Tourism: Travel trends for 2017: City - Sand - Sea

Dutch Beach: sometimes the beach is closer than you think

Where to go on holiday in 2017? To help potential customers decide, the travel companies have already got their catalogues out. And most agree that safety will again be a top priority among holiday-makers in 2017.

The facts and figures of the past months give the tourism industry cause for optimism: the demand for holiday offerings continues unabated - in spite of the lingering threat of terrorism. The UNWTO World Tourism barometer indicated an increase of 1.6 percent in overnight stays within Europe for the turbulent year 2016. So European tourism is still growing, even if no longer as rapidly as in previous years. And safety still ranks as the top selling point.

Spain and Portugal were last year’s most popular destinations and look set to top the list for 2017, as well. Travel companies are expanding their hotel capacities wherever they can.  Tui, the world’s largest tour operator, has acquired a good 20 percent more hotels on the Canary Islands alone. FTI has taken on 75 new hotels, and Alltours a full 100. But the beach capacity remains the same. Will vacationers find a spot to spread their towels on such overcrowded stretches of sand? In any case, they’ll have to splash out more cash for their summer vacation in Spain than in previous years. Prices are going up, as well.

Turkey registered 33-percent fewer tourists in 2016. Whether the sector has any real chance exists to recover from such a steep drop remains to be seen. The tour operators haven’t started cutting hotel capacity just yet, but they’ve slashed the prices: Tui by five percent, Thomas Cook and Neckermann by eight percent. The hotels offer the same high quality for less money. But will such a bargain be enough to counter holiday-makers’ fears in 2017? 
 
Read more: Travel trends for 2017: City - Sand - Sea | DW Travel | DW.COM | 06.01.2017

Global Oil Production: Double Dip seems to have started as prices drop

Oil Exploration

OILPrice Intelligence reports that the double dip looks to be on. After nearly two months of moderate price gains for crude oil, by mid-March oil is swooning once again. Brent is showing a bit of resilience, but the WTI benchmark – which is the major marker for North American crude – dropped to its lowest level in six years. Producers may have thought they were nearly out of the woods, but stubborn levels of production from U.S. shale fields have prevented a rally. Even worse (for drillers) is the fact that oil storage tanks are starting to fill up. Storage at Cushing, Oklahoma is two-thirds full, and hedge funds and major investors are selling off oil contracts, betting that prices are heading south.

While the oil storage story is real – average storage levels nationwide (USA) are up to 60%, a big jump from the 48% seen a year ago – it may have been played up too much in the media. Many refineries are taken offline in the spring for maintenance, which forces drillers to pump crude into storage for several weeks. Additionally, U.S. consumers are starting to use more gasoline because of low prices, and the extra demand may soak up some of the glut. Finally, production, stubborn as it is, may soon finally begin to dip. Fresh data from North Dakota shows that may already be happening. In other words, the weekly storage build may be unsustainably high.

Nevertheless, the selloff is underway. That is providing an interesting opportunity for the U.S. government, which is set to purchase 5 million barrels for the strategic petroleum reserve (SPR). In March 2014, the U.S. government sold off 5 million barrels ostensibly for a “test sale,” but was no doubt at least in part motivated by the fact that oil prices surpassed $100 per barrel. However, by law, the U.S. Department of Energy is required to replenish that sale within 12 months. With the deadline approaching, the DOE has announced plans to buy up 5 million barrels to put back into the SPR. The U.S. taxpayer is about to benefit from extraordinary timing. With prices now half of what they were 12 months ago, the government will be able to bring the SPR back to up to its proper level at half the price.

Low oil prices are good for the government, but not so good for the oil majors. Italian oil giant Eni (NYSE: ENI) became the first of the oil multinationals to slash its dividend due to low prices and also moved to suspend its share buy-back plan. Eni announced plans to pay 0.8 euros per share rather than the 1.12 euros it paid out in 2014. The move was not taken well by investors – the company’s stock tanked by nearly 5% on the announcement. Still, CEO Claudio Descalzi put on a brave face, claiming that he was “building a more robust Eni capable of facing a period of lower oil prices.” The dividend has long been prioritized by the oil majors, needing to be protected at all costs. Many of them have opted for dramatic cuts to capital spending rather than touch their dividend policies, even if that threatens future production rates. High dividends have made major oil companies highly attractive investment vehicles, allowing companies to obtain a lower cost of capital for drilling plans. Eni has bucked the trend, arguing that it will be more resilient as a result of the dividend cut. Descalzi insists the company will “be strong” if prices remain at $60 per barrel or above. It remains to be seen how long oil prices stay depressed, and whether or not other oil majors can avoid coming to the same conclusion as Eni.

OPEC released its monthly oil market report on March 16, in which it argued that North American shale will face a contraction later this year. However, the oil cartel also saw some production declines for the month, as Libya, Iraq, and Nigeria continue to struggle with violence and low oil prices. Libya, in particular, is facing a crisis. Spain raised the prospect of a European Union embargo on Libyan oil if the country’s two political factions did not make headway on peace. Cutting off Libya’s only economic lifeline almost certainly would not bring a swift end to political impasse in Libya, but the EU is clearly becoming impatient with the ongoing violence just across the Mediterranean.

Russian President Vladimir Putin reemerged from a 10-day absence that fueled many-a-rumor – speculation ranged from a palace coup, to a secret birth of a child, even to some wondering whether the Russian President met an early demise. The Kremlin offered no explanation, but Putin appeared to be just fine. Despite his seemingly good health, the Russian economy continues to buckle under the weight of low oil prices. And that, according to Bloomberg, has Putin increasingly angry at a once close ally: Rosneft head Igor Sechin. Putin is reportedly blaming Sechin for rising debt at the state-owned oil firm, perhaps stemming from the purchase of TNK-BP in 2013. Also, Sechin’s role in borrowing billions of rubles that sent the currency plummeting in December 2014 has raised the ire of the Russian President. There are rumors that Sechin could be on his way out, but those reports are unconfirmed. Nevertheless, the fraying of the relationship suggests low oil prices are taking a toll on Putin’s inner circle.

EU-Digest