Oil slides over 3% to lowest since June on demand fears - Reuters:
Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell $1.43, or 3.4%, to $40.58 a barrel at 1127 GMT, and earlier slipped to $40.55, the lowest since June 29. U.S. West Texas Intermediate (WTI) crude CLc1 dropped $2.06, or over 5%, to $37.71.
On Monday, crude fell after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
“The price weakness is continuing today,” said Eugen Weinberg, analyst at Commerzbank. “We believe this is attributable first and foremost to demand concerns."
Tuesday 8 September 2020
Column: Oil market cycle slips into reverse - Kemp - Reuters
Column: Oil market cycle slips into reverse - Kemp - Reuters:
The oil market’s rebalancing has run out of momentum and gone into reverse over the last two months as the lingering coronavirus epidemic has resulted in a much slower than anticipated resumption of fuel demand.
In the middle of June, most forecasters expected the market to move into a substantial production-consumption deficit in the second half of the year and into 2021, leading to a sustained draw down in excess stocks.
Based on experience, the result should have been continued upward pressure on spot prices and a progressive shift from contango to backwardation in the structure of dated Brent and futures prices.
But over the last two months, spot prices have stopped rising, and even started to ease, while the calendar spreads between pairs of delivery dates have softened steadily.
Price moves are consistent with a market that remains over-supplied rather than under-supplied. Rather than in a tightening phase of the cycle, the oil market currently appears to be in a softening one.
The oil market’s rebalancing has run out of momentum and gone into reverse over the last two months as the lingering coronavirus epidemic has resulted in a much slower than anticipated resumption of fuel demand.
In the middle of June, most forecasters expected the market to move into a substantial production-consumption deficit in the second half of the year and into 2021, leading to a sustained draw down in excess stocks.
Based on experience, the result should have been continued upward pressure on spot prices and a progressive shift from contango to backwardation in the structure of dated Brent and futures prices.
But over the last two months, spot prices have stopped rising, and even started to ease, while the calendar spreads between pairs of delivery dates have softened steadily.
Price moves are consistent with a market that remains over-supplied rather than under-supplied. Rather than in a tightening phase of the cycle, the oil market currently appears to be in a softening one.
#SaudiArabia puts crown prince’s flagship charity Misk under review | Financial Times
Saudi Arabia puts crown prince’s flagship charity Misk under review | Financial Times:
Saudi Arabia’s leadership has ordered a review of Crown Prince Mohammed bin Salman’s flagship charitable foundation after it became embroiled in alleged scandals, according to a Saudi official.
The Saudi official told the Financial Times the review of Misk was ordered after the US justice department appeared to refer to the foundation and one of its senior officials in a lawsuit in November against two former Twitter employees and a third man accused of spying on users of the social media platform on behalf of Saudi Arabia.
Last month Misk and Bader al-Asaker, former secretary-general of the foundation, were named as defendants alongside Prince Mohammed in a civil lawsuit filed by Saad Aljabri, a former top Saudi intelligence official, who alleges that the crown prince plotted to assassinate him.
“It [the allegations in the lawsuits] has brought scrutiny to something that has done phenomenal things,” said the Saudi official, who did not want to be identified because of the sensitivity of the cases. “I’m pretty sure the crown prince was furious that this jewel was linked to this.”
Saudi Arabia’s leadership has ordered a review of Crown Prince Mohammed bin Salman’s flagship charitable foundation after it became embroiled in alleged scandals, according to a Saudi official.
The Saudi official told the Financial Times the review of Misk was ordered after the US justice department appeared to refer to the foundation and one of its senior officials in a lawsuit in November against two former Twitter employees and a third man accused of spying on users of the social media platform on behalf of Saudi Arabia.
Last month Misk and Bader al-Asaker, former secretary-general of the foundation, were named as defendants alongside Prince Mohammed in a civil lawsuit filed by Saad Aljabri, a former top Saudi intelligence official, who alleges that the crown prince plotted to assassinate him.
“It [the allegations in the lawsuits] has brought scrutiny to something that has done phenomenal things,” said the Saudi official, who did not want to be identified because of the sensitivity of the cases. “I’m pretty sure the crown prince was furious that this jewel was linked to this.”
