Oil Edges Higher Alongside Equities With Stimulus Hopes Growing - Bloomberg

Oil Edges Higher Alongside Equities With Stimulus Hopes Growing - Bloomberg

Oil gained for a third day as a Democratic sweep in the U.S. stoked optimism around the prospect of more fiscal stimulus under the incoming Joe Biden administration.

The slight rise of less than 1% on Thursday left futures in New York at their highest since late February. Prices tracked a move higher in equities as Democrats are poised to take control of the Senate, House and presidency, setting the stage for additional virus aid that could boost ailing fuel demand.

With the Biden administration taking over and Democrats set to control both chambers, “it looks like stimulus packages will be swiftly approved,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. “That’s going to hopefully provide enough economic relief to keep petroleum demand elevated.”

PRICES
WTI for February delivery gained 20 cents to settle at $50.83 a barrel Brent for March settlement rose 8 cents to $54.38 a barrel Both benchmarks remain at the highest since late February

Oil Market Gears Up for $9 Billion Index Buying Spree - Bloomberg

Oil Market Gears Up for $9 Billion Index Buying Spree - Bloomberg

Tens of billions of dollars worth of commodity investments are about to be switched around in a move that’s set to cause a wave of oil-futures buying.

While the move happens every year, crude’s 20% decline in 2020 means that the value of oil index investments has been far below its target for months. As a result, as much as $9 billion of oil contracts could be purchased over the five days of re-balancing that start Friday, according to Citigroup Inc., at a time when the market is already surged to 10-month highs.

The move affects the world’s two biggest commodities indexes -- the S&P GSCI Index and the Bloomberg Commodities Index. Crude has recovered from its coronavirus-driven rout and so far this year has been benefiting from Saudi Arabia’s unilateral output cuts, a surge of investments to hedge reflation and coronavirus vaccines. Markets are now abuzz with talk of the next tailwind for prices: commodity indexes plowing into another 80 to 100 million barrels of crude futures contracts.

“It’s a big deal,” said Gary Ross, a veteran oil market watcher and chief executive officer of Black Gold Investors LLC. “If you start increasing financial length by 80-100 million barrels, you push up the price $2-$3, all other things being equal.”

Oil touches fresh 11-month highs, shrugging off unrest in Washington | Reuters

Oil touches fresh 11-month highs, shrugging off unrest in Washington | Reuters

Oil prices rose on Thursday, shrugging off surprising political unrest in the United States, as markets remain focused on Saudi Arabia’s pledge to cut oil output by more than expected.

Brent crude rose 28 cents to $54.58 a barrel by 11:35 a.m. EST (1635 GMT) after touching $54.90, a fresh high not seen since before the first COVID-19 lockdowns in the West.

U.S. West Texas Intermediate (WTI) was up 30 cents to $50.93, after hitting a high at $51.28.

On Wednesday, a mob of President Donald Trump’s supporters stormed the U.S. Capitol after he urged them to protest Congress’s validation of his election loss. Crude futures prices briefly dipped during the unrest.

OPEC: The Real Price of #SaudiArabia’s Oil Cuts - Bloomberg

OPEC: The Real Price of Saudi Arabia’s Oil Cuts - Bloomberg

Saudi Arabia’s $3 billion insurance premium to protect against falling oil prices will end up being a lot smaller than it seems at first sight. That holds even if demand turns out to be stronger than the kingdom seems to fear.

This week’s OPEC+ meeting of oil producers broke up in disarray on Monday night, with Russia pressing for output targets to be raised by 500,000 barrels a day in February. Most other members wanted to leave them unchanged as the coronavirus continues to roil global economies and the recovery in demand remains fragile.

Saudi Arabia appeared particularly worried. In his opening remarks, the country’s oil minister warned repeatedly against squandering gains made by the group’s hard-won sacrifices last year for “an immediate, but illusory, benefit.” He went so far as to suggest it was even necessary to reverse the output increase that had just come into effect.

And yet, in the end, the collective responsibility previously demanded by the Saudis was jettisoned and everyone got what they were asking for. The output targets for most countries will remain unchanged in February and March. Russia and Kazakhstan can proceed with the increases they wanted, albeit spread over two months. And Saudi Arabia will make its cut — and then some.

#Qatar News: Fitch Sees Banks Benefiting From #SaudiArabia Fund Inflows - Bloomberg

Qatar News: Fitch Sees Banks Benefiting From Saudi Arabia Fund Inflows - Bloomberg

Saudi Arabian clients are expected to start shifting some of their funds back to Qatar after four Arab states agreed to restore ties with the gas-rich nation after a three-year regional split, according to Fitch Ratings.

