Oil likely to hit $100 a barrel, say top commodity traders | Financial Times

Oil likely to hit $100 a barrel, say top commodity traders | Financial Times

The world’s top commodity traders have forecast a return to $100-a-barrel oil, as investment in new supplies slows down before demand has peaked and before green alternatives can take up the slack. 

Executives from Vitol, Glencore and Trafigura and Goldman Sachs said on Tuesday that $100 crude was a real possibility, with prices already reaching their highest level in two years this week as Brent crude moved above $73 a barrel. 

The prediction comes at a time when concern about inflation is rising and many commodities, such as copper, have already reached record highs, boosted by supply shortfalls as the economic recovery gathers pace. 

Oil has lagged behind because of a slowdown in demand during the coronavirus pandemic and fears demand could peak in the next decade. But predictions that prices will move much higher in the next few years have gained momentum in recent weeks. 

Jeremy Weir, executive chair of Trafigura, one of the world’s largest independent oil traders, told the FT Commodities Global Summit on Tuesday that he was “concerned” by the lack of spending on new supply because the world was not ready to make the leap to clean energy and complete electrification.

Oil Rises to Highest Since 2018 as Traders Eye Further Rally - Bloomberg

Oil Rises to Highest Since 2018 as Traders Eye Further Rally - Bloomberg

PRICES:

West Texas Intermediate crude for July delivery advanced $1.24 to settle at $72.12 a barrel. Brent for August settlement gained $1.13 to end the session at $73.99 a barrel. Oil climbed as a chorus of prominent traders in the crude market said prices will continue to rise after a nearly 50% rally so far this year. Futures in New York advanced 1.8% on Tuesday to the highest level since October 2018. At the FT Commodities Global summit, Glencore Plc and Vitol Group both said they see further gains in oil. There’s even a chance crude prices could hit $100 a barrel on a lack of supply amid underinvestment in the sector, according to Trafigura CEO Jeremy Weir. “Everybody’s continuing to do the math on rising demand and hesitancy among producers to dive back in and put more oil in the market,” said John Kilduff, a partner at Again Capital, LLC. “So there’s a developing structural supply-demand deficit.”

Goldman Lifts #SaudiArabia’s Growth Forecasts as Oil Prices Rise - Bloomberg

Goldman Lifts Saudi Arabia’s Growth Forecasts as Oil Prices Rise - Bloomberg

Goldman Sachs Group Inc. has raised its expectations for Saudi Arabia’s oil production and economic growth as crude prices rise well over $70 a barrel.

The bank’s Middle East and North Africa economist Farouk Soussa lifted his assumptions for Saudi oil production by around 500,000 barrels per day, to reach 10 million barrels by the end of 2021 and 10.5 million in 2022. That -- combined with the release of favorable non-oil growth data on Monday -- pushed Goldman to boost its growth forecast for gross domestic product to 4.5% this year, compared to an earlier 2.5%.

“We see risks to the oil sector as being significantly skewed to the upside,” Soussa wrote in a research note on Tuesday, adding that domestic demand has “recovered strongly.”

The bank sees the economy of the world’s largest crude exporter expanding a further 7% in 2022, compared to a 5.7% forecast previously, followed by an unchanged 1.2% growth rate in 2023 and 2024, he wrote. Brent crude was trading at over $73 a barrel on Tuesday, compared to an average price of around $61 in the first quarter.

The kingdom pumped just under 8.5 million barrels of crude a day in May and is expected to raise output to 9.5 million daily by July as OPEC eases supply cuts. The cartel, of which Saudi Arabia is the effective leader, is under pressure to increase production further as the oil market tightens with major economies reopening.

MIDEAST STOCKS Major stock markets in the Gulf end mixed | Reuters

MIDEAST STOCKS Major stock markets in the Gulf end mixed | Reuters

Major stock markets in the Gulf ended mixed on Tuesday, with financial shares weighing on the Saudi index and property stocks bolstering Dubai.

Saudi Arabia's benchmark index (.TASI) dropped 0.8%, weighed down by a 2.1% decline in Al Rajhi Bank (1120.SE) and a 2.3% slide in Saudi Telecom Company (7010.SE).

The kingdom's inflation rate rose for the second consecutive month in May, climbing to 5.7% from 5.3% in April, again reflecting a tripling of value-added tax (VAT) to 15% last year, official data showed on Tuesday. read more

The VAT increase, which went into effect in July, came as the Saudi government sought to bolster its coffers after being hit by last year's oil price crash and the pandemic, as well as voluntary oil production cuts to help stabilise world prices.

Dubai's main share index (.DFMGI) added 0.1%, helped by a 0.7% increase in blue-chip developer Emaar Properties (EMAR.DU).