For Gulf Arab States, China Is a Temporary Friend - Bloomberg
For Gulf Arab States, China Is a Temporary Friend - Bloomberg:
At a time of American retrenchment from the Middle East, there’s a tendency in foreign-policy circles to overestimate China’s influence in the region, even an expectation that it will take on some of the hegemon’s historic responsibilities in the region. But Beijing’s interests there are economic and tend to be concentrated in the Gulf Arab states. What’s more, they have a very limited lifespan, tied to Chinese demographic trends that point to declining demand for hydrocarbons over the next two decades.
This period will coincide with a fiscal dilemma for the oil and gas exporters of the Gulf Cooperation Council, when their own demographic burden of an aging population reaches retirement, even as pension systems go underfunded and social welfare states are eroded. The dilemma is especially acute for states that are now building a significant sovereign debt repayment schedule for years to come.
Little thought is being given in Washington to what comes when China’s imports of oil and gas tail off, leaving the region with neither superpower supervision nor a major consumer of its principal product. For the Gulf Arab states, a strategic partnership with China does not help achieve regional balance against Iran.
At a time of American retrenchment from the Middle East, there’s a tendency in foreign-policy circles to overestimate China’s influence in the region, even an expectation that it will take on some of the hegemon’s historic responsibilities in the region. But Beijing’s interests there are economic and tend to be concentrated in the Gulf Arab states. What’s more, they have a very limited lifespan, tied to Chinese demographic trends that point to declining demand for hydrocarbons over the next two decades.
This period will coincide with a fiscal dilemma for the oil and gas exporters of the Gulf Cooperation Council, when their own demographic burden of an aging population reaches retirement, even as pension systems go underfunded and social welfare states are eroded. The dilemma is especially acute for states that are now building a significant sovereign debt repayment schedule for years to come.
Little thought is being given in Washington to what comes when China’s imports of oil and gas tail off, leaving the region with neither superpower supervision nor a major consumer of its principal product. For the Gulf Arab states, a strategic partnership with China does not help achieve regional balance against Iran.
Oil Glut Trade on the Brink of Making Comeback in Blow for OPEC+ - Bloomberg
Oil Glut Trade on the Brink of Making Comeback in Blow for OPEC+ - Bloomberg:
An oil trade that only works when the market is glutted may be about to make a comeback. That’s bad news for producers withholding near-record amounts of crude in a coordinated bid to help prop up prices.
The global Brent crude benchmark is currently trading quite deeply in a bearish pattern known contango, where the most immediate prices are far below those for contracts for supply in later months. The discount has gotten so big that it appears to cover the nominal cost of hiring 1,200-feet long supertankers. In other words: traders can buy cargoes now, stash them on ships, and sell them later at a profit.
Such a development would be viewed with concern by the likes of Saudi Arabia and Russia, the two nations who led the deepest global oil production cuts in history. In recent months, they have been carefully trying to boost supply to bring it slowly back toward normal. The contango implies that the market is so oversupplied that one of the industry’s most expensive forms of storage is becoming a viable way to hoard barrels -- on paper at least.
An oil trade that only works when the market is glutted may be about to make a comeback. That’s bad news for producers withholding near-record amounts of crude in a coordinated bid to help prop up prices.
The global Brent crude benchmark is currently trading quite deeply in a bearish pattern known contango, where the most immediate prices are far below those for contracts for supply in later months. The discount has gotten so big that it appears to cover the nominal cost of hiring 1,200-feet long supertankers. In other words: traders can buy cargoes now, stash them on ships, and sell them later at a profit.
Such a development would be viewed with concern by the likes of Saudi Arabia and Russia, the two nations who led the deepest global oil production cuts in history. In recent months, they have been carefully trying to boost supply to bring it slowly back toward normal. The contango implies that the market is so oversupplied that one of the industry’s most expensive forms of storage is becoming a viable way to hoard barrels -- on paper at least.
