Wednesday 25 November 2020

Oil’s Surge Toward $50 Risks Giving OPEC+ Yet Another Headache - Bloomberg

Oil’s Surge Toward $50 Risks Giving OPEC+ Yet Another Headache - Bloomberg

With OPEC+ just days from meeting, those countries who favor ratcheting up oil production may be finding some support for their arguments from surging prices.

Headline futures contracts jumped 30% this month with Brent at one point on Wednesday hitting $48.75 a barrel, the highest since March. Critically though, a much more fundamental shift has taken place in the forward curve, which offers clues about traders’ perspectives on supply and demand -- both now and in future. Large parts of the curve are now trading in a structure known as backwardation, suggesting a clamor for barrels. Just a week ago, they were in contango and pointing to surplus.



The Organization of Petroleum Exporting Countries and its allies, who will meet on Monday and Tuesday, are already grappling with a difficult market to evaluate. Oil demand has rarely been so volatile. A supply glut -- built up when coronavirus first emerged -- remains but is being eroded. Adding supplies again in January would risk reversing the strength that has grown in recent weeks.

“The more relaxed ministers feel because prices are rising, the more difficult it can be to achieve consensus on further market stabilization measures,” Standard Chartered analyst Paul Hornsell wrote in a report. The bank sees a 3-month extension of curbs as the market’s minimum expectation when OPEC and its allies meet early next week.

The shift in the forward curve brings another challenge: average Brent prices for 2021 and 2022 are now above $48 a barrel, meaning producers from outside the group can lock in output for years ahead at the best levels in months. Some already are.

The longer OPEC+ keeps supplies constrained, the more support those companies and countries get.

Oil rallies past eight-month high on U.S. crude inventory draw, vaccine hopes | Reuters

Oil rallies past eight-month high on U.S. crude inventory draw, vaccine hopes | Reuters

Oil prices climbed nearly 2% to their highest in more than eight months on Wednesday, as data showing a surprise drop in weekly U.S. crude inventories extended a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.

Brent crude rose 75 cents, or 1.6%, to settle at $48.61 a barrel, its highest since early March.

U.S. West Texas Intermediate crude also closed at its highest since early March, rising 80 cents, or 1.8%, to $45.71.

Both benchmarks, which gained 4% on Tuesday, rose for a fourth straight session.

U.S. crude inventories fell by 754,000 barrels last week, government data showed, surprising analysts who in a Reuters poll had predicted a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels.

Oil Tanker Owner Says Ship Attacked in #Saudi Arabian Red Sea - Bloomberg

Oil Tanker Owner Says Ship Attacked in Saudi Arabian Red Sea - Bloomberg

An oil tanker came under attack while at a Saudi Arabian terminal in the Red Sea about 125 miles north of the country’s border with Yemen, according to the vessel’s owner.

The Agrari, a so-called Aframax-class vessel able to haul about 700,000 barrels of oil, was holed about 1 meter above the waterline in the incident, a statement distributed on behalf of the carrier’s owner said. The incident took place as the ship was preparing to leave a berth at the Shuqaiq facility, having finished unloading its cargo, it said.

It wasn’t clear who launched the attack and no one claimed responsibility. A few hours after the incident, state TV reported that Saudi-led coalition forces were destroying an explosives-laden boat and a commercial vessel was damaged in the process.

The incident wasn’t at a crude oil export facility and will almost certainly have zero effect Saudi Arabia’s capacity to produce or export oil. It follows a separate low-level attack on Monday, in which Yemen’s Houthis fired a missile at a Saudi Aramco fuel depot in Jeddah, the kingdom’s second-biggest city. The resulting blaze was extinguished in 40 minutes.

Deep losses for Middle East carriers to continue in 2021: IATA | ZAWYA MENA Edition

Deep losses for Middle East carriers to continue in 2021: IATA | ZAWYA MENA Edition

Airlines in the Middle East will see an improvement in business next year after a difficult period in 2020, but they will continue to burn through cash, with estimated losses in the industry expected to reach $3.3 billion, according to the International Air Transport Association (IATA).

The projected losses in 2021 will be nearly half this year’s revenue drop of $7.1 billion, which is still a “worrisome” picture for a region that is largely dependent on revenues from the tourism and air transport sectors, which both contribute $13 billion to the gross domestic product (GDP) and support 3.4 million jobs, said Muhammad Ali Albakri, IATA regional vice president for Africa and the Middle East.

“The forecast for 2021 is not that much better, but it is better than 2020. However, it's still in the negative territory in terms of passenger traffic and revenues,” Albakri said in a media briefing on Wednesday.

