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Saturday, 5 March 2011

Egypt's Jan-March c/a gap seen doubling on turmoil | Reuters

Egypt's central bank said on Saturday it expected its current account deficit in the January to March quarter to double to $3 billion from the July-December 2010 deficit of $1.4 billion due to political turmoil.

Egypt's current account deficit widened 9.2 percent year-on-year to $1.4 billion in July to December 2010 from a current account deficit of $1.3 billion in the same period in 2009, the central bank said.

The central bank said the January to March quarter deficit would widen owing to a fall in tourism revenues, remittances from workers abroad and foreign investment due to fallout from the turmoil that toppled of Hosni Mubarak on February 11.

Saudi shares surge 7% after minister's assurances -

The Saudi stock market, the largest Arab bourse, began the week on a positive note surging on Saturday after shedding 15% of its value last week, as fears of uprisings spreading shook Arab financial markets.

The recovery came after Finance Minister Ibrahim al-Assaf said in a televised interview that the Saudi economy was in "great" shape and that he himself bought stocks last week.

The Tadawul All-Shares Index opened 0.37% up Saturday, after it had closed 3.9% down on Thursday, for the 13th consecutive session in the red.

In half an hour of trading the index had surged over three percent to 5,486.09 points and continued rallying to close 7.1% higher at 5701.42 points.

MENA stock markets - March 5, 2011. Tadawul +7.26%

ExchangeStatus IndexChange
TASI (Saudi Stock Market)

Saudi minister says economy in excellent shape -TV | Reuters

Saudi Arabia's economy is in an "excellent" shape and a rise in oil prices will boost the strong economic and financial position of the world's top oil exporter, its finance minister said on Saturday.

"The Saudi bourse and the overall Gulf stock markets react away from economic factors," Ibrahim Alassaf told Al Arabiya TV.

Public revolts against autocratic regimes and economic hardships have swept through the Arab world over the past two months, unseating Egyptian and Tunisian leaders. The unrest now challenges governments in oil-exporting Libya, Bahrain and Oman.

Saudi Stocks End Longest Losing Streak Since 1996 After State Purchases - Bloomberg

Saudi Arabian shares rallied for the first time in three weeks after the Saudi finance minister said the Arab world’s largest economy is in excellent shape and a government fund bought stocks in the past week.

Saudi Basic Industries Corp. (SABIC), the world’s largest petrochemical maker, and Al Rajhi Bank (RJHI), the kingdom’s biggest lender, jumped more than 3 percent. The Tadawul All Share Index (SASEIDX) climbed as much as 4.9 percent, the steepest intraday gain since May 29, and traded 4.6 percent higher at 5,569.76 at 1:30 p.m. in Riyadh. The 146-member gauge snapped a 13-day losing streak, the longest selloff since a similar period ended July 18, 1996.

The economy is in an “excellent” condition and the state- run Public Pension Agency bought stocks last week, Saudi Finance Minister Ibrahim al-Assaf told Al Arabiya TV. Stocks tumbled across the region last week, sending the BGCC200 Index of Persian Gulf shares to the lowest level since 2009 and the Saudi benchmark slipping the most in two years, on concern the turmoil in Libya will spread through the Middle East.

Oil jumps as Libya clashes intensify; Mideast worry | Reuters

Brent oil prices pushed above $116 a barrel and U.S. oil jumped more than $3 to its highest since September 2008 on Friday, as fighting in Libya worsened and protests in the Middle East intensified.

Investors piled into the oil market fearing extended supply disruptions in Libya as rebels fought security forces in Ras Lanuf, a major oil terminal. And growing unrest in Bahrain and Yemen ratcheted up anxiety over Saudi Arabia, where Saudi Shi'ites staged protests on Thursday.

Prices closed out a second big weekly gain with news that hedge funds and big speculators had increased their bullish bets on U.S. oil prices by over 30 percent in the week to March 1, taking their net long position to a record high as they braced for further turbulence in the region.


