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Monday, 19 September 2011

THE CASE FOR HIGHER CRUDE OIL PRICES BY 2012, PART 1 | PRAGMATIC CAPITALISM

No commodity has affected the global economy more than crude oil. No commodity has a more direct impact on every world citizen. No commodity exerts more influence on the world financial system’s function and stability than oil. Given the importance of oil to the world economy, one would think the process that determines oil prices would be well understood.

One would clearly expect officials of all of the world’s major energy economies to be fully conversant in market processes. One also expects competition authorities, especially the U.S. Federal Trade Commission, to have a strong working knowledge of market process. One also expects investment banks, which put at risk large amounts of capital trading crude oil, to be able to forecast the price crude oil in a systematic way. Sadly, none of these expectations are close to being fulfilled.

We believe that crude oil prices are close to being launched and would take a semi-parabolic trajectory up to next year, in 2012. But in order for this hypothesis to be realized, there needs to be a structural underpinning of oil prices going forward — a trend that is defined mainly by the interaction of market players (users and suppliers of crude oil) influenced in a large part by the perceived future scarcity of crude oil supplies relative to future demand. That is what we intend to show in this report.


FT.com - Saudi inflation kept under wraps


Regional economists are scratching their heads over why a combination of historically high global food prices and a multibillion-dollar spending package is not stoking inflation in Saudi Arabia as forecast.


Global food prices rose 26 per cent year-on-year in August, according to the UN Food and Agriculture association. However, in Saudi Arabia, a leading importer of foodstuffs, prices of food and beverages rose only 5.4 per cent year-on-year in the same month.


Headline inflation of a wider basket of goods and services in the kingdom slowed to 4.8 per cent year-on-year in August from 4.9 per cent a year earlier, according to the central statistics bureau, despite including the holy month of Ramadan when food prices often increase.



MENA stock markets close - September 19, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
6118.34-0.42%
DFM (Dubai Financial Market)
1462.54-0.61%
ADX (Abudhabi Securities Exchange)
2564.02-0.26%
KSE (Kuwait Stock Exchange)
5976.7-0.44%
BSE (Bahrain Stock Exchange)
1257.29-0.55%
MSM (Muscat Securities Market)
5734.92-0.14%
QE (Qatar Exchange)
8405.59-0.31%
LSE (Beirut Stock Exchange)
1240.66-0.31%
EGX 30 (Egypt Exchange)
4409.321.93%
ASE (Amman Stock Exchange)
2029.09-0.02%
TUNINDEX (Tunisia Stock Exchange)
4559.620.12%
CB (Casablanca Stock Exchange)
11466.80.29%
PSE (Palestine Securities Exchange)
479.66-0.24%

Dubai’s Shares Decline on Greece Debt Concerns, Oil: Dubai Islamic Drops - Bloomberg

Dubai’s benchmark stock index fell for the first time in a week as investors await a decision on whether Greece will receive a payment that would help the country avoid a default and after crude oil retreated.

Dubai Islamic Bank PJSC (DIB), the biggest Shariah-compliant lender in the emirate, declined 1 percent. Deyaar Development (DEYAAR) PJSC decreased for a third day. The DFM General Index (DFMGI) slipped 0.6 percent, dropping for the first time since Sept. 12, to 1,462.54, at the 2 p.m. close in Dubai. About 38 million shares traded in Dubai compared with a 12-month daily average of 122 million shares, according to data compiled by Bloomberg. The Bloomberg GCC 200 Index (BGCC200) of the region’s stocks lost 0.4 percent.

“Markets are waiting for a catalyst or even a leading market,” said Fadi Al Said, a Dubai-based senior investment manager at ING Investment Management, which oversees about $518 billion worldwide. Local gauges are responding to a global downtrend in equities “in a more defensive fashion.”

SHUAA Capital, Bloomberg Tradebook launch DMA trading platform -- bi-me.com

SHUAA Capital, the leading financial services institution in The Cooperation Council for the Arab States of the Gulf (GCC), and Bloomberg Tradebook, Bloomberg's agency broker, today announced the launch of a direct market access (DMA) trading platform.

The new technology allows both local and international institutional investors to trade equity products on the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) in the United Arab Emirates (UAE).

The Bloomberg Tradebook-SHUAA DMA platform gives global traders direct access to UAE markets via a direct-to-exchange connection through the Bloomberg Professional service.

UAE jobs engine sputters on no growth - Emirates 24/7

A monthly gauge of online jobs demand in the UAE remained flat in August, even as healthcare, education and retail emerged the fastest growing industries in the country, a private research group said this morning.

Monster Worldwide, an online careers and recruiting firm, said its Gulf Employment Index, which tracks online jobs demand in the six GCC countries and Egypt, remained flat at 109 points in August – the same level it was in July 2011.