“This will provide Qatari banks with an additional pool of liquidity, which will diversify their funding base, reduce their reliance on price-sensitive government-related entity and corporate deposits, and cut their funding costs,” the rating agency said.

Saudi Arabia, Bahrain, the United Arab Emirates and Egypt on Tuesday agreed to restore ties with Qatar after a sustained U.S. push for the countries to unite against Iran. The wider economic and financial implications of resolving the dispute will be felt particularly in Qatar, which had increasingly turned to Iran and Turkey for support.

The Saudi-led bloc’s standoff with Qatar led to the withdrawal of about $30 billion of non-resident deposits from the country’s banks in June-October 2017, mainly by Saudi depositors and some from the UAE, according to Fitch. It tightened foreign-currency liquidity, and Qatari authorities stepped in with $40 billion of sovereign liquidity injections, Fitch said.

#Saudi-Backed Lucid in Talks for Electric Car Factory Near Jeddah - Bloomberg

Saudi-Backed Lucid in Talks for Electric Car Factory Near Jeddah - Bloomberg

Lucid Air Photographer: David Paul Morris/Bloomberg

Lucid Motors Inc. is in talks with Saudi Arabia’s sovereign wealth fund to build an electric vehicle factory potentially near the Red Sea city of Jeddah, according to people familiar with the matter.

The move would mark a significant expansion for Newark, California-based Lucid. Saudi Arabia is trying to become a Middle Eastern hub for manufacturing EVs as it diversifies its economy from oil.

The $360 billion Public Investment Fund, already a shareholder in Lucid, will provide much of the money for the site at the King Abdullah Economic City, the people said, asking not be named because the discussions are private. Plans are advanced but could change, the people said. PIF and Lucid have also considered Neom, a new city being developed in the northwest of Saudi Arabia, as a possible site for the plant.

Lucid is one of a several U.S. firms seeking to take on Elon Musk’s Tesla Inc. The startup is targeting the luxury end of the EV market and its chief executive officer, Peter Rawlinson, was previously Tesla’s chief engineer on the Model S sedan.

#Qatar Banks Agree to $2.2 Billion Deal to Leapfrog Larger Rivals - Bloomberg

Qatar Banks Agree to $2.2 Billion Deal to Leapfrog Larger Rivals - Bloomberg

Masraf Al Rayan QSC agreed to buy Al Khalij Commercial Bank PQSC in a share-swap deal that will create Qatar’s second-largest lender in the Middle East’s first takeover of the year.

Masraf Al Rayan will pay a 21% premium to Al Khalij’s closing share on Tuesday, and will issue 0.5 securities for every Al Khalij share, the lenders said in a statement on Thursday. The deal is valued at 8.2 billion riyals ($2.2 billion), according to Bloomberg data.

Taking over smaller rival Al Khalij will see Masraf Al Rayan leapfrog its next two largest competitors by giving it $47 billion in assets -- still six times less than that of Qatar National Bank QPSC. Qatar has 2.5 million people being served by about 20 local and international banks, leaving smaller lenders at a disadvantage unless they can find a niche or competitive edge.

The combination will “create a larger and stronger financial institution with a strong financial position and significant liquidity available to support Qatar’s economic growth,” the lenders said. The merger will also result in cost savings and revenue synergies.

Major markets log weekly gains; #Qatar leads day's gains | Reuters

Major markets log weekly gains; Qatar leads day's gains | Reuters

Major Gulf shares ended the first trading week of the New Year on a high on Thursday and registered weekly gains as the regional markets benefited from a rise in oil prices.

Crude hit its highest since late February after a fall in U.S. stockpiles added further support following Saudi Arabia’s unilateral decision to cut output. [O/R]

The week also saw investors cheer the breakthrough in Qatar’s over three-year diplomatic rift with Saudi Arabia and other Gulf countries as Arab leaders gathered for a summit focused on ending a long-running dispute with Doha.

Qatar’s index closed 0.9% higher, with petrochemical company Industries Qatar gaining more than 2% in the session.

The Gulf’s biggest lender Qatar National Bank concluded the week with a 1.4% gain. The benchmark firmed 2.3% for the week.

QNB Financial Services Research said in a note that Qatari companies including banks are forecast to get a boost from a deal to end Doha’s row with Gulf states.

Dubai’s blue-chip index finished 0.8% higher, with the benchmark gaining in four of the five sessions in the week to post a weekly gain of 5.4%.

Dubai’s biggest bank Emirates NBD strengthened 0.9%, while the emirate’s largest listed developer Emaar Properties added 1%.

