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Monday, 15 December 2014

The 'Dubai Omen' And Global Risks Of Plunging Oil Prices

The 'Dubai Omen' And Global Risks Of Plunging Oil Prices:



"As the price of oil continues to fall, share prices on the Gulf region's stock markets have plummeted in parallel. The price of oil reached a yearly low of $60 a barrel on Friday, and we're now looking at a possible $50, which would create a truly bleak outlook for economic prospects in the Middle East. On Monday, the price touched a low of $56.25 before a modest rebound.



"The freefall of the price of oil has unleashed panic here," says Wafik Dawood, portfolio manager at Compass Capital in Cairo. On the Egyptian stock exchange, rates fell by 5% on Sunday. In Qatar they fell by 6%, and in Dubai 8%. The region's stock indices therefore lost most of the year's profit. In majority Muslim countries, exchanges tend to be open on Sundays and closed on Fridays.



"Morale is poor," says Sanyalak Manibhandu, head of research at NBAD Securities in Abu Dhabi. "The falling rates of the past few weeks are accelerating.""



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Ukraine Says Chevron May Exit Agreement to Extract Shale Gas - Bloomberg

Ukraine Says Chevron May Exit Agreement to Extract Shale Gas - Bloomberg:



"Chevron Corp. may pull out of a shale-gas project in western Ukraine, further frustrating the country’s efforts to cut its dependence on Russia.



“There is information that they plan to exit” the Oleska production-sharing agreement, leaving Ukraine without any shale-gas projects, Valeriy Chaly, deputy chief of President Petro Poroshenko’s administration, told reporters today in Kiev.


The second-largest U.S. energy producer terminated the agreement because Ukraine failed to simplify taxation rules by a Nov. 18 deadline, the Kiev Post reported, citing Chevron country manager, Peter Clark. Chevron’s press service declined to comment further."



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fastFT: Russian equities slide to lowest since 2009 - FT.com

fastFT: Market-moving news and views, 24 hours a day - FT.com:



"The Russian stock market has tumbled to its lowest level since March 2009 as the turmoil in Moscow's financial markets has deepened.



The country's benchmark equity market has tumbled to its lowest level since March 2009 in US dollar terms, and is now almost two thirds below its post-financial crisis peak as the turmoil in Moscow's financial markets has deepened. 




The rouble has also slid to a new low of 61.46 per US dollar today, the government's international borrowing costs have climbed above Rwanda's and the corporate bond market has been convulsed by a wave of selling."



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MIDEAST STOCKS-Most Gulf markets stabilise as oil's plunge pauses | Reuters

MIDEAST STOCKS-Most Gulf markets stabilise as oil's plunge pauses | Reuters:



"Most Middle East stock markets became more stable on Monday, after plunging in previous days, as the price of oil recovered slightly. But fund managers said it was by no means clear that any sustained recovery of stock prices was starting.



Brent crude climbed above $62 per barrel, after hitting 5-1/2-year lows of $60.28 earlier, as traders began pricing in expectations of improving global manufacturing data to be published later this week.



Dubai's stock index inched up 0.1 percent as most shares in the emirate gained. The market rose as much as 4.8 percent during the day before giving up almost all those gains by the end of the session."



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Sultan's absence raises worries over Oman succession - ArabianBusiness.com

Sultan's absence raises worries over Oman succession - ArabianBusiness.com:



"Looking frail, Oman's Sultan Qaboos appeared on television last month to reassure his people about his health. But after a long absence abroad for medical treatment, many Omanis are worried that their childless leader has no publicly designated heir.



In a turbulent Middle East, Oman remains an island of stability along with Gulf Arab neighbours, and many Omanis believe the succession process could be handled smoothly when the sultan finally departs.



But some fear that any uncertainty could lead to jostling between potential heirs of Qaboos who, despite gradual reforms during his 44-year reign, remains an absolute ruler."



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Opec can ride out cheap oil, says head - FT.com

Opec can ride out cheap oil, says head - FT.com:



"Opec, the oil producers’ group, can ride out a slump in oil prices and keep output unchanged, its head said on Sunday, arguing market weakness did not reflect supply-and-demand fundamentals and could have been driven by speculators.



Speaking at a conference in Dubai, Abdullah al-Badri defended November’s decision by the cartel not to cut its output target of 30m barrels per day in the face of a drop in crude prices to multiyear lows.



“We agreed that it is important to continue with production [at current levels] for the . . . coming period. This decision was made by consensus by all ministers,” he said. “The decision has been made. Things will be left as is.”"



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​OPEC won’t cut production even if oil below $40 – UAE energy minister — RT Business

​OPEC won’t cut production even if oil below $40 – UAE energy minister — RT Business:



"The UAE Energy Minister Suhail Al-Mazrouei says OPEC will maintain output at 30 million barrels of oil a day, and wants to monitor the price for three months before even considering a meeting about possible changes.



“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg on Sunday at a conference in Dubai.



“We’re not targeting a price; the market will stabilize itself,” he said commenting on a statement by a Venezuelan official on Friday who said the country may propose convening an extraordinary meeting of the cartel."



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Supply and demand – the oil genies we need to tame | The National

Supply and demand – the oil genies we need to tame | The National:



"The classic 1996 book by the United States economist Morry Adelman Genie Out of the Bottle describes how the Opec countries discovered they could increase oil prices by restricting supply – then overplayed their hand and triggered a price crash. Now the oil exporters have let two genies escape – and neither of them offers good wishes.



