Oil prices sink again, as investors look out for more supply | Reuters
Oil prices fell by more than $1 a barrel on Thursday on expectations of more crude hitting the market after a compromise deal between leading OPEC producers and a surprisingly poor weekly reading on U.S. fuel demand.
Brent crude settled at $73.47 a barrel, dropping $1.29, or 1.7%. U.S. West Texas Intermediate (WTI) crude settled at $71.65 a barrel, down $1.48, or 2.2%.
The slide continued Wednesday’s losses, after Reuters reported that Saudi Arabia and the United Arab Emirates had reached an accord that should pave the way for a deal to supply more crude to a tight oil market.
A deal has yet to be solidified, and the UAE energy ministry said deliberations are continuing.
“That’s still the big elephant in the room - we had a deal, we didn’t have a deal - and that’s raising concerns,” said Phil Flynn of Price Futures Group.
Thursday, 15 July 2021
OPEC Sees Gradual Recovery in Demand for Its Oil Into Next Year - Bloomberg
OPEC Sees Gradual Recovery in Demand for Its Oil Into Next Year - Bloomberg
OPEC forecast a gradual recovery in demand for its crude this year and next, as the group closes in on a deal to revive the production still shuttered since the pandemic.
The need for supplies from the Organization of Petroleum Exporting Countries will continue to climb, remaining well above the group’s current output and exceeding pre-virus levels by the second half of 2022. But it will go through a lull in the first quarter that could see the global market return to surplus, the group indicated.
“Looking ahead to 2022, risks and uncertainties loom large and require careful monitoring to ensure the recovery from the Covid-19 pandemic,” OPEC said in its monthly report, which contained the first detailed estimates for next year.
The mixed outlook fits with plans by OPEC and its allies -- yet to be ratified -- to gently restore the vast amounts of production they still have offline in monthly tranches of 400,000 barrels a day. Before that road map can be approved, the group must first resolve a spat between the United Arab Emirates and Saudi Arabia.
The two countries have made progress in resolving a dispute over what the UAE says is an unfairly low output limit. If they can overcome the bitter impasse, the coalition can proceed with restarting the idled barrels.
OPEC forecast a gradual recovery in demand for its crude this year and next, as the group closes in on a deal to revive the production still shuttered since the pandemic.
The need for supplies from the Organization of Petroleum Exporting Countries will continue to climb, remaining well above the group’s current output and exceeding pre-virus levels by the second half of 2022. But it will go through a lull in the first quarter that could see the global market return to surplus, the group indicated.
“Looking ahead to 2022, risks and uncertainties loom large and require careful monitoring to ensure the recovery from the Covid-19 pandemic,” OPEC said in its monthly report, which contained the first detailed estimates for next year.
The mixed outlook fits with plans by OPEC and its allies -- yet to be ratified -- to gently restore the vast amounts of production they still have offline in monthly tranches of 400,000 barrels a day. Before that road map can be approved, the group must first resolve a spat between the United Arab Emirates and Saudi Arabia.
The two countries have made progress in resolving a dispute over what the UAE says is an unfairly low output limit. If they can overcome the bitter impasse, the coalition can proceed with restarting the idled barrels.
MIDEAST STOCKS #Saudi index gains on petrochemicals boost; other major markets ease | Reuters
MIDEAST STOCKS Saudi index gains on petrochemicals boost; other major markets ease | Reuters
Most major stock markets in the Gulf ended lower on Thursday, weighed by financial shares, while the Saudi index was lifted by shares of petrochemical companies.
Saudi Arabia's benchmark index (.TASI) finished 0.2% higher, with Sahara International Petrochemical Company (2310.SE) rising over 3% and Saudi Basic Industries (2010.SE) gaining 0.7%.
Goldman Sachs expects an oil supply agreement between Saudi Arabia and the United Arab Emirates to be a bullish catalyst for crude prices over coming months.
The kingdom and the UAE have reached a compromise over OPEC+ policy, Reuters reported on Wednesday, citing an OPEC+ source, a move that should unlock a deal to supply more crude to a tight oil market.
"New talks between OPEC members suggest possible modifications to the supply agreement and changes in the volumes they will put on the market," said Daniel Takieddine, senior market analyst at FXPrimus.
"The results will affect the energy sector in the GCC (Gulf Cooperation Council) stock markets."
Elsewhere, Arriyadh Development (4150.SE) jumped more than 5% after reporting a sharp rise in its quarterly net profit.
The property developer also proposed a dividend of one riyal per share for the first half of 2021.
The Qatari index (.QSI) retreated 0.7%, dragged down by a 1.6% slide in Qatar National Bank (QNBK.QA), the Gulf's largest lender, and a 1.2% drop in petrochemical firm Industries Qatar (IQCD.QA).