The decline in crude oil prices that began in mid-2008 was historic — plunging over $90 per barrel in just eight months. Over the past two years, however, crude oil prices have increased by over $60 per barrel. Today’s chart provides some perspective on the historic decline and recent spike with a long-term view of inflation-adjusted West Texas Intermediate Crude. Today’s chart illustrates that most oil price spikes were a result of Middle East crises and often preceded or coincided with a US recession. It is also interesting to note that the recent spike in oil prices has brought the price of oil back to a historically high level — a level that was surpassed only briefly during the tail-end of the major price spikes of 1980 and 2008.

gulfnews : Topaz Energy aims to raise $500m in London IPO

Topaz Energy & Marine, a Dubai- based oil and gas contracting company, is seeking to raise as much as $500 million in an initial public offering in London, according to terms for the sale obtained by Bloomberg News.

The company is seeking to sell as much as $500 million (Dh1.8 billion) of new shares while its owner, Muscat, Oman-based oil and gas service provider Renaissance Services SAOG, will also sell part of its stake in the IPO, according to the sales document. It didn't disclose how many existing shares will be offered.

Topaz Energy & Marine was acquired by Renaissance Services in 2005.

gulfnews : Unrest 'will lure investors'

Unnerving as it is, the tide of political change sweeping the Arab world may also end up drawing in a fresh wave of foreign capital for the region.

As entrenched monopolies and patronage give way in the Middle East and North Africa, governments in the region could open their markets further and divest some state assets.

Wealthy Gulf states such Kuwait and Qatar have little cause to sell, but post-revolutionary states such as Tunisia will likely lower protectionist barriers as they seek to accelerate income redistribution for their restive citizenry.

Mobius Says Oil's Rally Not Over Amid Middle East Turmoil, Trend is Up - Bloomberg

Oil will gain, extending a rally that sent prices to a 29-month high amid turmoil in the Middle East, said Mark Mobius, executive chairman of Templeton Asset Management’s Emerging Markets Group.

“The trend is up” for oil, Mobius said in an interview today with Lisa Murphy on Bloomberg Television’s “Fast Forward.” “I’m not predicting any particular level. Of course, there will be lots of volatility. But if you look at the long- term trend it’s definitely up.”

Crude in New York surged this week on concern unrest in Libya will spread to other North African and Middle East energy exporters, curbing shipments. Mobius also said popular revolts in the region are putting governments on notice that they must change to benefit their citizens.

The Truth Behind Saudi Arabia's "Spare Capacity"

Crude oil topped $103 this morning.

The last time oil was this high was Sept. 26, 2008 – the last trading day before the US House rejected the first bank bailout bill. Wall Street then threw a snit and slashed 777 points off the Dow in one day.

Good times.

Spare Capacity of Oil

Gulf Daily News Rallies are ruining Bahrain's economy...

An important message, a crucial article 'Please Save Bahrain' (GDN, March 1) highlights exactly what every Bahraini and expat from all over the globe here need to understand.

It's a basic concept which any layman would agree when we talk about our economic stability. A country can easily thrive without politics, but never without an economy.

Increasing protests for and against the Ruling Family will lead us nowhere and eventually our economy will collapse.

FT Alphaville » Oil facilities on fire

Via Reuters on Friday:

An oil facility at Zueitina, south of the Libyan rebel-held city of Benghazi, has been damaged and was on fire, Al Jazeera said, showing a video of black smoke rising from an oil plant.

Naturally, there’s nothing like images of oil facilities on fire to unnerve the commodity markets.

One of the reasons why oil — specifically WTI — has made a bit of an about turn on Friday.

Here’s the latest Brent-WTI spread:

And while we are on the subject of oil and the Middle East it’s worth popping up some chart porn from BNP Paribas’s rather excellent Friday wrap on what’s next for MENA countries.

Here’s some charts that specifically caught our eye.

First, per capita GDP — arguably the real source of real tension in the region:

Second, the potential financial liabilities at stake:

Third, who’s really benefiting from the higher oil prices:

… and last, the much debated youth unemployment demographic:

And for the options buffs out there, here’s how the added tensions have footprinted, in terms of skew, the market for oil-related calls — skew in this instance being the preference for protection versus a rise in oil prices:

And here’s some comment on that:

The implied volatility curve on WTI options that used to have a pronounced put-skew (Chart 2) has seen that skew flattened as volatility for out of the money calls was strongly bid higher. It is not just the skew that has changed, implying heightened risk aversion, the level of volatility has shifted higher making insurance against a price rise more expensive. So, for the oil market for now, when in doubt, buy. Therefore it is not surprising to witness open interest (Chart 3) on out of the money strikes for call options on NYMEX WTI rise in short-dated maturities.

All in all, the suggestion being: when in doubt, buy.