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Oil prices gained more than $1 a barrel on Wednesday, as frigid Texas temperatures shut production across the largest U.S. crude producing state, with the unusually cold weather expected to hamper output for days or even weeks.
Brent crude settled at $64.34 a barrel, gaining 99 cents, or 1.6%, while U.S. West Texas Intermediate (WTI) crude settled at $61.14 a barrel, rising $1.09, or 1.8%. Both benchmarks were at their highest levels since January last year.
Oil has been supported by OPEC+ supply curbs, Saudi Arabia’s additional cuts and hopes of a demand rebound due to COVID-19 vaccinations.
Historic cold weather since the weekend in Texas, which supplies the bulk of U.S. crude and is part of the main U.S. refining hub, has propelled prices even higher.
“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65,” Yawger said.
Dubai International Financial Centre has welcomed global payment technology provider Adyen, a company that has a market capitalisation of €66.4 billion and processed over €303.6 billion worth of transactions in 2020.
Dutch firm Adyen announced their expansion into the Middle East in November 2020 and selected the DIFC as the location for their regional headquarters, due to the Centre’s regional reach and comprehensive ecosystem.
“Adyen has selected DIFC as their regional office for the Middle East. They are joining the region’s largest, most innovative and forward thinking community of more than 2,500 financial related businesses who are working with us to shape the future of the industry. We are confident that our connectivity, ecosystem, infrastructure, laws and regulations will help them expand successfully across the region,” said Arif Amiri, Chief Executive Officer, DIFC.
Expanding to Dubai complements Adyen’s presence in other leading financial cities across the world such as New York, London, Hong Kong, Singapore and Tokyo.
Saudi Arabia’s Samba Financial Group, which is in the process of being merged with its larger rival National Commercial Bank, reported a 5.3 per cent increase in its net profit for 2020 despite a rise in operating expenses.
Net income for the period ending 31 December rose to 4.2 billion Saudi riyals ($1.1bn), the lender said in a statement on Wednesday to the Tadawul stock exchange, where its shares trade.
A 9.6 per rise in operating income to 9.43bn riyals, helped by a jump in trading income, gains on investments and exchange income underpinned the profitability. The increase in annual income, however, was “partially offset” by an 11 per cent decline in income from special commission, which amounted to 5.67bn riyals.
The sovereign wealth fund, also known as PIF, is chaired by Prince Mohammed, who told Bloomberg Businessweek in 2016 that he was part of the first Saudi generation to grow up playing video games. The crown prince credited video games with sparking ingenuity in the Bloomberg Businessweek profile, while telling the New Yorker in 2018 that his favorite diversion is Call of Duty series, Activision’s best-selling franchise.
In November, a subsidiary of the crown prince’s charitable organization -- the Mohamed bin Salman Foundation -- said it purchased a one-third stake in SNK Corp., the Japanese developer of King of Fighters and Samurai Shodown. The charity, also known as the MiSK Foundation, said it would increase its stake to 51% in the future.
Stock markets in neighbors Saudi Arabia and the United Arab Emirates have been moving in opposite directions. While the Saudi Tadawul All Share Index has risen for 10 straight days through Wednesday, boosted by rising oil prices, the Dubai DFM General Index has dropped in seven out of 10 sessions, as the pandemic’s impact continues to subdue tourism.
Saudi Arabia plans to increase oil output in the coming months, reversing a recent big production cut, say advisers to the kingdom, a sign of growing confidence over an oil-price recovery.
The world’s largest oil exporter surprised oil markets last month when it said it would unilaterally slash 1 million barrels a day of crude production in February and March in an effort to raise prices.
But the kingdom plans to announce a reversal of those cuts when a coalition of oil producers meets next month, the advisers said, in light of the recent recovery in prices. The output rise won’t kick in until April, given the Saudis have already committed to stick to cuts through March.
The advisers cautioned the plans could still be reversed if circumstances change, and the Saudis’ intention hasn’t yet been communicated to the Organization of the Petroleum Exporting Countries, said the people and OPEC delegates.
Spain is in talks with sovereign wealth funds from several Gulf countries on them co-investing in projects financed by European aid in order to leverage the initial investment, Spanish Foreign Minister Arancha Gonzalez Laya said on Wednesday.
“They are very interested in projects of decarbonisation, digitalisation and modernisation of our productive structure at a time when Spain is entering this process of transforming its economy,” she said during a video-call with foreign correspondents based in Spain.
