Oil moves higher, hovers below $40 as doubts emerge over next step on OPEC cuts - Reuters:
Oil ended slightly higher on Wednesday but remained below the session’s early highs above $40 a barrel, the highest since March, retreating as doubts emerged about the timing and scale of a potential extension to the pact between OPEC and its allies to cut crude supplies.
Oil prices were supported by a drawdown in U.S. crude inventories in the latest week, but came under pressure as U.S. refined product inventories surged on tepid demand.
“As product demand remains subdued, gasoline inventories showed a solid build, while distillates showed a mammoth one - despite refinery runs being over 3.6 million barrels per day below year-ago levels,” said Matt Smith, director of commodity research at ClipperData.
Saudi Arabia and Russia have a deal to extend oil output cuts by a month, but a policy meeting on Thursday rather than later in June is unlikely, sources said. Early in the session, oil fell when Bloomberg reported the Thursday meeting was in doubt.
Brent crude futures for August settled up 22 cents, or 0.6%, at $39.79 a barrel. The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July rose 48 cents, to $37.29 a barrel.
Wednesday, 3 June 2020
Natural Gas May Be the Next Commodity to Trade Below Zero - Bloomberg
Natural Gas May Be the Next Commodity to Trade Below Zero - Bloomberg:
The specter of negative prices is hanging over energy markets more than a month after oil’s unforgettable crash below zero.
While crude has staged a rapid recovery after a deal by the biggest producers to curb a surplus, the $600 billion global gas market remains extraordinarily oversupplied. Traders and analysts say the worst may be yet to come as demand falls and storage nears capacity, creating the ideal conditions for negative prices in some parts of the world.
It shows just how far the global energy industry is from recovering from a pandemic-fueled slide in demand and signals more pain for producers from the shale fields of Texas to Australia’s Curtis Island. Unlike the oil market, there’s been no sign of a coordinated response to address the glut, meaning the fallout could be deeper and longer.
The specter of negative prices is hanging over energy markets more than a month after oil’s unforgettable crash below zero.
While crude has staged a rapid recovery after a deal by the biggest producers to curb a surplus, the $600 billion global gas market remains extraordinarily oversupplied. Traders and analysts say the worst may be yet to come as demand falls and storage nears capacity, creating the ideal conditions for negative prices in some parts of the world.
It shows just how far the global energy industry is from recovering from a pandemic-fueled slide in demand and signals more pain for producers from the shale fields of Texas to Australia’s Curtis Island. Unlike the oil market, there’s been no sign of a coordinated response to address the glut, meaning the fallout could be deeper and longer.
#Kuwait Needs to Slash Expatriate Population to 30%, Premier Says - Bloomberg
Kuwait Needs to Slash Expatriate Population to 30%, Premier Says - Bloomberg:
Kuwait should reduce its expatriate population to 30% of the total from the current 70%, Prime Minister Sheikh Sabah Al-Khalid Al-Sabah said, as the coronavirus pandemic and a slump in oil prices expose vulnerabilities in economic models across the Gulf.
Foreigners account for nearly 3.4 million of Kuwait’s 4.8 million people, and that’s a “big imbalance, and we have a future challenge to redress this imbalance,” Sheikh Sabah told the top editors of local newspapers.
Despite running one of the Gulf’s smallest crisis stimulus packages, top lender National Bank of Kuwait SAK predicts the country’s shortfall will reach 40% of gross domestic product in the fiscal year that started April 1, the most since the 1991 Gulf War and its aftermath. Most Gulf states are expected to run budget shortfalls of 15%-25% of economic output, leading to a build-up of debt, dwindling reserves, and tough choices.
Kuwait should reduce its expatriate population to 30% of the total from the current 70%, Prime Minister Sheikh Sabah Al-Khalid Al-Sabah said, as the coronavirus pandemic and a slump in oil prices expose vulnerabilities in economic models across the Gulf.