The Emirate of Dubai unveiled its fifth stimulus package, worth 315 million dirhams ($86 million), on Wednesday to counter the economic impact of the COVID-19 pandemic.

The Abu Dhabi index closed Thursday’s session 0.7% higher for a weekly gain of 2.4%.

First Abu Dhabi Bank was the best performer on the benchmark, gaining 1.8%. The United Arab Emirates’ largest lender sold sukuk, or Islamic bonds, worth $500 million on Thursday, as Gulf issuers start tapping debt investors in what is likely to be another record year for regional bonds.

Real estate stock RAK Properties tacked on nearly 6%.

Saudi Arabia’s benchmark index firmed 0.8%, driven mainly by a 1.4% gain in the world’s fourth-largest chemical company Saudi Basic Industries and a 1.2% rise in Al-Rajhi Bank.

#UAE News: #AbuDhabi’s $232 Billion Mubadala Wants to Take Crack at Top 10 - Bloomberg

UAE News: Abu Dhabi’s $232 Billion Mubadala Wants to Take Crack at Top 10 - Bloomberg

Abu Dhabi’s Mubadala Investment Co. is overhauling its structure and deploying capital to double in size to nearly half a trillion dollars in the next decade, a plan that will vault it into the top ranks of the world’s sovereign wealth funds.

With stakes in businesses from Reliance Industries Ltd.’s retail unit to private equity firm Silver Lake, Mubadala was among a few sovereign investors that last year seized on opportunities from a dislocation in markets caused by the coronavirus pandemic.

To help achieve its target, Mubadala will put in place several structural changes later this month, the result of a review that began in 2019, according to a background note it provided to Bloomberg. The focus will be on technology, infrastructure, life sciences and other “future-oriented asset classes,” alongside continued investment in renewables and other clean technologies.

“We did not pause during the Covid pandemic, but kept investing according to our strategy,” Mubadala said.

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar close

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar close

Gulf States to Resume Trade, Air Links With #Qatar in Days - Bloomberg

Gulf States to Resume Trade, Air Links With Qatar in Days - Bloomberg

Gulf states expect to open their airspace to Qatar and resume trade with the natural-gas powerhouse within a week of the Jan. 5 signing of an accord ending their rift, a senior United Arab Emirates minister said Thursday.

The agreement signed in Saudi Arabia at a summit of Gulf leaders has “a note about ending measures within a week,” Minister of State for Foreign Affairs Anwar Gargash said in a virtual media briefing, referring to the air and trade measures.

Under the accord, four Arab states including the UAE agreed to fully restore ties with Qatar, ending a three-year dispute that divided the energy-producing region at a time of heightened tensions between the U.S. and its Gulf allies and Iran.

The deal came two weeks before the inauguration of President-elect Joe Biden, who has pledged to reengage diplomatically with Tehran. Details of the pact weren’t made public but Gargash said it included clauses on respecting each other’s sovereignty and addressing extremism and terrorism.

2021 Budget first step in delivery of #Oman 2040 Vision | ZAWYA MENA Edition

2021 Budget first step in delivery of Oman 2040 Vision | ZAWYA MENA Edition

Oman’s 2021 General Budget, replete with bold but judicious measures to drive fiscal sustainability amid a severe economic crunch, sets the tone for the implementation of the road map for achieving the country’s long-term growth objectives enshrined in the Oman 2040 Vision blueprint.

According to a key Muscat-based tax expert, the Budget also has the potential to put the Omani economy, weighed down by low oil prices and the coronavirus pandemic, on a promising path to recovery.

“This is an aspirational and prudent budget that has all of the essential ingredients necessary to invigorate the economy and return the country to health and eventual prosperity over the long-term,” commented Alkesh Joshi (pictured), Oman Tax Leader and MENA Energy Tax Leader at global professional services firm EY.

In comments to the Observer, Joshi listed a number of standout features in the Budget that, he said, augurs well for efforts to put the country on a stronger economic and fiscal footing in the shortest possible time.

#Qatar says deal to end Gulf crisis will not change its ties with #Iran | Financial Times

Qatar says deal to end Gulf crisis will not change its ties with Iran | Financial Times

Qatar will not alter its relations with Iran and Turkey in a sign that it has made few concessions after securing a deal with Saudi Arabia and its allies to end a bitter dispute between the rival Gulf states. 

Sheikh Mohammed bin Abdulrahman al-Thani, the Qatari foreign minister, told the Financial Times that Doha had agreed to co-operate on counter-terrorism and “transnational security” with Saudi Arabia and three other states that had imposed a regional embargo on Qatar. But he said “bilateral relationships are mainly driven by a sovereign decision of the country . . . [and] the national interest”. 

