Oil Drops With Virus Risks in Europe Dimming the Demand Outlook - Bloomber- West Texas Intermediate crude for May delivery fell $2.80 to settle at $58.65 a barrel in New York
- Brent for June settlement declined $2.71 to end the session at $62.15 a barrel
Oil plunged the most in nearly two weeks as growing delays in Europe’s reopening and looming Iranian supply dampened hopes for a swift decline in global inventories.
Futures in New York slumped 4.6% on Monday, sending prices to the lowest in more than a week and markedly below U.S. crude’s 50-day moving average. The U.K. may delay global travel beyond May 17 if Covid-19 infections continue to surge around the world, while Italy also extended some restrictions for travelers, adding further pressure to a recovery in oil consumption.
Meanwhile, Iran, the U.S. and the remaining members in the 2015 nuclear deal are set to gather in Vienna on Tuesday to discuss potentially resurrecting the agreement, presenting a possible path toward removing sanctions on the Middle Eastern country’s oil exports. Yet, Iran indicated talks won’t succeed without the U.S. fully removing sanctions.
“OPEC+ deciding to phase in production increases over time, when combined with news that potentially there could be more Iranian output, could very well mean that the market perceives there will be an imbalance more than previously,” said Bart Melek, head of commodity strategy at TD Securities. “Demand from Europe being significantly slower may derail” the near-term outlook for consumption.
Oil Drops With Virus Risks in Europe Dimming the Demand Outlook - Bloomberg
- West Texas Intermediate crude for May delivery fell $3.54 to $57.91 a barrel at 12:52 p.m. in New York
- Brent for June settlement lost $3.32 to $61.54 a barrel
Oil accelerated its decline after Britain warned it may continue limiting foreign travel, dampening hopes for a summer travel boom.
Futures in New York fell as much as 5.9% on Monday, sending prices markedly below their 50-day moving average. The U.K. may delay global travel beyond May 17 if coronavirus infections continue to surge elsewhere around the world, adding further pressure on the immediate trajectory for consumption as governments struggle to control the spread of Covid-19.
Meanwhile, Iran, the U.S. and the remaining members in the 2015 nuclear deal are set to gather in Vienna on Tuesday to discuss potentially resurrecting the agreement, presenting a possible path toward removing sanctions on the Middle Eastern country’s oil exports. Yet, Iran indicated talks won’t succeed without the U.S. fully removing sanctions.
“The scales got tipped here in terms of relative oversupply for the first time in a while,” said John Kilduff, a partner at Again Capital LLC. “There’s certainly a sense in the market that the easing tensions in Iran are going to enable a topping up of supplies to the market from the country.”
Saudi cement firm postpones capital reduction plan amid private sector push | Reuters
Saudi Arabia’s Yanbu Cement Co said on Monday it was postponing a recommendation to decrease its capital to support Saudi government plans requiring the private sector to invest in the local economy.
Yanbu Cement, listed on the Saudi stock exchange Tadawul, had said in January its board had recommended a capital reduction to 1 billion riyals ($266.65 million) from 1.575 billion riyals as the capital exceeded the company’s needs.
The capital decrease would have happened by cancelling 36.5% of its shares and compensating shareholders.
But the firm decided to postpone the plan “in line with the private sector partnership reinforcement program” announced by Saudi Arabia’s Crown Prince Mohammed bin Salman last week, it said in a bourse filing on Monday.
Abu Dhabi index gains for seventh day, blue-chip losses hit Egypt | Reuters
The Abu Dhabi stock market rose 1% on Monday to notch its seventh straight session of gains, as aquaculture firm International Holdings surged over 12% after divesting a unit.
Outside the Gulf, Egypt’s blue-chip index finished 1.5% lower, with Commercial International Bank losing 3.2%.
On Sunday, Abu Dhabi’s International Holdings said it planned to divest all its shares in defence supplier Trust International Holding for 350 million dirhams ($95.30 million).
Saudi Arabia’s benchmark index closed flat, with blue-chip shares trading mixed.
Saudi Electricity Company leapt 4.7%. Last week, the utility firm reported a sharp surge in its full-year earnings.
However, Saudi National Bank, the kingdom’s largest lender, fell 1.9%. It rose 3.6% a day earlier after it proposed a dividend.