Iran Taps Its Sovereign Wealth Fund to Calm Stock Market Jitters - Bloomberg
Iran Taps Its Sovereign Wealth Fund to Calm Stock Market Jitters - Bloomberg:
Iran will set aside 1% of its sovereign wealth fund to stabilize the country’s stock market after its main index of shares lost over a fifth of its value in a month, sparking fears of further falls.
The fund will deposit the unspecified amount on Saturday, government spokesman Ali Rabiei said in a press conference on Tuesday, according to the semi-official Mehr News Agency. The report didn’t give details of how the mechanism would work.
The Tehran Stock Exchange’s overall index was down 2.3% to 1,570,049 at 3:15 p.m. in Tehran, according to the bourse’s website. Shares rose to a record high of 2,065,114 on Aug. 9, capping a monthslong rally spurred by a government decision to sell state assets worth about $2 billion to aid the fight against the coronavirus.
The National Development Fund, founded in 2011 and derived mainly from oil income, hasn’t published data on its size since the U.S. reimposed sanctions on Iran in 2018. In May 2016, Mehr said it stood at $80 billion.
Iran will set aside 1% of its sovereign wealth fund to stabilize the country’s stock market after its main index of shares lost over a fifth of its value in a month, sparking fears of further falls.
The fund will deposit the unspecified amount on Saturday, government spokesman Ali Rabiei said in a press conference on Tuesday, according to the semi-official Mehr News Agency. The report didn’t give details of how the mechanism would work.
The Tehran Stock Exchange’s overall index was down 2.3% to 1,570,049 at 3:15 p.m. in Tehran, according to the bourse’s website. Shares rose to a record high of 2,065,114 on Aug. 9, capping a monthslong rally spurred by a government decision to sell state assets worth about $2 billion to aid the fight against the coronavirus.
The National Development Fund, founded in 2011 and derived mainly from oil income, hasn’t published data on its size since the U.S. reimposed sanctions on Iran in 2018. In May 2016, Mehr said it stood at $80 billion.
#UAE planning first official visit to Israel on Sept. 22: source - Reuters
UAE planning first official visit to Israel on Sept. 22: source - Reuters:
The United Arab Emirates is planning to make its first official visit to Israel on Sept. 22 to build up the countries’ agreement to normalize relations, a source familiar with the provisional itinerary said on Monday.
Israeli officials declined to comment and UAE officials did not respond to calls seeking comment.
The two countries announced on Aug. 13 they would normalize diplomatic relations in a U.S.-brokered deal that was hailed as a breakthrough by Washington and Israel but spurned by the Palestinians.
The UAE delegation’s trip to Israel, which has yet to be finalized, would come in reciprocation of a groundbreaking trip to Abu Dhabi last week by senior Israeli and U.S. envoys, the source told Reuters.
The United Arab Emirates is planning to make its first official visit to Israel on Sept. 22 to build up the countries’ agreement to normalize relations, a source familiar with the provisional itinerary said on Monday.
Israeli officials declined to comment and UAE officials did not respond to calls seeking comment.
The two countries announced on Aug. 13 they would normalize diplomatic relations in a U.S.-brokered deal that was hailed as a breakthrough by Washington and Israel but spurned by the Palestinians.
The UAE delegation’s trip to Israel, which has yet to be finalized, would come in reciprocation of a groundbreaking trip to Abu Dhabi last week by senior Israeli and U.S. envoys, the source told Reuters.
Oil slides over 3% to lowest since June on demand fears - Reuters
Oil slides over 3% to lowest since June on demand fears - Reuters:
Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell $1.43, or 3.4%, to $40.58 a barrel at 1127 GMT, and earlier slipped to $40.55, the lowest since June 29. U.S. West Texas Intermediate (WTI) crude CLc1 dropped $2.06, or over 5%, to $37.71.
On Monday, crude fell after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell $1.43, or 3.4%, to $40.58 a barrel at 1127 GMT, and earlier slipped to $40.55, the lowest since June 29. U.S. West Texas Intermediate (WTI) crude CLc1 dropped $2.06, or over 5%, to $37.71.
On Monday, crude fell after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #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.