“So there is no effect on our relationship with any other country,” he said in an interview. 

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cited Doha’s ties to Iran and Turkey, as well as its support for Islamist movements, as core reasons for their extraordinary decision in 2017 to cut diplomatic and transport links with Qatar.

#Qatar emerges from Gulf spat resolute and largely unscathed

Qatar emerges from Gulf spat resolute and largely unscathed

Qataris awoke to a surprise blockade and boycott by Gulf Arab neighbors 3 1/2 years ago, and this week were jolted again by the sudden announcement that it was all over.

The period in between was bitter, with mud-slinging by both sides and viscous media blitzes, social media trolling, expensive lobbying efforts in Washington, and allegations of hacks and leaks. Criticism of the boycott was a criminal offense in Saudi Arabia, the United Arab Emirates, Bahrain and Egypt as the four sought to punish Qatar.

Qatar’s resolve in the face of the assault showed how little the campaign achieved as the small, but influential U.S. ally holds firm with its ties to Turkey, Iran and Islamists.

“In terms of foreign policy, the international relations of the blockade, Qatar didn’t have to change much because the blockade was on such shaky ground to start,” said Jocelyn Sage Mitchell, an assistant professor in residence at Northwestern University’s campus in Qatar.

She said the quartet’s efforts to internationally isolate Qatar failed. This, coupled with an incoming Biden administration in Washington that is expected to take a firmer stance toward Saudi Arabia and re-engage with Iran, put Qatar in a strong negotiating position.

#Dubai home prices nearly stable, overall market still in decline | ZAWYA MENA Edition

Dubai home prices nearly stable, overall market still in decline | ZAWYA MENA Edition

The capital values of residential properties in Dubai appear to be stabilising, after years of steady decline, according to ValuStrat’s Price Index (VPI).

“Early last year, the property market fell markedly as the coronavirus pandemic halted mobility around the world. Today, the sector remains weak but there are reasons for optimism,” ValuStrat said.

ValuStrat’s valuation-based index for the emirate stood at a “stable” 65.3 points as of December 2020, showing an insignificant monthly fall of only 0.1 percent, the lowest rate of decline in three years. On an annual basis, the index posted a 13.8 percent decline over 2019.

Prices in villa communities posted some minor increases, owing to high demand from price-conscious buyers, while apartments in other locations continued to be in decline.

“Capital values of homes approached stabilisation at the end of 2020, as the downward trend of recent years currently appears to be coming to a gradual end,” the consulting firm said.

#AbuDhabi’s Top Bank Follows #Dubai Rival to Dollar Bond Market - Bloomberg

Abu Dhabi’s Top Bank Follows Dubai Rival to Dollar Bond Market - Bloomberg

First Abu Dhabi Bank PJSC followed its Dubai rival to the debt market by starting to market dollar-denominated Islamic bonds on Thursday.

Abu Dhabi’s biggest lender opened books on a $500 million five-year sukuk, setting initial price guidance at between 100 and 105 basis points over midswaps, according to a person familiar with the matter, who asked not to be identified because the matter is private. A senior unsecured debt sale is expected to be closed on Thursday.

Dubai Islamic Bank PJSC, Emirates NBD Capital, First Abu Dhabi Bank PJSC, Islamic Corporation for the Development of the Private Sector, KFH Capital KSCP, NCB Capital and Standard Chartered Bank are the joint lead managers for the sale.

Gulf banks are joining a wave of global borrowing after yields crashed following unprecedented stimulus by authorities to keep economies afloat during the coronavirus pandemic. Emirates NBD PJSC raised $750 million this week in the Middle East’s first dollar bond sale of 2021.

What Biden Administration Brings for Reunited Gulf, #SaudiArabia - Bloomberg video

What Biden Administration Brings for Reunited Gulf, Saudi Arabia - Bloomberg

Kirsten Fontenrose, director of the Scowcroft Middle East Security Initiative at the Atlantic Council, discusses shifting U.S. foreign policy after Gulf countries agreed to end a years-long boycott of Qatar. She apeaks on "Bloomberg Daybreak: Middle East." (This interview aired on January 6, 2021.) (Source: Bloomberg)

Q4 forecasts: #Saudi's SABIC to post 50% rise in net profit, Al Rajhi earnings to surge | ZAWYA MENA Edition

Q4 forecasts: Saudi's SABIC to post 50% rise in net profit, Al Rajhi earnings to surge | ZAWYA MENA Edition

Petrochemicals giant Saudi Basic Industries Corporation (SABIC) is forecast to make 1.6 billion Saudi riyals ($426.5 million) in net profit for the fourth quarter of 2020, nearly 50 percent higher compared to the previous quarter, according to NCB Capital.