Supply and demand are the two genies, and the Opec countries and Russia unleashed them by accepting very high oil and gas prices over the past decade. Some major producers, such as Iraq, could not increase output significantly because of well-known political problems. But in many cases, countries made a deliberate choice to let their production decline, or at least increase only modestly – even in the face of rampant Chinese demand and prices that in the space of seven years soared from US$20 per barrel to $147. 




The first genie is well-publicised – escaping from shale rock deep under North America. Although the technologies of shale oil and gas extraction were developed from the 1980s onwards, it was the stimulus of high oil prices that led to their rapid development and deployment. Oil output in the main US shale areas of North Dakota, South Texas and West Texas rose from less than half a million barrels per day in 2008 to more than 3 million barrels per day this year."



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Sinking crude erases 2014 gains on Dubai index | GulfNews.com

Sinking crude erases 2014 gains on Dubai index | GulfNews.com:



"A downward spiral in crude oil prices continued to dent investor sentiment in GCC equity markets on Sunday. The Dubai index wiped off gains registered in 2014, since it fell another 7 per cent for a second straight session.



The Dubai Financial Market General Index ended 7.61 per cent at 3,321.33, after hitting a low of 3,312.48, a level last seen in January. Leading the decline were construction major Arabtec and Emaar Properties. Arabtec fell 9.66 per cent, while Emaar Properties fell more than 8 per cent.



Dubai’s stock market was the world’s best performing this year until it was caught up in a regional sell off amid tumbling oil prices."



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Travelex Buyer Shetty Said to Close $750m in Funding - Bloomberg

Travelex Buyer Shetty Said to Close $750m in Funding - Bloomberg:



"Bavaguthu Raghuram Shetty secured $750 million of financing to acquire a majority stake in Travelex Holdings Ltd., three people with knowledge of the matter said.



Goldman Sachs (GS) and Qatar National Bank arranged the loan and were lenders with Doha Bank, National Bank of Fujairah and Commercial Bank International (CBI), the people said, asking not to be identified as the information is private. The loan is for about 18 months and will be replaced with a longer-term facility in about a year’s time, two of the people said.



Apax Partners LLP, one of Europe’s largest private-equity firms, agreed in May to sell its majority stake in Travelex, a chain of foreign-currency exchanges, to Shetty and entities linked to Saeed Bin Butti Al Qubaisi’s Abu Dhabi-based Centurion Investments. Shetty also owns UAE Exchange, a currency exchange and money-transfer company, although Travelex will continue to be run separately, the companies said in May."



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Qatar Latest Bear in Gulf Selloff as OPEC Output Cut Unlikely - Bloomberg

Qatar Latest Bear in Gulf Selloff as OPEC Output Cut Unlikely - Bloomberg:



"Qatar’s stock index became the fifth in the region to enter a bear market yesterday amid plunging oil, as a member of OPEC said the group will stand by its decision not to cut crude output even if prices fall to $40 a barrel.



The QE Index (DSM) slumped 5.9 percent, the most since 2009, to 11,114.43, bringing its decline since a peak in September to 23 percent. Abu Dhabi’s ADX General Index fell 3.6 percent to 4,209.75, less than 10 points away from entering a bear market. Dubai’s DFM General Index slid the most since October 2008. 




Shares in Qatar followed gauges in Saudi Arabia, Dubai, Kuwait and Oman into a bear market as Brent crude heads for its worst year since 2008. The Organization of Petroleum Exporting Countries will wait at least three months before considering an emergency meeting, Suhail Al-Mazrouei, the United Arab Emirates’ energy minister, said yesterday."



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Dubai Shares Lead U.A.E. Gains as Investors Hunt for Bargains - Bloomberg

Dubai Shares Lead U.A.E. Gains as Investors Hunt for Bargains - Bloomberg:



"Dubai shares rose as oil advanced and some investors judged stocks were cheap following a nine-day selloff. Abu Dhabi’s gauge climbed.



The DFM General Index (DFMGI) added 3.7 percent, headed for the biggest gain since July, to 3,442.75 at 11:39 a.m. local time. The measure, which erased its year-to-date gains yesterday, was the best performer among more than 90 gauges tracked by Bloomberg globally. Abu Dhabi’s ADX General Index (ADSMI) jumped 1.2 percent, set for sharpest increase in a month. The gauge was less than 10 points away from a bear market yesterday. 




The estimated 12-month price-to-earnings ratio of Dubai’s index, which entered a bear market last week, rose to 10.8, near MSCI Emerging Markets Index’s 10.7. The 14-day relative strength indicator of the emirate’s measure climbed to 21 today from 13.7 yesterday. A level below 30 indicates to some analysts that securities have fallen too far."



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Iran’s 300% Stocks Rally Fizzles as Nuclear Deal Eludes Rouhani - Bloomberg

Iran’s 300% Stocks Rally Fizzles as Nuclear Deal Eludes Rouhani - Bloomberg:



"The five-year rally in Iranian stocks is coming to an end as optimism fades that President Hassan Rouhani can resolve an international standoff over the Islamic republic’s nuclear program.



The Tehran Stock Exchange Index has lost 19 percent in 2014, set for the first yearly decline since 2008, as petrochemical companies and lenders plunged, bourse data show. Over the previous five years, shares soared 910 percent, or about 300 percent in dollar terms after factoring in the rial’s declines.



Progress on talks with world powers stalled last month, undermining confidence that Rouhani’s election in June 2013 would spur a detente with the U.S. The two sides announced Nov. 24 they’d need another seven months to try to end a decade of international sanctions that are throttling the economy. The six-month plunge in oil, Iran’s biggest income source, deepened the selloff."



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