Dubai's main share index (.DFMGI) fell 0.4%, weighed by a 1.3% fall in blue-chip developer Emaar Properties (EMAR.DU) and a 0.6% decrease in sharia-compliant lender Dubai Islamic Bank (DISB.DU).
In Abu Dhabi, the index (.ADI) edged down 0.2%, hit by a 0.6% fall in First Abu Dhabi Bank (FAB.AD) and a 0.7% decline in conglomerate International Holding (IHC) (IHC.AD).
Outside the Gulf, Egypt's blue-chip index (.EGX30) lost 0.4%, with Fawry for Banking Technology and Electronics dropping 1.9%.
Most major stock markets in the Gulf ended lower on Thursday, weighed by financial shares, while the Saudi index was lifted by shares of petrochemical companies.
Saudi Arabia's benchmark index (.TASI) finished 0.2% higher, with Sahara International Petrochemical Company (2310.SE) rising over 3% and Saudi Basic Industries (2010.SE) gaining 0.7%.
Goldman Sachs expects an oil supply agreement between Saudi Arabia and the United Arab Emirates to be a bullish catalyst for crude prices over coming months.
The kingdom and the UAE have reached a compromise over OPEC+ policy, Reuters reported on Wednesday, citing an OPEC+ source, a move that should unlock a deal to supply more crude to a tight oil market.
"New talks between OPEC members suggest possible modifications to the supply agreement and changes in the volumes they will put on the market," said Daniel Takieddine, senior market analyst at FXPrimus.
"The results will affect the energy sector in the GCC (Gulf Cooperation Council) stock markets."
Elsewhere, Arriyadh Development (4150.SE) jumped more than 5% after reporting a sharp rise in its quarterly net profit.
The property developer also proposed a dividend of one riyal per share for the first half of 2021.
The Qatari index (.QSI) retreated 0.7%, dragged down by a 1.6% slide in Qatar National Bank (QNBK.QA), the Gulf's largest lender, and a 1.2% drop in petrochemical firm Industries Qatar (IQCD.QA).
Dubai's main share index (.DFMGI) fell 0.4%, weighed by a 1.3% fall in blue-chip developer Emaar Properties (EMAR.DU) and a 0.6% decrease in sharia-compliant lender Dubai Islamic Bank (DISB.DU).
In Abu Dhabi, the index (.ADI) edged down 0.2%, hit by a 0.6% fall in First Abu Dhabi Bank (FAB.AD) and a 0.7% decline in conglomerate International Holding (IHC) (IHC.AD).
Outside the Gulf, Egypt's blue-chip index (.EGX30) lost 0.4%, with Fawry for Banking Technology and Electronics dropping 1.9%.
Fitch Revises #SaudiArabia's Outlook to Stable; Affirms at 'A'
Fitch Revises Saudi Arabia's Outlook to Stable; Affirms at 'A'
KEY RATING DRIVERS
The Outlook revision reflects prospects for a smaller deterioration in key sovereign balance-sheet metrics than at the time of the previous review, owing to significantly higher oil prices and continued government commitment to fiscal consolidation. We continue to forecast government debt/GDP to rise and sovereign net foreign assets (SNFA) to decline over the medium term, but these metrics will remain considerably stronger than the 'A' median. In addition, the government will retain significant fiscal buffers, for example, deposits at the central bank in excess of 10% of GDP. Oil dependence, weak governance indicators and vulnerability to geopolitical shocks constrain the rating.
The widening of the 2020 budget deficit, to 11.2% of GDP, was less severe than during the 2015-2016 oil price slide owing to subsequent fiscal reforms, the policy response in 2020 and exceptional budget transfers from the Saudi Central Bank (SAMA) and the Public Investment Fund (PIF). The government tripled the VAT rate to 15% in July 2020, raised customs duties and reprioritised spending. Total spending was only 5% above budget because of capex reductions and the suspension of the cost of living allowance. Non-oil revenue rose to 18.5% of non-oil GDP (or 15.8%, excluding non-recurring items) from less than 10% in 2015.
We forecast the budget deficit to narrow to 3.3% of GDP in 2021, better than the 4.9% budget target. We assume the Brent price will average USD63/bbl, up 46% from 2020. A full year of the higher VAT rate will support non-oil revenue. Fiscal policy has tended to be procyclical with oil prices, but we expect budget spending to remain better anchored to budget plans in 2021 given the uncertain medium-term oil price outlook, the government's aim to improve the Kingdom's fiscal structure and increasing public-sector spending outside the budget. Higher oil prices in 2021 are nonetheless a test for reform momentum, including on the wage bill and subsidies. Planned reforms in these areas may well slow.