Dubai’s main share index advanced 0.9%, with sharia-compliant lender Dubai Islamic Bank (DIB) rising 2.2%, while blue-chip developer Emaar Properties was up 1.4%.
Dubai Islamic Bank plans to tap the international debt markets with U.S. dollar-denominated Additional Tier 1 sukuk, or Islamic bonds, as soon as this week, two sources said on Monday.
The Qatari index lost 0.6%, extending losses from the previous session, as most of the stocks on the index were in negative territory including Commercial Bank.
Last month, Qatar tightened COVID-19 restrictions ordering the closure of leisure centres, gyms and swimming pools and for shopping malls to operate at a reduced capacity of 30%, while cinemas would run at 20% capacity.
Abu Dhabi Stock Exchange lists MDJH-GMTN's bonds worth $1.29bln | ZAWYA MENA Edition
The Abu Dhabi Stock Exchange (ADSE) said it has listed €1.1 billion ($1.29 billion) in bonds issued by MDJH-GMTN (RSC) Ltd., owned by Mubadala Treasury Holding Company, which is a wholly owned subsidiary of Mamoura Diversified Global Holding.
In a statement Monday the exchange said the first six-year tranche comes with a value of €600 million with a fixed interest rate of 0.375 percent. The second is for 13 years with a value of €500 million and a fixed interest rate of 1 percent.
These bonds, which comes under the issuer’s Global Medium-Term Note Programme were initially listed on the London Stock Exchange and are listed on the Abu Dhabi Stock Exchange under the symbol XSMDGH0327.
The bonds are guaranteed by Al Mamoura Diversified Global Holding, a wholly owned subsidiary of Mubadala Investment.
Carlos Obeid, Group Chief Financial Officer, Mubadala Investment Company and Chief Financial Officer of Mamoura Diversified Global Holding, said: "The successful listing of the two new segments of our bonds reflects a very strong demand from investors for MDGH bond issues, the second time we have listed bonds on the Abu Dhabi Stock Exchange. This release will support our efforts to continue to inject capital into our extensive portfolio of diversified investments in the UAE and other markets."
Apollo Global Leads Group for $10 Billion Saudi Arabia's Aramco Pipeline Deal - Bloomberg
Apollo Global Management Inc. is leading a group of investors aiming to buy a roughly $10 billion stake in Saudi Aramco’s oil pipelines, people familiar with the matter said.
The buyout firm’s consortium will include U.S. and Chinese investors and has been shortlisted to make a final offer, the people said, asking not to be identified as the matter is private. Aramco, Saudi Arabia’s state energy company, has narrowed the pool of bidders and Canada’s Brookfield Asset Management Inc. and BlackRock Inc. are no longer involved, the people said.
While the Apollo consortium is currently seen as a leading contender, another bidder could still emerge as the winner, the people said.
Aramco, the world’s biggest oil company, may choose a winner in the coming weeks, though it could decide not to sell the stake, according to the people.
Apollo didn’t respond to requests for comment. Representatives for Aramco, BlackRock and Brookfield declined to comment.
Saudi Arabia News: Bechtel, Others Seek Billions of Unpaid Riyadh Metro Bills - Bloomberg
U.S.-based Bechtel Corp. and other international firms are pursuing billions of dollars in unpaid bills from Saudi Arabia’s government for work done on the Riyadh metro project, according to five people familiar with the matter.
Bechtel is owed around $1 billion for the transport system, a cornerstone of the government’s efforts to upgrade the traffic-clogged Saudi capital, according to four of the people. Companies working on the project -- which also involves French, Spanish and Italian firms -- are pursuing several billions of dollars in unpaid bills in total, two of the people said, with Bechtel owed the most.
The overdue payments are related in part to construction delays and cost overruns caused by the coronavirus pandemic, which trapped some workers outside the kingdom and made it difficult to continue the pace of work on the project, three of the people said. The payments dispute took on diplomatic overtones last year when the American, French and Spanish embassies in Riyadh raised the matter in a letter to the Saudi government, two of the people said.
Government contractors have complained for years about overdue payments since a 2015 oil price slump led authorities to withhold tens of billions of dollars to help rein in a ballooning budget deficit. While that decision helped to keep a lid on state spending, it dented the confidence of a private sector that relies heavily on government contracts.