Foreigners account for nearly 3.4 million of Kuwait’s 4.8 million people, and that’s a “big imbalance, and we have a future challenge to redress this imbalance,” Sheikh Sabah told the top editors of local newspapers.
Despite running one of the Gulf’s smallest crisis stimulus packages, top lender National Bank of Kuwait SAK predicts the country’s shortfall will reach 40% of gross domestic product in the fiscal year that started April 1, the most since the 1991 Gulf War and its aftermath. Most Gulf states are expected to run budget shortfalls of 15%-25% of economic output, leading to a build-up of debt, dwindling reserves, and tough choices.
Gulf OPEC members not planning additional voluntary oil cuts beyond June -sources - Reuters
Gulf OPEC members not planning additional voluntary oil cuts beyond June -sources - Reuters:
Gulf OPEC producers Saudi Arabia, Kuwait and the United Arab Emirates have no plans to extend beyond June their voluntary additional oil cuts of 1.18 million barrels per day (bpd), two sources said on Wednesday.
OPEC+, agreed to reduce output by about 9.7 million bpd in May and June to help shore up prices as coronavirus-related lockdowns crippled demand.
In addition, Saudi Arabia, Kuwait and the UAE pledged to cut by an extra 1.18 million bpd in June.
“There are not discussions about extending those deeper cuts now,” one source said.
Gulf OPEC producers Saudi Arabia, Kuwait and the United Arab Emirates have no plans to extend beyond June their voluntary additional oil cuts of 1.18 million barrels per day (bpd), two sources said on Wednesday.
OPEC+, agreed to reduce output by about 9.7 million bpd in May and June to help shore up prices as coronavirus-related lockdowns crippled demand.
In addition, Saudi Arabia, Kuwait and the UAE pledged to cut by an extra 1.18 million bpd in June.
“There are not discussions about extending those deeper cuts now,” one source said.
MIDEAST STOCKS-Most markets gain, #Saudi retreats amid falling oil prices - Reuters
MIDEAST STOCKS-Most markets gain, Saudi retreats amid falling oil prices - Reuters:
Most stock markets in the Gulf region
closed higher on Wednesday, with Qatar rising the most, while
the Saudi index fell after oil prices weakened due to doubts
about an early meeting of OPEC+ nations.
OPEC leader Saudi Arabia and non-OPEC Russia have
preliminary agreed to extend existing record oil production cuts
by one month, sources told Reuters.
But oil prices retreated after Bloomberg reported that the
Thursday meeting was in doubt. Brent crude futures for August
were down 31 cents, or 0.8%, at $39.26 by 1310 GMT,
having earlier touched their highest since March 6.
Saudi Arabian benchmark index lost 0.9%, with Al
Rajhi Bank dropping 1% and petrochemical maker Saudi
Basic Industries declining 1.8%.
In Dubai, the index firmed 0.8%, with
sharia-compliant lender Dubai Islamic Bank rising 2%
and logistics firm Aramex leaping 3.8%.
Most stock markets in the Gulf region
closed higher on Wednesday, with Qatar rising the most, while
the Saudi index fell after oil prices weakened due to doubts
about an early meeting of OPEC+ nations.
OPEC leader Saudi Arabia and non-OPEC Russia have
preliminary agreed to extend existing record oil production cuts
by one month, sources told Reuters.
But oil prices retreated after Bloomberg reported that the
Thursday meeting was in doubt. Brent crude futures for August
were down 31 cents, or 0.8%, at $39.26 by 1310 GMT,
having earlier touched their highest since March 6.
Saudi Arabian benchmark index lost 0.9%, with Al
Rajhi Bank dropping 1% and petrochemical maker Saudi
Basic Industries declining 1.8%.
In Dubai, the index firmed 0.8%, with
sharia-compliant lender Dubai Islamic Bank rising 2%
and logistics firm Aramex leaping 3.8%.