The petrochemicals giant made a loss of 725 million riyals during the last quarter of 2019.

Its affiliate, Yanbu National Petrochemical Company (Yansab) is also expected to make 271 million riyals during the same period, 58 percent higher than a year earlier, and 38 percent higher compared to the previous quarter.

Within the banking sector, Al Rajhi Bank, one of Saudi Arabia’s largest lenders by assets, could see earnings go up22 percent year-on-year at 2.7 billion riyals.

Banque Saudi Fransi is expected to make a net profit of 360 million riyals, marking a 30 percent decline compared to the year-ago period.

Trade, transport could resume within a week with #Qatar, #UAE says | Reuters

Trade, transport could resume within a week with Qatar, UAE says | Reuters

Trade and transportation could resume between Qatar and boycotting countries within a week, the United Arab Emirates’ minister of state for foreign affairs said on Thursday.

Saudi Arabia and its Arab allies agreed on Tuesday to restore ties with Qatar, ending a boycott imposed in 2017 over allegations that Doha supported terrorism and was cosying up to Iran, which it denied. Tuesday’s deal has U.S. backing.

“Measures to be implemented within a week of the agreement include practical measures of airlines, shipping and trade,” the UAE minister, Anwar Gargash, told reporters.

However, other issues such as restoring full diplomatic relations and the Turkish presence in the Gulf would take longer, the official said. “Some issues are easier to fix and some others will take a longer time.”

Oil gains with supply constraints in focus after Saudi cuts | Reuters

Oil gains with supply constraints in focus after Saudi cuts | Reuters

Oil prices rose almost 1% on Thursday after a fall in U.S. stockpiles added further support following the unilateral decision by Saudi Arabia, the world’s biggest exporter, to cut output over the next two months.

It was not immediately clear how the storming of the U.S. Capitol by supporters of President Donald Trump would impact oil markets, although some analysts believe President-elect Joe Biden’s administration will clamp down on U.S. oil production.

Brent crude was up 44 cents, or 0.8%, at $54.74 a barrel by 0734 GMT, after gaining 1.3% overnight. U.S. West Texas Intermediate (WTI) gained 51 cents, or 1% to $51.14. The contract rose 1.4% on Wednesday.

Saudi Arabia, the world’s biggest oil exporter, said it would voluntarily cut 1 million barrels per day (bpd) of output in February and March, after OPEC+, which groups the Organization of the Petroleum Exporting Countries and other producers, including Russia, met earlier this week.

MIDEAST STOCKS-Major Gulf stocks gain in early trade as oil prices rise | Nasdaq

MIDEAST STOCKS-Major Gulf stocks gain in early trade as oil prices rise | Nasdaq

Major Gulf markets gained early on Thursday as oil prices rose, with most set to end their first week of the year with gains amid positive sentiment over the Gulf detente.

Oil prices rose almost 1% on Thursday after a fall in U.S. stockpiles added further support following the unilateral decision by Saudi Arabia, the world's biggest exporter, to cut output over the next two months.

Saudi Arabia and its Arab allies agreed on Tuesday to restore ties with Qatar to end a boycott imposed in mid-2017.

Qatar's index .QSI was up 0.2% in early trading. Qatar Gas Transport QGTS.QA rose as much as 1.5%.

The sharia-compliant Islamic lender Masraf Al Rayan MARK.QA, which will discuss a merger with Al Khaliji Bank KCBK.QA later in the day, rose 0.8%.

QNB Financial Services Research, part of Qatar's biggest bank Qatar National Bank, said in a note that Qatari companies including banks are forecast to get a boost from a deal to end a more than three-year row between Doha and some Gulf states.

Dubai's index .DFMGI rose 0.3%, with Dubai Investments DINV.DU and Dubai Financial Market DFM.DU adding 1.9% and 3.6%, respectively.

The Emirate of Dubai on Wednesday unveiled its fifth stimulus package, worth 315 million dirhams ($86 million), to counter the economic impact of the COVID-19 pandemic.

The Abu Dhabi index .ADI rose 0.5%, as First Abu Dhabi Bank FAB.AD rose 1.2% and telecoms major Etisalat ETISALAT.AD edged up 0.2%.

Markets in Qatar, Dubai and Abu Dhabi looked set to log weekly gains on Thursday.

Saudi Arabia's benchmark index .TASI eked out 0.1%. The world's fourth-largest chemical company Saudi Basic Industries 2010.SE advanced 1%, while Samba Financial Group 1090.SE added 0.7%.

Saudi Arabia's index, the best performer in 2020 across the Middle East, was down just 0.2% for the week.