Arabtec: Creditors await Dubai Court’s next move in getting back their Dh10b plus | Property – Gulf News
Creditors to Arabtec, the UAE construction giant that has filed for bankruptcy, will have to wait for a Dubai court’s next judgement to see how - or whether - they can recover their dues, estimated to be in the billions of dirhams.
First, the court-appointed panel of experts will have to come up with their findings on whether Arabtec should proceed with the liquidation or whether there are other less drastic options available for the company that built the Burj Khalifa and the Louvre Abu Dhabi. But the submission by the panel itself could take time.
Once that’s done and “Assuming the panel concludes that insolvent liquidation is the correct course of action, the court is likely to accept the bankruptcy application,” said Matthew Escritt, Partner at the Dubai office of Pinsent Masons, the law firm. “The moratorium on payments and other claims starts when the application is accepted by the court.”
It was late last year that a majority of Arabtec shareholders decided that pulling the plug was the only option left to them as losses kept mounting and chances of a new or existing investor coming up with new funding turned remote. The construction company suffered some grueling losses as new project activity slowed down. Some of its non-UAE operations too took a hit, which was reflected in the first-half 2020 results.
NCB and Samba complete merger deal to create Saudi Arabia's biggest lender | The National
The deal to merge Saudi Arabia’s biggest retail lender National Commercial Bank and it smaller rival Samba Financial Group is now complete, with Samba shareholders receiving new shares in the merged entity.
Saudi National Bank, the merged banking institution that formally began operations on April 1, said in a statement the shares issued to former Samba shareholders are now listed on the Saudi stock exchange.
“As set out in the shareholder circular issued by SNB, the merger has been completed,” it said in a statement to the exchange.
Last month, National Commercial Bank and Samba Financial Group shareholders voted in favour of the merger after the Saudi Central Bank, the General Authority for Competition, the Capital Markets Authority and the stock exchange approved the deal.
Oil slips to $64 as rising OPEC+, Iranian output weighs | Reuters
Oil slipped to around $64 a barrel on Monday as rising supply from OPEC+ and higher Iranian output countered signs of a strong economic rebound in the United States and hopes for a wider demand recovery in 2021.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed on Thursday to monthly production hikes from May to July. Iran is also boosting supply. [OPEC/O]
Brent crude for June fell 96 cents, or 1.5%, to $63.90 a barrel by 0905 GMT. U.S. West Texas Intermediate crude for May dropped 62 cents, or 1%, to $60.83.
“The OPEC+ decision, perhaps nudged along by increasing Iranian production heading to China, probably means we have seen the best of the oil rally now for the next few months,” said Jeffrey Halley of brokerage OANDA.
Dubai Mercantile Exchange launches Mideast crude trading platform | Reuters
The Dubai Mercantile Exchange launched a bilateral trading platform on Monday for companies to trade multiple Middle East crude grades priced against DME’s Oman crude futures.
The seven grades are: Dubai, Upper Zakum and Murban from the United Arab Emirates, Basra Light and Basra Heavy from Iraq, Qatar’s al-Shaheen and Oman crude, it said in a statement.
The platform, called the Alternative Crude Ecosystem (ACE), is aimed at widening the use of DME Oman crude futures as a benchmark for Middle East crude. The other alternative is Dubai, operated by S&P Global Platts.
Last week, Intercontinental Exchange Inc, Abu Dhabi National Oil Co (ADNOC) and partners including international oil majors launched the Murban crude contract.
Israel's Delek in talks to sell Tamar gas field stake, Calcalist reports | Reuters
Israel’s Delek Drilling is in talks to sell its stake in the offshore natural gas field for up to $1.1 billion, financial news website Calcalist reported on Monday.
Delek owns a 22% stake in Tamar, one of Israel’s main energy sources, which it is required to sell by the end of the year under a government framework to open the sector to competition. The company holds a stake of about 45% of the nearby Leviathan gas field, which is larger than Tamar.
Delek Drilling, a subsidiary of Delek Group, declined to comment on the report.
Calcalist, which did not disclose its sources, said the advanced negotiations are being held with an unnamed British company.
Emirates Development Bank to allocate $8 bln for vital companies | Reuters
The state-run Emirates Development Bank plans to allocate 30 billion dirhams ($8.17 billion) in the coming years to support companies in sectors considered as priority for the economy, the United Arab Emirates’ prime minister said on Monday.