However, Dubai Islamic Bank (DISB.DU) fell 0.8%. The largest Islamic lender in the United Arab Emirates gave an initial price guidance of about 135 basis points over mid-swaps for five-year U.S. dollar-denominated sukuk, or Islamic bonds, a document showed on Tuesday.

Dubai's stock market is set for another delisting, raising a question mark over the future of one of the Gulf's major exchanges, which was launched two decades ago. read more

A $595 million bid to take DAMAC Properties (DAMAC.DU) private by the firm's founder Hussain Sajwani is the latest blow to the exchange, even as the Gulf city state's property market showed signs of life in the first quarter. read more

DAMAC shares finished 0.8% higher.

In Abu Dhabi, the index (.ADI) was up 0.1%, with Aldar Properties (ALDAR.AD) rising 0.8%.

The Qatari index (.QSI) lost 0.2%, hit by a 1% fall in Commercial Bank (COMB.QA).

Qatar Financial Markets Authority approved the merger of Masraf Al Rayan (MARK.QA) and Al Khalij Commercial Bank (KCBK.QA). Shares in both banks traded flat.

The merger will lead to the creation of one of the largest Sharia-compliant banks in Qatar and the Middle East.

Outside the Gulf, Egypt's blue-chip index (.EGX30) fell 0.4% with most of the stocks on the index in negative territory, including its top lender Commercial International Bank (COMI.CA).

#Dubai's Damac appoints top-level committee to assess $599m shares offer - Arabianbusiness

Dubai's Damac appoints top-level committee to assess $599m shares offer - Arabianbusiness

Dubai-based developer Damac has appointed an independent committee of board directors to assess the offer from former chairman Hussain Sajwani to take the company private by buying out the minority shares.

In a filing to Dubai Financial Market, Damac said it has also appointed KPMG Lower Gulf Limited as valuer and Arqaam Capital Limited as financial advisor to evaluate the offer to acquire 100 percent of its issued and paid up ordinary share capital.

Maple Invest Co Limited, an investment vehicle owned by Sajwani, offered AED2.2 billion ($599 million) last week.

Sajwani who owns a 72 percent stake in the developer, resigned as Damac’s chairman to avoid conflict of interest.

Damac said in the filing that he has now been replaced by Farooq Arjomand with immediate effect while Ali Malallah Binjab has been appointed vice-chairman.

Currently Maple has direct and indirect shareholding of 88.106 percent in Damac Properties.

DP World Said to Weigh Sale of Stake in Jebel Ali Free Zone - Bloomberg

DP World Said to Weigh Sale of Stake in Jebel Ali Free Zone - Bloomberg

DP World is considering offering international investors a chance to buy into the Jebel Ali Free Zone, a prized asset that helped transform Dubai into a hub of global trade, as it looks for ways to cut its debt pile.

The Dubai-based port operator is working with advisers to gauge interest in the sprawling industrial park, according to people familiar with the matter. DP World is considering options including selling a stake in the free zone or some assets based there, the people said, asking not to be identified discussing confidential information.

Any sale is likely to attract interest from infrastructure funds and strategic suitors, the people said. Deliberations are ongoing, and no final decisions have been taken on the structure of a potential deal, according to the people.

A representative for DP World declined to comment.

The Jebel Ali Free Zone attracts almost a quarter of foreign direct investment into Dubai, with more than 8,000 companies having set up operations in the trade zone since its foundation in the mid 1980s, according to its website. Dubai saw 24.7 billion dirhams ($6.7 billion) of foreign direct investment in 2020, according to government figures.

State-owned DP World has been exploring the sale of equity stakes in certain assets as it works to reduce leverage to about 4 times earnings by 2022 and maintain its investment-grade rating. It agreed to buy the operator of the free zone in a $2.6 billion deal in 2014.

Bloomberg Intelligence analyst Sharon Chen wrote in a note that a 30% to 40% stake in the Jebel Ali Free Zone could raise $1 billion to $1.3 billion for DP World, which might not be sufficient to help meet its leverage targets.

“We estimate that the company may need to raise at least $2.5 billion from asset sales,” Chen said. “This does not take into account further issuance of perpetual securities.”

Dubai took DP World private in early 2020 to alleviate its debt burden and avoid a repeat of the economic crisis that forced a bailout in 2009. In exploring the possible sale of a stake in Jebel Ali Free Zone, Dubai is also joining regional neighbors Abu Dhabi and Saudi Arabia in looking to open up to overseas investors by offering the chance to buy into state assets.

DP World is one of the world’s largest operators of marine ports and inland cargo terminals, stretching from gateways in London and Antwerp to hubs in Africa, Russia, India and the Americas. It’s been on an acquisition spree in recent years, buying assets from P&O Ferries and P&O Ferrymasters in Europe to Puertos y Logistica in Chile.