In 2022-2023, the government projects budget deficits of 3% of GDP and -0.4% of GDP, with lower nominal spending each year. Our forecasts are more conservative, with the budget deficit widening to an average of 3.6% of GDP as oil prices decline and assuming marginal nominal increases in spending which will nonetheless decline as a percentage of GDP.
The Outlook revision reflects prospects for a smaller deterioration in key sovereign balance-sheet metrics than at the time of the previous review, owing to significantly higher oil prices and continued government commitment to fiscal consolidation. We continue to forecast government debt/GDP to rise and sovereign net foreign assets (SNFA) to decline over the medium term, but these metrics will remain considerably stronger than the 'A' median. In addition, the government will retain significant fiscal buffers, for example, deposits at the central bank in excess of 10% of GDP. Oil dependence, weak governance indicators and vulnerability to geopolitical shocks constrain the rating.
The widening of the 2020 budget deficit, to 11.2% of GDP, was less severe than during the 2015-2016 oil price slide owing to subsequent fiscal reforms, the policy response in 2020 and exceptional budget transfers from the Saudi Central Bank (SAMA) and the Public Investment Fund (PIF). The government tripled the VAT rate to 15% in July 2020, raised customs duties and reprioritised spending. Total spending was only 5% above budget because of capex reductions and the suspension of the cost of living allowance. Non-oil revenue rose to 18.5% of non-oil GDP (or 15.8%, excluding non-recurring items) from less than 10% in 2015.
We forecast the budget deficit to narrow to 3.3% of GDP in 2021, better than the 4.9% budget target. We assume the Brent price will average USD63/bbl, up 46% from 2020. A full year of the higher VAT rate will support non-oil revenue. Fiscal policy has tended to be procyclical with oil prices, but we expect budget spending to remain better anchored to budget plans in 2021 given the uncertain medium-term oil price outlook, the government's aim to improve the Kingdom's fiscal structure and increasing public-sector spending outside the budget. Higher oil prices in 2021 are nonetheless a test for reform momentum, including on the wage bill and subsidies. Planned reforms in these areas may well slow.
In 2022-2023, the government projects budget deficits of 3% of GDP and -0.4% of GDP, with lower nominal spending each year. Our forecasts are more conservative, with the budget deficit widening to an average of 3.6% of GDP as oil prices decline and assuming marginal nominal increases in spending which will nonetheless decline as a percentage of GDP.
Oil Price Slides on #UAE-#Saudi Talks, U.S. Stockpile Gain - Bloomberg video
Oil Price Slides on UAE-Saudi Talks, U.S. Stockpile Gain - Bloomberg
Oil losses extended on signs that the United Arab Emirates is nearing a deal on what could be a more generous output level, along with an unexpected expansion of U.S. stockpiles. Bloomberg’s Stephen Stapczynski reports. (Source: Bloomberg)
Russian healthcare provider EMC valued at $1.1 bln in IPO | Reuters
Russian healthcare provider EMC valued at $1.1 bln in IPO | Reuters
Russian healthcare provider European Medical Centre (EMC), which was valued at $1.1 billion in its initial public offering (IPO) on Thursday, said it sees strong potential for growth as more wealthy Russians seek private healthcare.
EMC has been offering healthcare through a network of medical centres in and around Moscow for over three decades and is the second private Russian healthcare provider to list shares after MD Medical Group nearly a decade ago.
EMC offered 40 million global depository receipts at $12.50, or 926.55 roubles, apiece, which was at the lower end of its initial guidance and gave it a market value of $1.13 billion.
The sale of existing shares raised about $500 million for EMC shareholders led by Igor Shilov and left the company with a free float of 44%. Shilov retained a 55.1% stake in EMC following the IPO, the company said.
Russian healthcare provider European Medical Centre (EMC), which was valued at $1.1 billion in its initial public offering (IPO) on Thursday, said it sees strong potential for growth as more wealthy Russians seek private healthcare.
EMC has been offering healthcare through a network of medical centres in and around Moscow for over three decades and is the second private Russian healthcare provider to list shares after MD Medical Group nearly a decade ago.
EMC offered 40 million global depository receipts at $12.50, or 926.55 roubles, apiece, which was at the lower end of its initial guidance and gave it a market value of $1.13 billion.
The sale of existing shares raised about $500 million for EMC shareholders led by Igor Shilov and left the company with a free float of 44%. Shilov retained a 55.1% stake in EMC following the IPO, the company said.
#Saudi inflation rises again in June, hits highest rate this year | Reuters
Saudi inflation rises again in June, hits highest rate this year | Reuters
Saudi Arabia’s annual inflation rate rose to 6.2% in June, the highest this year, from 5.7% in May, official data showed on Thursday.
June marked a third consecutive monthly rise reflecting an increase in value-added tax introduced last year.