“The August Monster Employment Index Middle East sustains the positive momentum of July. Hiring in sectors like Retail Trade/ Logistic Consumer Goods/ FMCG continues to underscore a relatively healthy consumer environment,” said Sanjay Modi, Managing Director, Monster.com (India/Middle East/South East Asia).


StanChart: Dubai back in business - Emirates 24/7

Dubai’s economy is back in business,c said in its latest economic report on the region, outlining data that suggests that even as the emirate’s core economic sectors of trade and tourism are roaring back to life, the worst impacted real estate sector too witnessing green shoots of recovery.

In the just published Middle East focus economic report, Standard Chartered analysts Shady Shaher and Victor Lohle maintain that the UAE’s first-half performance was driven by increased hydrocarbon output from Abu Dhabi and strong non-oil growth in Dubai. “We believe these two factors will continue to drive growth in the UAE for the rest of the year,” the analysts said.

Dubai’s “economy is back in business,” the report said, adding that “non-oil economic indicators in Dubai look positive, in line with our positive view on the emirate this year.” Figures compiled by the Dubai Chamber of Commerce and Industry show that exports and re-exports rose by 16.5 per cent in the forst half of 2011. The emirate’s tourism sector is also doing well, with hotel occupancy above 70 per cent in June (the off-season period in Dubai). Passenger numbers at Dubai International Airport were up 10.4 per cent year-on-year in June, and rose 8.9 per cent in the first half of the year.


Gulf oil output will fall as Libya recovers-OPEC's Badri - Ahram Online

Gulf OPEC producers that raised oil output to compensate for the shutdown of Libyan oilfields will certainly reduce production as Libya's output recovers, OPEC Secretary General Abdullah al-Badri said on Monday.

Saudi Arabia and its Gulf OPEC allies raised their oil production in June after failing to convince other members to agree an increase in production to make up for the shutdown of Libyan oil fields since February.

But Badri, who was Libyan energy minister 1990-2000, said those Organization of the Petroleum Exporting Countries members who raised output to make up for the Libyan loss will doubtless cut output again.

Egypt discussing finance package with Saudi, UAE | Reuters

Egypt is discussing financial packages for budgetary and other support with Saudi Arabia and the United Arab Emirates that could exceed a total of $5 billion based on figures initially proposed, the Egyptian finance minister said on Monday.

Hazem el-Beblawi also told Reuters that Cairo was open to "all sorts of cooperation" with the International Monetary Fund, which offered a $3 billion financing package earlier this year that Egypt then turned down.

"I don't want to give the impression that I am going to negotiate for a loan, but I am going with an open mind," the finance minister said of talks he was due to have in Washington at IMF and World Bank meetings this month.

gulfnews : Chinese firms aim to cash in on Adnoc's expansion drive

The Arab Oil and Gas Show saw a proliferation of Chinese exhibitors looking to capitalise on a spill-over of contracts for the planned $5 billion (Dh18.3 billion) investment by Abu Dhabi National Oil Company (Adnoc) to raise output capacity by 2016.

"It is clear that there are massive development plans in the Gulf, particularly in the UAE, Saudi Arabia, Qatar and Iraq," said Hadi Shuka, business development manager at Dolphin Heat Transfer, one of the exhibitors at the show which opened yesterday.

"For these plans to materialise there has to be massive investment in various technology, equipment and services in the energy sector. The Arab Oil and Gas show provides an excellent platform for us to help address this demand as the dedicated trade show will enable us ot establish contacts and introduce our company and our products to potential customers in the region," Shuka said.

gulfnews : Etisalat credit rating among the best

Etisalat, one of the leading telecommunications companies in the Middle East and Africa, has been recognised as a company with one of the highest credit ratings in the telecom sector following a rigorous evaluation by the three international credit rating agencies, S&P, Fitch and Moody's.

During the second quarter of 2011, etisalat management met the three agencies to review the company's credit rating.

Etisalat investment grade ratings are considered among the highest of all globally-rated telecommunications companies.

Kuwait budget surplus rises to $15 bln April-May | Reuters

Kuwait's budget surplus stood at 4.2 billion dinars ($15.3 billion) in the first two months of its 2011/12 fiscal year, larger than a year ago on higher-than-projected oil revenue and lower spending, finance ministry data showed on Sunday.

The surplus accounted for 11.4 percent of the OPEC member's gross domestic product, according to Reuters calculations. It reached 2.4 billion dinars in the same period a year ago.

Revenue of the world's sixth-largest oil exporter was 4.8 billion dinars in April-May, while spending was 648.3 million dinars, below a projected 3.2 billion for the first two months, the data showed.

Kuwait's top lenders deny derivatives trading - Banking & Finance - ArabianBusiness.com

Kuwait's biggest lenders National Bank of Kuwait and Kuwait Finance House denied on Sunday reports that they were putting customers' money at risk by trading in derivatives.