According to Albakri, the current landscape in the Middle East’s air travel industry is worrisome. He noted that prior to the crisis, airlines in the region were witnessing double-digit growth, while aviation hubs served a record number of destinations, with city pairs accounting for 1,060 as of April 2019.

MIDEAST STOCKS-Major Gulf shares extend gains on upbeat global outlook | Nasdaq

MIDEAST STOCKS-Major Gulf shares extend gains on upbeat global outlook | Nasdaq

Major Gulf markets rallied on Wednesday as investors cheered the prospects of a faster-than-expected global economic recovery, driven mainly by encouraging news on the COVID-19 vaccine development front.

Financial markets worldwide have gained in the past couple of weeks as U.S. drugmakers Pfizer Inc PFE.N and Moderna Inc MRNA.O as well as British firm AstraZeneca AZN.L released positive data on the effectiveness of their vaccine candidates.

Aiding sentiment, the uncertainty over presidential transition in the United States seemed ending with President Donald Trump's administration clearing the way for President-elect Joe Biden to prepare for the start of his administration.

Oil, a key catalyst for the economies in the Gulf region, rose for the fourth straight session as the market shrugged off an industry report showing U.S. crude stockpiles rose more than expected, extending a rally driven by vaccine hopes. O/R

Saudi Arabia's benchmark .TASI closed 0.6% higher. National Commercial Bank 1180.SE gained more than 2% and was the top gainer on the index. Another lender Al-Rajhi Bank 1120.SE put on 0.5%.

The Saudi benchmark has now gained for four consecutive sessions.

Dubai's main share index .DFMGI finished 0.6% higher, with Dubai Islamic Bank DISB.DU and property firm Emaar Properties EMAR.DU leading the gains, ending the session 0.9% higher each.

The Dubai benchmark has gained for four straight sessions now.

The Abu Dhabi index .ADI bounced back from the previous session's losses to gain about 0.9%. Lenders First Abu Dhabi Bank FAB.AD appreciated 0.9%, while real estate firm Aldar Properties ALDAR.AD put on more than 4%.

Elsewhere, in Qatar, the blue-chip index .QSI added 0.4%, buoyed by Industries Qatar IQCD.QA, which gained 2.4% in the session.

Israeli telecoms firm Partner eyes more cost cuts after third quarter loss | Reuters

Israeli telecoms firm Partner eyes more cost cuts after third quarter loss | Reuters

Israeli telecoms group Partner Communications moved to a net loss in the third quarter, citing a loss of roaming revenue due to a steep decline in tourists caused by the coronavirus pandemic.

Partner, Israel’s second-largest mobile operator, said on Wednesday it lost 5 million shekels ($1.5 million) in the July-September period, compared with a profit of 7 million shekels a year earlier.

Revenue dropped 3% to 800 million shekels, hurt by restrictions on international travel that lowered roaming services and reduced activity in shopping malls, while the sector as a whole remains competitive and faces price erosion.

“Despite the effects of the coronavirus crisis, Partner’s results exhibit stability and resilience in the third quarter due to the consistent growth in the fixed-line segment, which contributes to a revenue mix that establishes long-term financial strength,” said CEO Isaac Benbenisti.

Rent relief hits profits at Israeli shopping mall operator Azrieli | Reuters

Rent relief hits profits at Israeli shopping mall operator Azrieli | Reuters

Azrieli Group, one of Israel’s largest shopping mall operators, on Wednesday reported lower third-quarter profits, citing rent relief given to its retail tenants due to the coronavirus outbreak.

Azrieli said it earned 192 million shekels ($58 million) in the third quarter, down from 289 million shekels a year earlier. It said profit was also impacted by higher financing expenses.

The company said that excluding the lockdown periods in March, April, May and September aimed at containing the COVID-19 virus, store revenue between January and Sept 18 was up 1.2% over the same period last year.

The company invested 307 million shekels in the quarter in investment properties, both to develop and construct new properties and to upgrade existing ones.

#UAE's Ministry of Economy sets up anti-money laundering department | ZAWYA MENA Edition

UAE's Ministry of Economy sets up anti-money laundering department | ZAWYA MENA Edition

The UAE’s Ministry of Economy (MoE) has developed a strategic plan to combat money laundering practices in the country by setting up a specialized department called the ‘Anti-Money Laundering Department’

The new department, acting within the structure of the MoE, aims to create awareness, and to regulate all activities listed under the business sector and specific non-financial professions.

Abdulla Bin Touq Al Marri, UAE Minister of Economy said that the Anti-Money Laundering Department will add further value to the progress made in strengthening the legislative and regulatory framework to confront money laundering in the country during the past three years, which is being led by the Supreme Committee for Combating Money Laundering.