#Dubai Islamic Bank gives initial guidance for 5-yr dollar sukuk - document | Reuters

Dubai Islamic Bank gives initial guidance for 5-yr dollar sukuk - document | Reuters

Dubai Islamic Bank (DISB.DU), the United Arab Emirates' largest Islamic lender, gave initial price guidance of around 135 basis points over mid-swaps for five-year U.S. dollar-denominated sukuk, or Islamic bonds, a document showed on Tuesday.

Bank ABC, Dubai Islamic Bank (DISB.DU), Emirates NBD Capital (ENBD.DU), First Abu Dhabi Bank (FAB.AD), HSBC (HSBA.L), KFH Capital (KFH.KW), Standard Chartered (STAN.L) and the Islamic Corporation for the Development of the Private Sector are arranging the deal, which is expected to close later on Tuesday, the document from one of the banks showed.

Emirates Gets Government Aid After Pandemic Leads to Huge Loss - Bloomberg

Emirates Gets Government Aid After Pandemic Leads to Huge Loss - Bloomberg

Results

• Emirates airline reported a loss of 20.3 billion dirhams versus 1.1 billion dirhams profit in the previous year
• Dnata, the ground-handling unit, reported a loss of 1.8 billion dirhams versus a 618 million dirhams profit
• One-off impairment charge of 710 million dirhams related to certain grounded aircraft which might not re-enter service before their scheduled retirement within the next financial year
• Load factor declined to 44.3% from 78.5%

Omani Plastics Firm Octal Is Said to Weigh $800 Million Sale - Bloomberg

Omani Plastics Firm Octal Is Said to Weigh $800 Million Sale - Bloomberg

Octal, an Omani plastics packaging manufacturer, is weighing a sale, according to people familiar with the matter.

The Muscat-based company is working with JPMorgan Chase & Co. as it considers selling a majority stake, the people said, asking not to be identified discussing confidential information. A sale could value Octal at about $800 million, one of the people said.

Octal has already drawn interest from strategic suitors in Asia and the U.S., according to the people. A representative for JPMorgan declined to comment, while a spokesperson for Octal couldn’t be reached for comment.

Founded in 2006, Octal produces polyethylene terephthalate, a type of plastic used to package food and consumer products. The company has facilities in Oman, Saudi Arabia and the U.S. and ships its products to more than 75 countries, according to its website.

A sale would add to the $96 billion of deals targeting companies in the Middle East and Africa this year, according to data compiled by Bloomberg. That’s up more than threefold on the same period in 2020.

Analysis: DAMAC delisting plan piles pressure on shrinking Dubai market | Reuters

Analysis: DAMAC delisting plan piles pressure on shrinking Dubai market | Reuters

Dubai’s stock market is set for another delisting, raising a question mark over the future of one of the Gulf’s major exchanges, which was launched two decades ago.

A $595 million bid to take DAMAC Properties (DAMAC.DU) private by the firm’s founder Hussain Sajwani is the latest blow to the exchange, even as the Gulf city state’s property market showed signs of life in the first quarter.

"It is not that Dubai is becoming less attractive. Alternatives are becoming more attractive," Khaled Abdel Majeed, founder at London-based Mena Capital LLP, told Reuters.

Majeed said Dubai needs to work harder to attract listings amid growing competition from within the Gulf region such as Abu Dhabi and Saudi Arabia where Tadawul, the region's biggest exchange based on market value, wants to become a regional hub.

While the value of traded stocks in Dubai was once higher than rival Abu Dhabi, this changed in 2019 and ADX now has a more than four times higher average daily traded value.

ADX has also seen gains after its owner, ADQ, launched a market maker last year that tapped into a fund to boost liquidity on the bourse.

"It's disappointing from a market point of view that you have companies de-listing ... at a time when we think the market needs added depth, more companies, which has not been happening since 2014-2015," Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital in Abu Dhabi, said of the Dubai stock market.

Since the start of 2020, two prominent Dubai companies have de-listed from the Dubai Financial Market (DFM.DU) (DFM) and Nasdaq Dubai: Dubai parks operator DXB Entertainments (DXBE.DU) and Dubai ports operator DP World.

And shares in Arabtec, once a high-flying Dubai construction company, were suspended in September after its shareholders voted to dissolve company.

Emaar Malls (EMAA.DU), operator and owner of the world's largest shopping centre, in March said it planned to offer to buy out minority shareholders and merge with Emaar Properties.

And Dubai real estate fund Emirates REIT (REIT.DI), which is listed on the Nasdaq Dubai exchange, said in July it was considering de-listing.

Where Abu Dhabi is boosting liquidity through planned new listings and consolidation of assets of state holding company ADQ, Dubai appears to have become more tolerant of delistings, a Gulf M&A banker told Reuters.

Analysts say the move to de-list spares companies having to face scrutiny from investors, along with the running costs of a listing and disclosure and transparency requirements.