“Noting that consumer prices still reflect an increase of the value added tax (VAT) from 5% to 15% in July 2020, the rise of the CPI resulted mainly from higher prices of transport (+22.6%) and food and beverages (+8.1%),” the General Authority for Statistics said.
The VAT increase came as the Saudi government sought to bolster state coffers depleted by the twin shock of last year’s oil price crash and the COVID-19 pandemic, as well as voluntary oil production cuts implemented to help stabilise world prices.
To help alleviate rising living costs, Saudi Arabia, the world’s largest oil exporter, last week set a cap on local gasoline prices for July.
Month on month, consumer prices in June increased by just 0.2%, the statistics authority said.
Inflation is expected to start declining from July as the base effect of the VAT increase will drop out of the annual price comparison, London-based Capital Economics has said.
It estimated the headline rate will slow to around 1%-1.5% year on year.
The International Monetary Fund has said it expects annual average inflation of 3.2% this year.
Saudi Arabia’s annual inflation rate rose to 6.2% in June, the highest this year, from 5.7% in May, official data showed on Thursday.
June marked a third consecutive monthly rise reflecting an increase in value-added tax introduced last year.
“Noting that consumer prices still reflect an increase of the value added tax (VAT) from 5% to 15% in July 2020, the rise of the CPI resulted mainly from higher prices of transport (+22.6%) and food and beverages (+8.1%),” the General Authority for Statistics said.
The VAT increase came as the Saudi government sought to bolster state coffers depleted by the twin shock of last year’s oil price crash and the COVID-19 pandemic, as well as voluntary oil production cuts implemented to help stabilise world prices.
To help alleviate rising living costs, Saudi Arabia, the world’s largest oil exporter, last week set a cap on local gasoline prices for July.
Month on month, consumer prices in June increased by just 0.2%, the statistics authority said.
Inflation is expected to start declining from July as the base effect of the VAT increase will drop out of the annual price comparison, London-based Capital Economics has said.
It estimated the headline rate will slow to around 1%-1.5% year on year.
The International Monetary Fund has said it expects annual average inflation of 3.2% this year.
#Kuwait plans taxes and sovereign bonds to balance budget, says minister | ZAWYA MENA Edition
Kuwait plans taxes and sovereign bonds to balance budget, says minister | ZAWYA MENA Edition
Bond sales and indirect taxation are part of Kuwait's strategy to address its budget deficit, Al-Jarida paper reported, citing the country's finance minister
Minister Khalifa Hamada made the remarks in response to a parliamentary question about the government's strategy.
Taxes are selective, “imposed at high varying rates on the selling price of goods harmful to public health and the environment, in addition to luxury goods specified by law,” in addition to value-added tax, Hamada explained.
There is need for cooperation between the government and the parliament "to allow the issuance of bonds, and the orderly and limited withdrawal from the Future Generations Reserve Fund, to cover the deficit as a temporary measure, pending the completion of the reforms contained in the government's work program," the newspaper quoted the minister as saying.
Minister Khalifa Hamada made the remarks in response to a parliamentary question about the government's strategy.
Taxes are selective, “imposed at high varying rates on the selling price of goods harmful to public health and the environment, in addition to luxury goods specified by law,” in addition to value-added tax, Hamada explained.
There is need for cooperation between the government and the parliament "to allow the issuance of bonds, and the orderly and limited withdrawal from the Future Generations Reserve Fund, to cover the deficit as a temporary measure, pending the completion of the reforms contained in the government's work program," the newspaper quoted the minister as saying.
Oil falls 1% as market eyes increased supplies | Reuters
Oil falls 1% as market eyes increased supplies | Reuters
Oil prices fell more than 1% on Thursday, extending losses as investors braced for more supplies following a compromise between top OPEC producers and as U.S. fuel stocks rose, raising concerns about demand in the world’s largest consumer.
Brent crude futures for September dropped 91 cents, or 1.2%, to $73.85 a barrel by 0640 GMT while U.S. West Texas Intermediate (WTI) crude for August was at $72.11 a barrel, down $1.02, or 1.4%.
Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the UAE had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.
“The market is not taking any chances. Prices are very overbought anyway so traders might want to take some money off the table before the deal is concrete,” said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.
Oil prices fell more than 1% on Thursday, extending losses as investors braced for more supplies following a compromise between top OPEC producers and as U.S. fuel stocks rose, raising concerns about demand in the world’s largest consumer.
Brent crude futures for September dropped 91 cents, or 1.2%, to $73.85 a barrel by 0640 GMT while U.S. West Texas Intermediate (WTI) crude for August was at $72.11 a barrel, down $1.02, or 1.4%.
Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the UAE had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.
“The market is not taking any chances. Prices are very overbought anyway so traders might want to take some money off the table before the deal is concrete,” said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.
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