The designated non-financial business and professions sector, which is supervised by MoE, with regard to combating money laundering, includes a wide range of non-financial sectors and activities that are most exposed to the risks of money laundering, according to a statement from the MoE.

#UAE's ADGM to sign MOU with Israel's securities authority on fintech | Reuters

UAE's ADGM to sign MOU with Israel's securities authority on fintech | Reuters

Abu Dhabi’s financial centre, Abu Dhabi Global Market (ADGM), will sign a memorandum of understanding with Israel Securities Authority and Israel’s biggest lender, Bank Hapoalim, to support financial technology, ADGM chairman Ahmed Ali al-Sayegh said on Wednesday.

After the United Arab Emirates (UAE) and Israel agreed to normalise relations in August, the two countries have signed a host of accords to boost economic and business ties.

Last month, the two countries signed an agreement that would give incentives and protection to investors who make investments in each other’s countries.

Abdulhamid Saeed Alahmadi, governor of the Central Bank of the UAE, said at the same conference the central bank will issue a series of regulations over the coming months on fintech.

Mubadala seeks Israeli partners on technology investment | Reuters

Mubadala seeks Israeli partners on technology investment | Reuters

Abu Dhabi state investor Mubadala Investment Co plans to identify potential fund partners in Israel and find high-growth companies to co-invest in, the head of its ventures unit said on Wednesday.

“There will be interesting opportunities with joint funds or joint ventures, but we are still early on in evaluating this,” Ibrahim Ajami told a financial technology conference in Abu Dhabi.

He said Mubadala has co-invested with Israeli investors in the United States and Europe, but closer ties between the United Arab Emirates (UAE) and Israel opens up a significant opportunity for investments.

After the UAE and Israel agreed to normalise relations in August, the two countries have signed a host of accords to boost economic and business ties.

“We are always excited about Silicon Valley. But we are also looking at Europe, we’re looking at the Middle East, we’re looking at India and we would like to be very active in China,” Ajami said.

#Saudi Aramco announces completion of $8bln international bond issuance | ZAWYA MENA Edition

Saudi Aramco announces completion of $8bln international bond issuance | ZAWYA MENA Edition

The world’s largest oil producer Saudi Aramco confirmed on Wednesday it has just completed the issuance of $8 billion bonds that will help cover a multi-billion-dollar payout for its shareholders.

The oil giant kicked off the international bond issuance on November 16, marking its first time to return to the debt markets since last year.

The issuance of multi-year tranche bonds comes as the state-owned firm looks to raise cash amid low oil prices and the COVID-19 pandemic.

In a bourse filing to the Saudi Stock Exchange (Tadawul), Aramco said it has issued a total of 40,000 bonds/ sukuk, with a yield of 1.25 percent for bonds maturing in three years, 1.625 percent for bonds maturing in five years, 2.25 percent for 10 years, 3.25 percent for 30 years and 3.5 percent for bonds maturing in 50 years.

It’s the first time the oil giant has offered a bond maturity of 50 years.

MIDEAST STOCKS-Gulf markets rally on upbeat global economic outlook | Nasdaq

MIDEAST STOCKS-Gulf markets rally on upbeat global economic outlook | Nasdaq

Most major Gulf markets extended gains on Wednesday as investors cheered prospects of a faster-than-expected global economic recovery, driven mainly by encouraging news on the COVID-19 vaccine development front.

Financial markets worldwide have gained in the past couple of weeks as U.S. drugmakers Pfizer Inc PFE.N and Moderna Inc MRNA.O and British firm AstraZeneca AZN.L released positive data on the effectiveness of their vaccine candidates.

Aiding sentiment, the uncertainty over presidential transition in the United States seemed ending with President Donald Trump's administration clearing the way for President-elect Joe Biden to prepare for the start of his administration.

Oil, a key catalyst for the economies in the Gulf region, rose for the fourth straight session as the market shrugged off an industry report showing U.S. crude stockpiles rose more than expected, extending a rally driven by vaccine hopes. O/R

Saudi Arabia's benchmark index .TASI was up 0.6%. National Commercial Bank 1180.SE gained 1.9%, while Saudi Basic Industries Corp 2010.SE advanced 1.5%.

Index heavyweight Saudi Aramco 2222.SE led the losses, with the state oil firm slipping 0.4%, while National Commercial Bank 1180.SE shed 0.5%.

The Saudi benchmark is on track to gain for a fourth consecutive session.