"If someone wants to take (their company) private; this is the time," the M&A banker said.

Asked what steps, if any, it was taking to ensure that listed companies remained on the exchange and that it attracted new listings, the DFM declined to comment.

The problem for listed Dubai real estate companies is that they are trading at a discount to the average price to earnings of the wider market, at around 8 times earnings, while the market is trading at around 20 times that.

"For DAMAC, I'm sure that the strategic investor, Hussain Sajwani, understands that the intrinsic value of the company is higher than the share price, Tariq Qaqish, chief executive of Salt Fund Placement in Dubai, said.

The two years leading to the COVID-19 pandemic exposed the vulnerabilities of Dubai's homebuilders and property companies, said Samer Haydar, director of corporate ratings at Fitch.

And despite signs of recovery, many are "still facing the aftermath of the pandemic in terms of negative working capital, rising leverage, weak liquidity and overall un-absorbed supply in the market," Haydar said.

MIDEAST STOCKS Major Gulf bourses ease in early trade as financial shares drag | Reuters

MIDEAST STOCKS Major Gulf bourses ease in early trade as financial shares drag | Reuters

Major stock markets in the Gulf were subdued in early trade on Tuesday, mostly hurt by losses in financial shares in the absence of fresh factors to trade on.

Saudi Arabia's benchmark index (.TASI) fell 0.4%, with Al Rajhi Bank (1120.SE) losing 0.9%, while Saudi Arabian Mining Company (1211.SE) retreated 1.2%.

The kingdom's inflation rate rose for the second consecutive month, climbing to 5.7% in May from 5.3% in April, again reflecting a tripling of value-added tax to 15% last year, official data showed on Tuesday. read more

Saudi Arabia's economy, the largest in the Arab world, shrank 3% in the first quarter this year from a year earlier, hit by oil output cuts.

Dubai's main share index (.DFMGI) lost 0.3%, with Emirates NBD Bank (ENBD.DU) falling 0.4% and logistic firm Aramex (ARMX.DU) shedding 1.5%.

Dubai's stock market is set for another delisting, raising a question mark over the future of one of the Gulf's major exchanges, which was launched two decades ago.

A $595 million bid to take DAMAC Properties (DAMAC.DU) private by the firm's founder Hussain Sajwani is the latest blow to the exchange, even as the Gulf city state's property market showed signs of life in the first quarter.

However, DAMAC traded flat.

The Abu Dhabi index (.ADI) eased 0.2%, hurt by a 0.1% drop in First Abu Dhabi Bank (FAB.AD), the country's largest lender, and a 0.2% decline in telecoms firm Etisalat (ETISALAT.AD).

In Qatar, the index (.QSI) was down 0.2%, driven down by a 0.8% fall in Qatar National Bank (QNBK.QA), the Gulf's biggest bank.

Emirates Posts First Loss in Three Decades as Virus Slams Travel - Bloomberg

Emirates Posts First Loss in Three Decades as Virus Slams Travel - Bloomberg

Results

• Emirates airline reported a loss of 20.3 billion dirhams down from 1.1 billion dirhams profit in the previous year
• Revenue at the airline declined 66% to 30.9 billion dirhams
• Dnata reported a loss of 1.8 billion dirhams vs 618 million dirhams profit

Emirates Group, owner of the world’s largest long-haul airline prior to the Covid-19 pandemic, slumped to a 22.1 billion dirhams ($6 billion) loss in the financial year ended March as the virus upended demand for air travel.

The state-owned company received a capital injection of 11.3 billion dirhams ($3.1 billion) from its owner, the government of Dubai. Its dnata unit tapped industry support programs and availed relief of nearly 800 million dirhams, Chairman Sheikh Ahmed Bin Saeed Al Maktoum said.

“Emirates and dnata were hit hard by the drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions,” Sheikh Ahmed said. Emirates Group reduced total workforce by 31% to 75,145 employees.

Emirates has been hit especially hard by the pandemic, with widespread border curbs making it impossible for people to make the inter-continental journeys in which it specializes.

The Gulf carrier responded by grounding most of its fleet of Airbus SE A380 superjumbos, while its Boeing Co. 777s are struggling with lower passenger loads and mainly transporting cargo.

Oil gains as risk of Iran supply resumption recedes | Reuters

Oil gains as risk of Iran supply resumption recedes | Reuters

Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.

Brent crude was up by 38 cents, or 0.5%, at $73.24 a barrel by 0651 GMT, having risen 0.2% on Monday. U.S. oil gained 33 cents, or 0.5%, to $71.21 a barrel, having slipped 3 cents in the previous session.

Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear programme, resumed on Saturday in Vienna and were described as “intense” by the European Union.

A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.

It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian presidential elections later this week,” ING Economics said in a note.