European, Middle Eastern & African Stocks - Bloomberg #UAE #SaudiArabia #Qatar close
European, Middle Eastern & African Stocks - Bloomberg:
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
Oil falls from $40 as doubts emerge over next step on OPEC cuts - Reuters
Oil falls from $40 as doubts emerge over next step on OPEC cuts - Reuters:
“Prices were firm so far this week on the news that the meeting was earlier,” said Olivier Jakob, oil analyst at Petromatrix. “The retracement today is definitely due to the latest headlines on OPEC.”
Brent crude futures for August were down 13 cents, or 0.3%, at $39.43 by 10:48 a.m. EST (1548 GMT). The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July fell 3 cents, to $36.78.
Both benchmarks have surged in recent weeks, with Brent more than doubling after hitting a 21-year low below $16 in April, when U.S. crude turned negative.
The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, is cutting output by 9.7 million barrels per day (bpd) in May and June, equal to about 10% of global output before the coronavirus crisis.
“Prices were firm so far this week on the news that the meeting was earlier,” said Olivier Jakob, oil analyst at Petromatrix. “The retracement today is definitely due to the latest headlines on OPEC.”
Brent crude futures for August were down 13 cents, or 0.3%, at $39.43 by 10:48 a.m. EST (1548 GMT). The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July fell 3 cents, to $36.78.
Both benchmarks have surged in recent weeks, with Brent more than doubling after hitting a 21-year low below $16 in April, when U.S. crude turned negative.
The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, is cutting output by 9.7 million barrels per day (bpd) in May and June, equal to about 10% of global output before the coronavirus crisis.
#SaudiArabia poised to reverse extra production cuts as Opec+ meets | Financial Times
Saudi Arabia poised to reverse extra production cuts as Opec+ meets | Financial Times:
Saudi Arabia is set to unwind the extra production cuts it pledged last month, increasingly confident that the grand bargain agreed by oil producers in April to reduce supply has restored order to a market thrown into disarray by the Covid-19 crisis.
As part of the deal two months ago, the Opec+ group that includes Saudi Arabia and Russia agreed its biggest-ever production curbs of 9.7m barrels a day. The deal ended a price war between the countries and sought to offset a collapse in demand triggered by coronavirus. This month, Saudi Arabia went even further by making additional cuts of 1m b/d to placate US president Donald Trump, as America’s domestic shale industry reeled from the price plunge.
Now, with Brent crude having rebounded from 18-year lows of below $20 a barrel in April to about $40, Saudi Arabia is poised to bring that 1m b/d of production back, according to four people briefed on the kingdom’s thinking.
Yet given the uncertainty still hanging over the market, the Opec+ group is expected to agree an extension of its core production curbs for at least one month beyond July, when producers were initially due to start tapering the two-year deal.
Saudi Arabia is set to unwind the extra production cuts it pledged last month, increasingly confident that the grand bargain agreed by oil producers in April to reduce supply has restored order to a market thrown into disarray by the Covid-19 crisis.
As part of the deal two months ago, the Opec+ group that includes Saudi Arabia and Russia agreed its biggest-ever production curbs of 9.7m barrels a day. The deal ended a price war between the countries and sought to offset a collapse in demand triggered by coronavirus. This month, Saudi Arabia went even further by making additional cuts of 1m b/d to placate US president Donald Trump, as America’s domestic shale industry reeled from the price plunge.
Now, with Brent crude having rebounded from 18-year lows of below $20 a barrel in April to about $40, Saudi Arabia is poised to bring that 1m b/d of production back, according to four people briefed on the kingdom’s thinking.
Yet given the uncertainty still hanging over the market, the Opec+ group is expected to agree an extension of its core production curbs for at least one month beyond July, when producers were initially due to start tapering the two-year deal.
Saudi, Russia reach deal on oil cuts, raising pressure on laggards - Reuters
Saudi, Russia reach deal on oil cuts, raising pressure on laggards - Reuters:
OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil production cuts by one month while raising pressure on countries with poor compliance to deepen their output cuts, OPEC+ sources told Reuters.
“Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction,” one OPEC source said.
OPEC+ agreed last month to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus.
Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June.
OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil production cuts by one month while raising pressure on countries with poor compliance to deepen their output cuts, OPEC+ sources told Reuters.
“Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction,” one OPEC source said.
OPEC+ agreed last month to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus.
Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June.
Worst May Be Over for Biggest Arab Economies as Businesses Adapt - Bloomberg
Worst May Be Over for Biggest Arab Economies as Businesses Adapt - Bloomberg:
Business conditions in the Arab world’s three largest economies deteriorated at a slower pace in May as governments began to lift some lockdown restrictions while companies adjusted by slimming down staff and cutting salaries.
Following a pandemic-driven plunge, non-oil private sector activity improved in Saudi Arabia, Egypt and the United Arab Emirates, according to Purchasing Managers’ Index surveys compiled by IHS Markit. The gauge in each country still remained below the threshold of 50 that separates growth from contraction.
Business conditions in the Arab world’s three largest economies deteriorated at a slower pace in May as governments began to lift some lockdown restrictions while companies adjusted by slimming down staff and cutting salaries.
Following a pandemic-driven plunge, non-oil private sector activity improved in Saudi Arabia, Egypt and the United Arab Emirates, according to Purchasing Managers’ Index surveys compiled by IHS Markit. The gauge in each country still remained below the threshold of 50 that separates growth from contraction.
- Saudi Arabia’s PMI rose to 48.1 in May from 44.4 a month earlier, thanks to slower declines in output, new work and employment, according to IHS Markit
- The Egypt PMI rose to 40.7 from a record low 29.7 in April, bringing its stretch of declining conditions to the 10th consecutive month; employment and salary cuts resulted in the first drop in cost pressures in the series’ history
- IHS Markit’s gauge for the UAE reached 46.7 in May from a record low of 44.1 in April; sentiment slipped to joint-lowest on record
Austerity Experiment in Oil-Rich Gulf May Falter Post-Crisis - Bloomberg
Austerity Experiment in Oil-Rich Gulf May Falter Post-Crisis - Bloomberg:
The coronavirus pandemic is hitting Gulf Arab economies hard and emboldening the region’s dynastic rulers to push through unpopular fiscal measures that will impact their citizens. The question now is how long their resolve will last.
Saudi Arabia, the Arab world’s largest economy, announced a surprise tripling of value-added-taxes and trimmed allowances for government workers. Oman cut salaries of new state employees. Even in the United Arab Emirates, a financial and commercial hub with the Gulf’s most diversified economy, there are calls for overhauling a “rentier-state” model dependent on energy resources, state jobs and a foreign-majority private workforce.
Yet for all the talk of accelerating overdue changes, there were also moves to protect state jobs and shield nationals from cuts in the private sector, casting doubt on whether the downturn will trigger deeper reforms that outlive the crisis.
Oman has already called for foreigners to be replaced with nationals in government jobs, the UAE is preventing banks from firing citizens and Saudi Arabia’s finance minister alluded to state support for the kingdom’s workforce.
The coronavirus pandemic is hitting Gulf Arab economies hard and emboldening the region’s dynastic rulers to push through unpopular fiscal measures that will impact their citizens. The question now is how long their resolve will last.
Saudi Arabia, the Arab world’s largest economy, announced a surprise tripling of value-added-taxes and trimmed allowances for government workers. Oman cut salaries of new state employees. Even in the United Arab Emirates, a financial and commercial hub with the Gulf’s most diversified economy, there are calls for overhauling a “rentier-state” model dependent on energy resources, state jobs and a foreign-majority private workforce.
Yet for all the talk of accelerating overdue changes, there were also moves to protect state jobs and shield nationals from cuts in the private sector, casting doubt on whether the downturn will trigger deeper reforms that outlive the crisis.