Dubai's main share index .DFMGI tacked on 0.8%, with Dubai Islamic Bank DISB.DU and property firm Emaar Properties EMAR.DU leading the gains, up 1.8% and 1.2%, respectively.

The Abu Dhabi index .ADI bounced back from the previous session's losse to gain about 0.2%. Lenders Abu Dhabi Commercial Bank ADCB.AD and First Abu Dhabi Bank FAB.AD led the gains, putting on 0.8% and 0.2%, respectively.

In Qatar also, the index .QSI gained about 0.2%, buoyed by Industries Qatar IQCD.QA, which traded up 1.4%.

Emirates Sees 2022 Return of Jumbo A380s as Travel Recovers - Bloomberg

Emirates Sees 2022 Return of Jumbo A380s as Travel Recovers - Bloomberg

Emirates sees a sharp recovery in demand for air travel next year as coronavirus vaccines are distributed around the world, meaning the carrier’s full fleet of jumbo Airbus SE A380 jets could return to the skies by early 2022.

Progress on the production and transportation of inoculations should be evident by the second quarter of next year, President Tim Clark said in an interview with Bloomberg TV on Wednesday. That will lead to a release in pent-up demand “across all segments” led by those who have had to shelve travel plans during the pandemic, he said.

“I can see demand for travel moving at pace,” Clark said. “My own view, and it’s always an optimistic view, is by end of next calendar year or the first quarter of 2022 we’ll have all our A380s flying.”

The show of confidence from the veteran airline executive contrasts with a deteriorating outlook for airlines facing the worse crisis the industry has ever suffered. Bankruptcies are happening at a record pace, while the industry’s chief lobby on Tuesday estimated carriers will lose $157 billion this year and next because of the pandemic’s devastating impact on travel.

#Dubai Raises $1.5 Billion From Private Bond Placement - Bloomberg

Dubai Raises $1.5 Billion From Private Bond Placement - Bloomberg

Dubai’s government raised $1.5 billion this week by reopening existing debt instruments, data compiled by Bloomberg show.

Emirates NBD Capital, a unit of Dubai’s biggest bank, was the sole manager of the transactions on Nov. 23 and 24, according to the data.

The transactions:
  • $150 million and $100 million from reopening a September facility of $1 billion {DUGB 3.9 09/09/50 Govt DES <GO>}
  • $300 million and $200 million from reopening a January 2013 facility of $500 million {DUGB 5 ¼ 01/30/43 Govt DES <GO>}
  • $300 million and $200 million from reopening a September Islamic facility of $1 billion {DUGB 2.763 09/09/30 Govt DES <GO>}
  • $150 million and $100 million from reopening an April 2014 facility of $750 million {DUGB 5 04/30/29 Govt DES <GO>}
The yield on Dubai’s bond due 2050 was at 4.17% on Tuesday, compared
with a high of 4.39% in September.

#Saudi Exports Drop in September, With Oil Revenue Down 39% - Bloomberg

Saudi Exports Drop in September, With Oil Revenue Down 39% - Bloomberg

Saudi Arabia’s exports fell by nearly a third in September from a year ago, driven largely by a slump in oil demand.

Total revenue from exports was 53.3 billion riyals ($14.2 billion) compared with 77.3 billion riyals for the same month last year, according to a statement from the General Authority for Statistics. Oil exports slumped 38.7% to about 35 billion riyals.

  • Non-oil exports declined 9.3% compared to a year ago to about 18 billion riyals, after having risen in August
  • Plastics and rubber products dropped 13.4%, weighing the most on the overall drop in non-oil revenue
  • Share of oil exports in total exports decreased to 65.8% this year from 74% in 2019
  • China was the top destination for Saudi exports, followed by the U.S. and the United Arab Emirates

Oil shrugs off inventory gain amid sustained vaccine rally | Reuters

Oil shrugs off inventory gain amid sustained vaccine rally | Reuters

Oil rose for the fourth straight session on Wednesday as the market shrugged off an industry report showing U.S. crude stockpiles rose more than expected, extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.

Brent crude was up 44 cents, or 0.9%, at $48.30 a barrel by 0743 GMT, having risen almost 4% in the previous session. West Texas Intermediate crude gained 33 cents, or 0.7%, to $45.24, after rising more than 4% on Tuesday.

Both contracts are at their highest since early March and have rallied around 9% in the last four days.

“With an orderly Presidential transition in sight, vaccine boosters and expectations that OPEC+ will extend production cuts next week, oil markets completely ignored the unexpected 3.8 million-barrel climb in API U.S. crude inventories,” said Jeffrey Halley, senior market analyst at OANDA.