Kuwaiti daily newspaper al-Seyassah said on Saturday in a report, citing unnamed parliamentary and economic sources, that several lawmakers were planning to investigate derivatives trading by some banks. The trades took place away from the central bank's supervision, it reported, and put clients' deposits at risk.

"NBK does not engage in any derivative trading at all and has no exposure whatsoever to these instruments," Kuwait's biggest lender said in a statement on the bourse website on Sunday, reiterated by a similar statement by KFH.

Battle between GIH and NBQ reaches Court of Cassation in Dubai - The National

A dispute between a Kuwaiti investment company and the National Bank of Umm Al Qaiwain (NBQ) is set to reach the highest court of appeal in the country tomorrow, with the stakes high for both lenders.

NBQ will make one last plea to overturn an earlier court decision forcing it to return a payment worth about US$315 million (Dh1.15 billion) to Global Investment House.

Not so long ago it would have been a mismatched encounter. Global was among the Gulf's biggest investment banks, and NBQ is a tiny lender with assets of Dh12.5bn, but analysts say the combination of the financial crisis and the court dispute has left both banks "squeezed into a corner".

Gulf Times – Gulf sukuk issuers eye GCC, Asia deals

Arab Gulf banks and corporates are expected to issue more Islamic bonds, or sukuk, denominated in local Gulf and Asian currencies in the coming months, driven by increased appetite for regional and Asian debt at a time of heightened concerns over the health of the US and European economies, bankers and analysts say.

As international financial markets, uncertain about the global economy and Europe’s debt crisis, continue to hamper global lenders’ ability to finance projects and deals in the Arab Gulf region, potential borrowers from the Middle East are targeting wealthy oil-rich GCC (Gulf Cooperation Council) governments and Asian fans of Islamic debt instruments for fund raising.

“From the issuers point of view, they are looking for new sources of capital at competitive prices. From the investors point of view they want to deploy their capital in diversified avenues-both geographies and industries,” said Afaq Khan, chief executive officer of Islamic banking at Standard Chartered Saadiq.

UPDATE 1-HSBC sees $1 bln Gulf project bond within 6 mths | Reuters

A $1 billion project bond from a Gulf borrower is likely to be issued in the next six months, an HSBC executive said on Sunday, adding Qatar's Barzan gas project was a "likely candidate" for the sale.

Jonathan Robinson, HSBC's regional head of project finance, said the project bond would be in the hydrocarbons or power and utilities sector.

However, he declined to say whether banks had been mandated for the deal, which would support the $10 billion joint venture between Qatar Petroleum and ExxonMobil .

Jafza, DIFC Bond Yields Rise on Refinancing Risk: Arab Credit - Bloomberg

Yields on Islamic bonds of Jebel Ali Free Zone FZE and DIFC Investments LLC, two Dubai government-owned companies, have risen since April as investors shunned risky assets and refinancing prospects worsened.

The extra yield investors demand to hold the floating rate Islamic bond due Nov. 2012 of Jebel Ali Free Zone, a business park, over the Dubai government’s 6.7 percent 2015 bond widened to 443 basis points on Sept. 16 from 316 at the end of the first quarter, according to data compiled by Bloomberg. The spread between the floating rate note maturing June 2012 of DIFC Investments and the sovereign widened to 623 basis points on Sept. 16 from this year’s low of 115 on May 9.

“Over the last four months, you have gone through a general de-risking and names that are a higher credit risk have under-performed,” Abdul Kadir Hussain, chief executive officer at Mashreq Capital DIFC Ltd., said in a phone interview yesterday. The two companies also have sukuk maturing in 2012 and “investors are starting to get a bit concerned about their refinancing capabilities given the market volatility,” he said.

BP woos Abu Dhabi over oil deal renewal - The National

The head of BP came to the capital yesterday as a deadline approaches for the British oil giant to renew its contract to pump oil in the emirate.

Abu Dhabi's biggest onshore concession expires in 2014 after a seven-decade run, and BP is jockeying to keep a stake in the business. Officials in the emirate will make a decision regarding its foreign oil partners "in the coming months", said the head of the Abu Dhabi National Oil Company (Adnoc), the state producer.

"Everything is being revisited," Abdulla Nasser Al Suwaidi, the Adnoc chief executive, said on the sidelines of a British trade mission to the UAE.

Egypt and Libya: capital takes flight – FT.com

The Bank for International Settlements for the first time unveiled the extent of capital flight from Egypt and Libya in its latest quarterly report, noting that outflows from Egypt in the first three months of 2011 surged at their highest quarterly rate ever.

Internationally active banks reported that liabilities to residents of Egypt (in banking terms, a liability is deposit from a resident whereas an asset is a loan to a resident) rose by $6.4bn or 26 per cent, according to the BIS. Liabilities to residents of Libya rose by a more modest $2.2bn or a rise of 3.7 per cent.

“These developments most likely reflected domestic funds being moved out of the two countries as a result of the elevated levels of political and economic uncertainty,” the BIS said in its report.