“The target is to fund 13,500 new companies,” Sheikh Mohammed Bin Rashid Al-Maktoum said on Twitter
Builders and Vaccines Power UAE Business Growth Near 2-Year High - Bloomberg
Business conditions in the United Arab Emirates improved at the fastest pace in 20 months, taking a sharp turn for the better with the vaccine rollout and an upswing in construction work.
Non-oil private sector activity grew for a fourth month in March, the longest run of expansion since late 2019, according to IHS Markit. Its UAE Purchasing Managers’ Index rose to 52.6 from 50.6 in February.
By contrast, Saudi Arabia’s recovery lost some momentum, with its non-oil economy suffering from a slowdown in sales and worsening expectations by firms. The kingdom’s PMI fell to 53.3 in March from 53.9 in the previous month.
Oil Declines After OPEC+ Wagers Market Can Absorb Extra Barrels - Bloomberg
Oil retreated after OPEC+ decided to ramp up output over the three months to July and figures showed coronavirus infections in India hit a record, highlighting risks to energy demand in one of Asia’s main importers.
West Texas Intermediate fell 0.9%, paring the 3.9% gain seen on Thursday, when the alliance agreed to loosen its supply curbs gradually. The grouping will raise production by more 1 million barrels a day in stages between May and July, and over the same period, Saudi Arabia will roll back its voluntary 1-million-barrel-a-day reduction. Markets were closed on Friday for a holiday.
Crude has staged an impressive rally this year as the roll-out of coronavirus vaccines paves the way for the reopening of key economies, and the decision by the Organization of Petroleum Exporting Countries and its allies was seen as a vote of confidence in the outlook. Reinforcing signs that some top regions are firmly on the mend, the U.S. added more than 900,000 jobs in March. Although that bodes well for oil demand, significant risks -- such as the uptick in Indian cases -- attests to a complex, multi-speed global picture.
Before Thursday’s meeting, the OPEC+ cartel had been expected to maintain its cautious stance by rolling over the cuts that applied to most countries, although Russia had been allowed an increase at the previous gathering. Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ was now “testing” the market, and can reverse course if necessary at the next session on April 28.
Some Middle East economies start recovering; GDP forecasts revised | ZAWYA MENA Edition
Some economies in the Middle East are already starting to recover after months of hardship caused by the coronavirus pandemic, according to a new analysis by PwC.
Expectations for growth domestic product (GDP) have been scaled up for Gulf states like Bahrain and Oman, but trimmed for Saudi Arabia, as new official data have become available recently.
Bahrain’s real GDP is likely to grow by 3.3 percent in 2020, up from the 2.3 percent forecast published in December 2020. Oman’s economy is also expected to perform better than previously forecast, with its GDP estimated to be around 1.8 percent, up from -0.5 percent.
As for Saudi Arabia, real GDP will be around 2.6 percent, down from 3.1 percent in the previous estimate.
Forecasts for Qatar, Kuwait and UAE have remained the same at 2.5 percent, 0.6 percent and 1.3 percent, respectively.
Dubai contracting giant Drake & Scull to 'cut overheads' as losses top $1.3bln | ZAWYA MENA Edition
Dubai-based contracting giant Drake & Scull International (DSI) is planning to reduce the cost of overheads as losses have reached nearly 5 billion dirhams ($1.3 billion).
In a bourse filing to the Dubai International Financial Market (DFM) on Monday, the company said it will also continue negotiating with banks and creditors to reach “comprehensive settlements”, as well as improve its overall “operational productivity and efficiency”.
The company’s accumulated losses as of December 31, 2020 have reached 4.902 billion dirhams, which now represent 458 percent of the capital.
Dubai Islamic Bank plans to sell AT1 Islamic bonds - sources | ZAWYA MENA Edition
Dubai Islamic Bank, the United Arab Emirates' largest Islamic lender, plans to tap the international debt markets with U.S. dollar-denominated Additional Tier 1 (AT1) sukuk, or Islamic bonds, as soon as this week, two sources said on Monday.
AT1 bonds, the riskiest debt instruments banks can issue, are designed to be perpetual in nature but issuers can call them after a specified period.
DIB, which raised $1 billion via AT1 sukuk in November, did not immediately respond to a request for comment.