So far, the only condition on these investments under consideration is job creation in Spain, a senior official with knowledge of the management of the EU recovery plan told Reuters.
The Gulf sovereign funds are “good connoisseurs of Spain and good investors,” Gonzalez Laya added.
Spain will receive one of the biggest slices of European recovery funds in the coming years, up to 140 billion euros ($170 billion) of which about half will be in the form of grants.
The United Arab Emirates is considering price controls on some foods, as soaring crop prices affect countries across the world.
The Persian Gulf nation could place price caps on chicken and milk, said Mariam Almheiri, the country’s minister of state for food and water security.
Global food prices climbed to the highest level in six years last month, according to a United Nations index. The surge has been driven by crop such as corn and soybeans, which are widely used to feed farm animals. That’s adding to food inflation worries for nations already strained after the coronavirus pandemic upended supply chains.
“We are studying this very carefully and we may need some adjustments,” Almheiri said in an interview, adding that they could apply to both local and imported products.
Saudi Arabia urged fellow members of the OPEC+ oil alliance to remain cautious as they prepare to consider further output increases.
Crude prices have rebounded to a one-year high above $60 a barrel in New York as fuel demand recovers and the 23-nation OPEC+ coalition constricts supply. Still, the ongoing pandemic poses a continuing threat to consumption, and oil-output losses in the U.S. caused by freezing storms are unlikely to last.
“I must warn once again against complacency,” Energy Minister Prince Abdulaziz bin Salman said on Wednesday at an online conference held by the International Energy Forum in Riyadh. “The uncertainty is very high and we have to be extremely cautious. The scars from the events last year should teach us caution.”
The alliance led by the Saudis and fellow oil titan Russia will gather in early March to decide whether they can revive some more of the production halted during the coronavirus crisis.
The group is currently withholding just over 7 million barrels a day -- or about 7% of world supplies -- and is committed to restoring about 1.5 million barrels in stages over the course of this year, depending on market conditions.
United Arab Emirates energy firm Dana Gas is exploring financing avenues, including green bonds, to raise around $500 million for a plan to more than double its output capacity, its chief executive said.
Dana plans to raise its capacity in the Kurdistan Region of Iraq (KRI) to 900 million standard cubic feet per day (mmscfd) with two processing trains of 250 mmscfd each.
“The total scope that we’re looking at is probably another $500 million. But that would ... be split up between hopefully contractor financing, some bank debt and maybe this green bond,” CEO Patrick Allman-Ward told Reuters in an interview.
Dana rocked the global Islamic finance industry in 2017, when it said some $700 million outstanding sukuk, or Islamic bonds, were no longer valid under UAE law because of changes in Islamic financial practice.
After a protracted legal battle, it reached an agreement with creditors in 2018 and repaid the sukuk in full last year.
Most Middle Eastern stock markets fell on Wednesday, with Saudi Arabia's benchmark index reversing early gains and snapping a nine-day rally.
The index fell 0.2% and Saudi telecom and Banque Saudi Fransi led the losses, down 2.2% and 2.6%, respectively.
Saudi Arabia's inflation rose to 5.7% in January from 5.3% the month before, continuing a rise fuelled by a tripling of value-added tax last year, government data showed.
The economy of the world's largest oil exporter contracted last year, but data suggest the rate of decline slowed in the third quarter as some COVID-19 restrictions were lifted, and GDP is expected to return to growth this year.
The Qatari index lost the most among the major indices, ending the session 1.1% lower. The index marked its steepest fall in nearly three months.
Qatar National Bank, the largest lender in the Gulf and Africa fell 2.4%, its third consecutive session of losses.
Trade and travel restrictions continue to pressure the energy-rich region, said Daniel Takieddine, market analyst at FXPrimus.com.
Dubai's main share index ended 0.6% lower, hit by a 1.5% fall in Dubai Islamic Bank (DIB).
In the previous session, DIB, the United Arab Emirates' largest sharia-compliant lender, slid 2.6% after reporting a sharp decline in full-year profit.
Among others, logistics firm Aramex retreated 3.5%, to become the biggest faller on the index.
In Abu Dhabi, the index fell 0.5% in its biggest daily percentage loss so far this month as financial and communication services stocks weighed on sentiment.