Oman has already called for foreigners to be replaced with nationals in government jobs, the UAE is preventing banks from firing citizens and Saudi Arabia’s finance minister alluded to state support for the kingdom’s workforce.
Air Arabia lays off more staff due to COVID-19 impact - Reuters
Air Arabia lays off more staff due to COVID-19 impact - Reuters:
Air Arabia, the only listed carrier in the United Arab Emirates, has made further job cuts due to the business impact of COVID-19, a spokesman said on Wednesday.
The Sharjah-based airline, which has about 2,000 employees, did not say how many employees had been affected by the latest cuts. It laid off 57 employees in May.
Air Arabia, the only listed carrier in the United Arab Emirates, has made further job cuts due to the business impact of COVID-19, a spokesman said on Wednesday.
The Sharjah-based airline, which has about 2,000 employees, did not say how many employees had been affected by the latest cuts. It laid off 57 employees in May.
European, Middle Eastern & African Stocks - Bloomberg #UAE #SaudiArabia #Qatar mid-session
European, Middle Eastern & African Stocks - Bloomberg:
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
Updated stock indexes in Europe, Middle East & Africa. Get an overview of major indexes, current values and stock market data in Europe, UK, Germany, Russia & more.
#AbuDhabi to look at more debt sales to protect finances - Reuters
Abu Dhabi to look at more debt sales to protect finances - Reuters:
Oil-rich Abu Dhabi will consider raising more money via the bond markets to protect its finances from the impact of low oil prices, it said in a statement, after raising $10 billion in bonds this year.
Abu Dhabi’s fiscal balance depends almost entirely on revenue from hydrocarbon royalties and taxes and dividends received from ADNOC, its national oil company.
With the highest credit rating in the Gulf region, Abu Dhabi attracted strong demand from investors for its fundraising this year, which was split into a $7 billion bond in April and a $3 billion re-opening of the same deal last month.
“The emirate’s net asset position, which exceeds 200% of GDP despite the recent oil price decrease, ensures that Abu Dhabi continues to be in a strong position to leverage market windows,” Abu Dhabi’s department of finance said in the statement on Wednesday.
Oil-rich Abu Dhabi will consider raising more money via the bond markets to protect its finances from the impact of low oil prices, it said in a statement, after raising $10 billion in bonds this year.
Abu Dhabi’s fiscal balance depends almost entirely on revenue from hydrocarbon royalties and taxes and dividends received from ADNOC, its national oil company.
With the highest credit rating in the Gulf region, Abu Dhabi attracted strong demand from investors for its fundraising this year, which was split into a $7 billion bond in April and a $3 billion re-opening of the same deal last month.
“The emirate’s net asset position, which exceeds 200% of GDP despite the recent oil price decrease, ensures that Abu Dhabi continues to be in a strong position to leverage market windows,” Abu Dhabi’s department of finance said in the statement on Wednesday.
Wizz Air CEO says #AbuDhabi-JV to be bigger than initially planned | ZAWYA MENA Edition
Wizz Air CEO says Abu Dhabi-JV to be bigger than initially planned | ZAWYA MENA Edition:
Wizz Air's Abu Dhabi-based joint venture will now be bigger than originally planned with six aircraft up from three, the Hungary-based carrier's chief executive said on Wednesday.
The joint venture with Abu Dhabi state holding company ADQ will start flying in October, with tickets on sale from June to destinations in Europe, the Indian subcontinent, Middle East and Africa.
"We are looking at a larger scale start versus what we originally contemplated," Wizz CEO Jozsef Varadi told Reuters, saying that despite the challenge of COVID-19, Wizz saw opportunities emerging.
"We would be looking at a six aircraft start in the first six months."
Wizz Air's Abu Dhabi-based joint venture will now be bigger than originally planned with six aircraft up from three, the Hungary-based carrier's chief executive said on Wednesday.
The joint venture with Abu Dhabi state holding company ADQ will start flying in October, with tickets on sale from June to destinations in Europe, the Indian subcontinent, Middle East and Africa.