Several Gulf lenders have taken advantage of low rates to shore up their Tier 1 capital this year. Saudi Arabia's largest lender, National Commercial Bank, led the way in January by raising $1.25 billion in AT1 sukuk with the lowest coupon from the region.
Other Gulf banks that have issued AT1 bonds or sukuk this year were Qatar's Ahli Bank and Commercial Bank, Kuwait's Boubyan Bank and National Bank of Kuwait.
Saudi non-oil private sector keeps up steady growth in March - PMI | Reuters
Saudi Arabia’s non-oil private sector grew for the seventh straight month in March, albeit at a slower pace, with output and new orders expanding more moderately than a month earlier, a survey showed on Monday.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) fell slightly to 53.3 in March from 53.9 in February, remaining above the 50 mark that separates expansion from contraction.
The overall index has fallen from a recent peak of 57.1 in January, indicating the recovery from the COVID-19 pandemic has lost some momentum.
“The pandemic and associated restrictions continued to trim new business growth, according to respondents, contributing to a more downbeat outlook for business activity over the next 12 months,” said David Owen, economist at survey compiler IHS Markit.
UAE March non-oil private sector growth climbs to 20-month high - PMI | Reuters
The United Arab Emirates’ non-oil private sector grew in March at the fastest pace since July 2019, boosted by new business and a sharp rise in the construction sector, a survey showed on Monday.
The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, rose to 52.6 in March from 50.6 in February, hitting a 20-month high and indicating a solid upturn in business conditions but still below the series average of 54.1.
“The PMI has also now been above the 50.0 no-change mark in each of the latest four months, signalling increased momentum in the economy’s recovery. Likewise, business confidence improved to an eight-month high, with vaccine optimism driving confidence in future activity,” said David Owen, economist at survey compiler IHS Markit.
The output subindex climbed to 56.3 in March from 51.8 in February, also reaching its highest level since July 2019 but still below the series average of 57.3.
Oil prices fall after prior gains driven by OPEC+ move | ReutersOil prices slipped on Monday, paring strong gains made in the previous session that was driven by the decision by OPEC+ to gradually ease some of its production cuts between May and July.
Brent crude futures for June fell 96 cents, or 1.5%, to $63.90 a barrel by 0615 GMT while U.S. West Texas Intermediate crude for May was at $60.56 a barrel, down 89 cents, or 1.5%.
Both contracts settled up more than $2 a barrel on Thursday as investors viewed the OPEC+ decision as an affirmation of demand-led recovery, and optimism was boosted by U.S. President Joe Biden’s $2 trillion infrastructure spending plan.
Markets were closed on Friday because of the Easter holiday.
Most major Gulf markets gain; Qatar eases | Reuters
Most major stock markets rose in early trade on Monday, with Abu Dhabi index leading the gains, although Qatar traded lower.
Saudi Arabia’s benchmark index rose 0.2%, with Al Rajhi Bank gaining 0.2%, while Saudi Arabian Mining Company advanced 1.2%.
Saudi Arabia increased the price of its Arab light crude for the Asian market by $0.4/barrel in May, compared to April, and lowered those for the U.S. and European markets by $0.1/barrel and $0.2/barrel respectively, according to a statement from oil producer Saudi Aramco.
Aramco was down 0.4%.
Dubai’s main share index gained 0.5%, led by a 1.3% rise in sharia-compliant lender Dubai Islamic Bank and 2.3% increase in logistic firm Aramex.
The United Arab Emirates will invest $3 billion in Iraq, it said in a joint statement at the end of Iraqi Prime Minister Mustafa al-Kadhimi’s visit to UAE, state news agency WAM reported.
In Ab Dhabi, the index rose 0.7%, boosted by a 6.9% jump in International Holding.
The firm has gone through rapid expansion across its major business sectors, resulting in a sharp growth in its financials, positioning it for long-term growth.
International Holding is on track to gain for a 10th consecutive session.
The Qatari index, however, fell 0.3%, hit by a 1% fall in Qatar Islamic Bank and 0.4% decrease in Qatar National Bank, the Gulf’s largest lender.
Last month, Qatar tightened COVID-19 restrictions ordering the closure of leisure centres, gyms and swimming pools and for shopping malls to operate at a reduced capacity of 30%, while cinemas would run at 20% capacity.