Minister of Finance Muhammad Al-Jadaan said that some sectors will be excluded from the decision to stop government agencies’ contracting with any foreign commercial company or establishment that has a regional headquarters in the region outside the Kingdom.
He pointed out that even though Saudi Arabia has the largest economy in the region, its share of regional headquarters is much smaller, accounting for less than five percent at present.
“The new decision aims to help the government’s endeavor to provide job opportunities to Saudi youth and attract foreign direct investment so as to diversify the Kingdom’s economy,” he added.
Meanwhile, Minister of Investment Khalid Al-Falih identified five main benefits from the decision to limit the government agencies’ contracting to international companies that have a regional center in the Kingdom.
President Joe Biden intends to “recalibrate” the U.S. relationship with Saudi Arabia and will emphasize outreach to King Salman, in a move that signals a downgrade in ties with Crown Prince Mohammed Bin Salman, the country’s de facto ruler.
It is the latest sign Biden’s team is taking a different track from former President Donald Trump toward the world’s largest oil exporter. Trump established close ties with Prince Mohammed and made Saudi Arabia the centerpiece of his strategy toward the Middle East after taking his first trip abroad as president there.
That’s all being scaled back. In Biden’s first few days, the U.S. put a hold on some key weapons sales to the kingdom and announced new efforts to bring an end to the Saudi-led war in Yemen. Biden has also called on Saudi Arabia to improve its human rights record.
“We’re going to recalibrate our relationship with Saudi Arabia,” Press Secretary Jen Psaki told reporters on Tuesday. “Part of that is going back to engagement counterpart-to-counterpart. The president’s counterpart is King Salman.”
Qatar aims to be the world’s biggest producer of liquefied natural gas for at least the next two decades, capitalizing on rising demand as the world transitions from oil and coal to cleaner energy.
Qatar will spend billions of dollars expanding its LNG capacity more than 50% to 126 million tons a year. That’s a level other countries will struggle to match, Energy Minister Saad Al-Kaabi said in an interview with Bloomberg Television.
The country is already the world’s main supplier of the super-chilled fuel, but new projects elsewhere -- especially in Australia and the U.S. -- have eroded its dominance.
The Persian Gulf nation will be able to produce LNG from the first phase of the expansion so cheaply that it will be viable even if oil prices fall below $20 a barrel, said Al-Kaabi. “This is one of the most competitive, if not the most competitive, projects on the planet,” he said.
Oil prices advanced further on Wednesday, underpinned by major supply disruption in the south of the United States this week, caused by a historic winter storm in Texas.
U.S. West Texas Intermediate (WTI) crude futures rose 41 cents, or 0.68%, to $60.46 a barrel at 0752 GMT.
Brent crude futures gained 44 cents, or 0.69%, to $63.79 a barrel.
Oil prices have run up strongly in recent months and output disruptions caused by the storm in Texas, the country’s largest oil producing state, continued to keep prices supported, analysts said.
ANZ and Citigroup analysts estimated at least 2 million barrels per day (bpd) of U.S. shale oil production has been curtailed. Citi estimated a cumulative production loss of around 16 million barrels through early March.
Major Gulf stocks were mixed early on Wednesday in the absence of fresh factors to trade on, with Saudi index on track to extend gains for a ninth consecutive session.
Saudi Arabia's benchmark index .TASI rose 0.3%, with Al Rajhi Bank 1120.SE gaining 0.8%, while Saudi Arabian Mining Company 1211.SE was up 2.1%.
Meanwhile, the kingdom's sovereign wealth fund has increased its holding of U.S. stocks to nearly $12.8 billion in the fourth quarter from $7 billion in the third quarter, according to a U.S. regulatory filing on Tuesday.
Saudi Crown Prince Mohammed bin Salman has long pushed the Public Investment Fund as a central plank in his plan to find ways of driving growth while weaning the economy off its dependence on oil.
In Dubai, the index .DFMGI edged up 0.2%, helped by a 1.6% gain in blue-chip developer Emaar Properties EMAR.DU.
The Abu Dhabi index .ADI eased 0.2%, hit by a 0.5% fall in the country's largest lender First Abu Dhabi Bank FAB.AD.
In Qatar, the index .QSI lost 0.5%, as most of the stocks were in red including petrochemical maker Industries Qatar IQCD.QA, which retreated 1.2%.
Among others, Qatar National Bank QNBK.QA, the Gulf's largest lender, slipped 0.8%.