"We are looking at a larger scale start versus what we originally contemplated," Wizz CEO Jozsef Varadi told Reuters, saying that despite the challenge of COVID-19, Wizz saw opportunities emerging.
"We would be looking at a six aircraft start in the first six months."
Oil gains, with Brent above $40, as hopes rise for output cuts, recovery - Reuters
Oil gains, with Brent above $40, as hopes rise for output cuts, recovery - Reuters:
Oil rose on Wednesday, with Brent above $40 for the first time since March, as optimism mounted that major producers will extend output cuts and a recovery from the coronavirus pandemic will spur fuel demand.
Brent crude futures for August were up 78 cents, or 2%, at $40.35 a barrel, by 0636 GMT. The contract climbed to as high as $40.53, the highest since March 6, after gaining 3.3% on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures gained $1.06, or 2.9%, at $37.87 a barrel. It rose to as much as $38.18, also the highest since March 6. The contract ended the previous session up 3.9%.
Both benchmarks have risen sharply in recent weeks from the lows of April, buoyed by a continuing recovery in China, the epicentre of the virus outbreak, while other economies are slowly opening up after lockdowns to contain its spread.
Oil rose on Wednesday, with Brent above $40 for the first time since March, as optimism mounted that major producers will extend output cuts and a recovery from the coronavirus pandemic will spur fuel demand.
Brent crude futures for August were up 78 cents, or 2%, at $40.35 a barrel, by 0636 GMT. The contract climbed to as high as $40.53, the highest since March 6, after gaining 3.3% on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures gained $1.06, or 2.9%, at $37.87 a barrel. It rose to as much as $38.18, also the highest since March 6. The contract ended the previous session up 3.9%.
Both benchmarks have risen sharply in recent weeks from the lows of April, buoyed by a continuing recovery in China, the epicentre of the virus outbreak, while other economies are slowly opening up after lockdowns to contain its spread.
MIDEAST STOCKS- #Saudi index eases ahead of OPEC+ meet; others markets mixed - Agricultural Commodities - Reuters
MIDEAST STOCKS-Saudi index eases ahead of OPEC+ meet; others markets mixed - Agricultural Commodities - Reuters:
Major stock markets moved sideways in lacklustre trade on Wednesday, while shares in Saudi Arabia retreated ahead of an OPEC+ meeting on output cuts.
The Organization of the Petroleum Exporting Countries (OPEC) and other major producers including Russia, a group known as OPEC+, may extend production cuts of 9.7 million barrels per day (bpd), equivalent to about 10% of global production, into July or August, at an online meeting expected to be held on June 4.
The benchmark index of Saudi Arabia, the de-facto OPEC leader, eased 0.4%, with petrochemical maker Saudi Basic Industries losing 1.6% and utility firm Saudi Electricity sliding 4.1%.
Meanwhile, the kingdom’s non-oil private sector contracted for the third straight month in May as measures to stem the spread of the coronavirus continued to hit demand, although it shrank at a slower pace than in the previous two months, a survey showed.
Major stock markets moved sideways in lacklustre trade on Wednesday, while shares in Saudi Arabia retreated ahead of an OPEC+ meeting on output cuts.
The Organization of the Petroleum Exporting Countries (OPEC) and other major producers including Russia, a group known as OPEC+, may extend production cuts of 9.7 million barrels per day (bpd), equivalent to about 10% of global production, into July or August, at an online meeting expected to be held on June 4.
The benchmark index of Saudi Arabia, the de-facto OPEC leader, eased 0.4%, with petrochemical maker Saudi Basic Industries losing 1.6% and utility firm Saudi Electricity sliding 4.1%.
Meanwhile, the kingdom’s non-oil private sector contracted for the third straight month in May as measures to stem the spread of the coronavirus continued to hit demand, although it shrank at a slower pace than in the previous two months, a survey showed.