Middle East Finance: #Bahrain to Sell Dollar Bonds (BHD USD) and Sukuk - Bloomberg
Middle East Finance: Bahrain to Sell Dollar Bonds (BHD USD) and Sukuk - Bloomberg:
Bahrain started marketing a three-tranche dollar bond to help plug one of the biggest budget deficits in the world.
The Gulf nation is selling benchmark-size seven-year Islamic bonds as well as conventional debt with a duration of 12 years and/or 30 years, according to a person familiar with the matter, who’s not authorized to speak publicly and asked not to be identified. Benchmark typically means the equivalent of at least $500 million.
Bank ABC, Citigroup Inc, Gulf International Bank BSC, HSBC Holdings Plc, National Bank of Bahrain BSC and Standard Chartered Plc are the lead managers for the sale and will arrange a global investor call on Tuesday.
Bahrain started marketing a three-tranche dollar bond to help plug one of the biggest budget deficits in the world.
The Gulf nation is selling benchmark-size seven-year Islamic bonds as well as conventional debt with a duration of 12 years and/or 30 years, according to a person familiar with the matter, who’s not authorized to speak publicly and asked not to be identified. Benchmark typically means the equivalent of at least $500 million.
Bank ABC, Citigroup Inc, Gulf International Bank BSC, HSBC Holdings Plc, National Bank of Bahrain BSC and Standard Chartered Plc are the lead managers for the sale and will arrange a global investor call on Tuesday.
Remittances from #UAE nearly halved due to job losses, furloughs, pay cuts | ZAWYA MENA Edition
Remittances from UAE nearly halved due to job losses, furloughs, pay cuts | ZAWYA MENA Edition:
Remittances in the UAE have recently dropped to record lows amid job losses and growing uncertainty, an industry source told Zawya.
Outbound money transfers during the coronavirus pandemic, particularly from March to June, dropped by 40 percent when compared to the same period last year, according to Rajiv Raipancholia, the chief executive officer (CEO) and managing director of Orient Exchange.
“We have seen a reduced number of transactions these past few months. This is because of job losses, reduced salaries and also due to unpaid leave,” Raipancholia told Zawya.
Expatriates in the UAE and around the world send billions of US dollars per year, a huge chunk of which serves as a lifeline to a significant number of poor and vulnerable families. Experts had forecast that the amount of money that these workers remit back to their home countries will drop as a result of the pandemic.
The World Bank predicted that global remittances could fall sharply by about 20 percent in 2020, the sharpest decline in recent history.
Remittances in the UAE have recently dropped to record lows amid job losses and growing uncertainty, an industry source told Zawya.
Outbound money transfers during the coronavirus pandemic, particularly from March to June, dropped by 40 percent when compared to the same period last year, according to Rajiv Raipancholia, the chief executive officer (CEO) and managing director of Orient Exchange.
“We have seen a reduced number of transactions these past few months. This is because of job losses, reduced salaries and also due to unpaid leave,” Raipancholia told Zawya.
Expatriates in the UAE and around the world send billions of US dollars per year, a huge chunk of which serves as a lifeline to a significant number of poor and vulnerable families. Experts had forecast that the amount of money that these workers remit back to their home countries will drop as a result of the pandemic.
The World Bank predicted that global remittances could fall sharply by about 20 percent in 2020, the sharpest decline in recent history.
Banking outlook: Kuwaiti banks to post lower profits, deposit growth to plunge | ZAWYA MENA Edition
Banking outlook: Kuwaiti banks to post lower profits, deposit growth to plunge | ZAWYA MENA Edition:
Kuwait’s banking sector will continue to face pressure in terms of profitability and asset quality for the rest of the year, said Markaz.
Kuwait Financial Centre’s recent report gave an indepth insight into the impact of COVID-19 credit demand, deposit growth, and net interest margin for the banking sector, as well as non-performing loans (NPL) and profitability prospects over the coming quarters.
Profitability for 2020 is expected to fall, with net income reducing from KD 1.202 billion in 2019 to KD 592 million in 2020, due to lower operating income consequent to contracting Net Interest Margins and lower non-interest income due to subdued business activity, the report said.
For listed banks, deposit growth is expected to fall to 5.0 percent in 2020, down from 8.1 percent last year.
Credit demand is expected to be moderate at 4.0% on a year-on-year basis in 2020 due to the fall in economic activity and output caused by the restrictions laid by the government.
Kuwait’s banking sector will continue to face pressure in terms of profitability and asset quality for the rest of the year, said Markaz.
Kuwait Financial Centre’s recent report gave an indepth insight into the impact of COVID-19 credit demand, deposit growth, and net interest margin for the banking sector, as well as non-performing loans (NPL) and profitability prospects over the coming quarters.
Profitability for 2020 is expected to fall, with net income reducing from KD 1.202 billion in 2019 to KD 592 million in 2020, due to lower operating income consequent to contracting Net Interest Margins and lower non-interest income due to subdued business activity, the report said.
For listed banks, deposit growth is expected to fall to 5.0 percent in 2020, down from 8.1 percent last year.
Credit demand is expected to be moderate at 4.0% on a year-on-year basis in 2020 due to the fall in economic activity and output caused by the restrictions laid by the government.
Oil falls below $42 on demand fears as virus cases rise - Reuters
Oil falls below $42 on demand fears as virus cases rise - Reuters:
Oil fell below $42 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell 50 cents, or 1.2%, to $41.51 a barrel at 0818 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 dropped $1.05, or nearly 3%, to $38.72.
On Monday, crude fell after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
Oil fell below $42 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell 50 cents, or 1.2%, to $41.51 a barrel at 0818 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 dropped $1.05, or nearly 3%, to $38.72.
On Monday, crude fell after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
MIDEAST STOCKS-Major Gulf markets gain in early trade | Reuters
MIDEAST STOCKS-Major Gulf markets gain in early trade | Reuters:
Major stock markets in the Gulf rose in early trade on Tuesday, with property shares supporting the Saudi index.
Saudi Arabia’s benchmark index gained 0.4%, with Jabal Omar Development advancing 3.1% and oil behemoth Saudi Aramco adding 0.7%.
Dubai’s main share index rose 0.3%, helped by a 1.3% gain in logistic firm Aramex and a 1.4% increase in shopping malls operator Emaar Malls.
In Abu Dhabi, the index added 0.3%, with the country’s largest lender First Abu Dhabi Bank rising 0.2%.
The United Arab Emirates federal government posted a second-quarter budget surplus of around 9.75 billion dirhams ($2.65 billion), state news agency WAM said on Monday, up from a surplus of 1.8 billion dirhams in the first quarter.
Revenues in the second quarter were at 34.744 billion dirhams and expenditures were at 24.997 billion dirhams, WAM said, citing a finance ministry report.
The Qatari index edged up 0.1%, driven by a 1.4% gain in Commercial Bank.
The lender has hired banks to arrange a potential issuance of five-year U.S. dollar-denominated bonds, a document showed on Monday.
Major stock markets in the Gulf rose in early trade on Tuesday, with property shares supporting the Saudi index.
Saudi Arabia’s benchmark index gained 0.4%, with Jabal Omar Development advancing 3.1% and oil behemoth Saudi Aramco adding 0.7%.
Dubai’s main share index rose 0.3%, helped by a 1.3% gain in logistic firm Aramex and a 1.4% increase in shopping malls operator Emaar Malls.
In Abu Dhabi, the index added 0.3%, with the country’s largest lender First Abu Dhabi Bank rising 0.2%.
The United Arab Emirates federal government posted a second-quarter budget surplus of around 9.75 billion dirhams ($2.65 billion), state news agency WAM said on Monday, up from a surplus of 1.8 billion dirhams in the first quarter.
Revenues in the second quarter were at 34.744 billion dirhams and expenditures were at 24.997 billion dirhams, WAM said, citing a finance ministry report.
The Qatari index edged up 0.1%, driven by a 1.4% gain in Commercial Bank.
The lender has hired banks to arrange a potential issuance of five-year U.S. dollar-denominated bonds, a document showed on Monday.