SINGAPORE: Oil prices were mixed on Tuesday, with US fuel markets seen to be tightening while the Sino-US trade dispute dragged on international crude contracts.
US West Texas Intermediate (WTI) crude futures for September delivery were up 27 cents, or 0.4 percent, at 0306 GMT, at $66.70 per barrel. The contract expires on Tuesday.
The more active October futures were up 7 cents, or 0.1 percent, to $65.49 a barrel.
Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months.
Inventories in the United States for refined products such as diesel and heating oil for this time of year are at their lowest in four years.
This is occurring just ahead of the peak demand period for these fuels, with diesel needed for tractors to harvest crops and the arrival of colder weather during the Northern Hemisphere autumn raising consumption of heating oil.
Outside the United States, Brent crude oil futures were somewhat weaker, trading at $72.18 per barrel, down 3 cents from their last close.
This followed the United States offering on Monday 11 million barrels of crude from its Strategic Petroleum Reserve (SPR) for delivery from Oct. 1 to Nov. 30.
The released oil could offset expected supply shortfalls from US sanctions against Iran, which will target its oil industry from November.
Because of the sanctions, French bank BNP Paribas said it expected oil production from the Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, to fall from an average of 32.1 million barrels per day (bpd) in 2018 to 31.7 million bpd in 2019.
Still, traders said overall market sentiment was cautious because of concerns over the demand outlook amid the trade dispute between the United States and China.
A Chinese trade delegation is due in Washington this week to resolve the dispute, but US President Donald Trump told Reuters in an interview on Monday he does not expect much progress, and that resolving the trade dispute with China will “take time.”
The impact of the Iran sanctions is not yet clear.
China has indicated that it will continue to buy Iranian oil despite the US sanctions.
The Iran supply cut may also be more than compensated for by production increases outside OPEC.
BNP Paribas said non-OPEC output would likely grow by 2 million bpd in 2018 and by 1.9 million bpd next year.
“Depending on when pipeline infrastructure constraints are lifted in the US, non-OPEC supply growth by the end of 2019 may prove higher than currently assumed,” the bank said.
The search for new oil has increased globally in the last two years, with the worldwide rig count rising from 1,013 at the end of July 2016 to 1,664 in August 2018, according to energy services firm Baker Hughes.
The biggest increase was in North America, where the rig count shot up from 491 to 1,057 in the last two years.
How prices develop will also depend on demand.
“We see global oil demand growing by 1.4 million barrels per day in both 2018 and 2019,” BNP Paribas said, implying that global markets are likely to remain sufficiently supplied.
Oil mixed on tighter US outlook
Oil mixed on tighter US outlook
- Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months
- The Iran supply cut may also be more than compensated for by production increases outside OPEC
GCC central banks hold interest rates steady for 6th time following Fed’s move
RIYADH: Gulf Cooperation Council central banks have held interest rates steady for the sixth time as the US Federal Reserve keeps its benchmark level between 5.25 percent and 5.50 percent.
As most currencies in the region are pegged to the US dollar, monetary policy follows the decisions taken in Washington, with policymakers opting to lock the rate at the level it has been since July.
The freeze comes as the rate-setting panel cites “a lack of further progress toward the committee’s 2 percent inflation objective.”
Vijay Valecha, chief investment officer at Century Financial, told Arab News: “This decision marks the sixth consecutive time that the central bank has chosen to keep rates unchanged. Market expectations have adjusted, now forecasting only one rate cut by year-end compared to the six anticipated at the beginning of 2024.”
He added: “The monetary policies of most central banks in the GCC countries, including the UAE, Saudi Arabia, Bahrain, Oman, and Qatar, typically mirror those of the Fed due to their currencies being pegged to the US dollar. Kuwait is the exception in the bloc, as its dinar is linked to a basket of currencies.”
Valecha continued by stating that as a result, interest rates in GCC markets are also anticipated to remain stable in the near future, which bodes well for the profitability of GCC banks.
This decision implies that the Saudi Central Bank, also known as SAMA, will maintain its repo rates at the current level of 6 percent.
The UAE central bank, along with Kuwait, Qatar, Oman, and Bahrain, also mirrored the Fed’s move.
Repo rates, which represent a form of short-term borrowing primarily involving government securities, underscore the close economic ties and financial dynamics between the GCC countries and the global economic landscape, particularly the US.
The US central bank also stated that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
This indicates that rate cuts are not on the cards anytime soon, until inflation cools down and moves sustainably toward the 2 percent target set by the US Fed.
US car marker Lucid partners with KACST to advance EV technology in Saudi Arabia
RIYADH: US electric vehicle manufacturer Lucid Group and Saudi Arabia’s King Abdulaziz City for Science and Technology have inked a pact to boost EV technology development within the Kingdom.
As part of the deal, the California-based firm, in which Saudi Arabia’s Public Investment Fund holds a significant stake, will collaborate with KACST on joint research, utilizing the institute’s services, facilities, and products for dedicated research into advanced battery technologies and materials.
Additionally, they will conduct studies in aerodynamics, autonomous driving, and artificial intelligence technologies, according to a press release.
Faisal Sultan, vice president and managing director of Middle East, Lucid Group said: “Lucid’s goal is to inspire the adoption of sustainable energy by creating advanced technologies. This Memorandum of Understanding marks a key step towards achieving this vision, acting as a catalyst to advance and elevate the entire EV industry and inspire the adoption of sustainable transportation in support of the Kingdom’s vision for a more sustainable and diversified economy.”
The partnership between Lucid and KACST will also include research on electric vehicles, assessing their performance to ensure they are suitable for the climatic conditions in the Kingdom, the release added.
The joint research and development headquarters will be established at the national laboratories in KACST and are scheduled to launch during the third quarter of 2024.
“Using our state-of-the-art facilities, the research conducted under this project will advance electric vehicle systems and aid the development of technologies to support autonomous driving, in line with national aspirations for research, development and innovation in the energy and industry sector,” said Talal bin Ahmed Al-Sudairi, senior vice president of KACST for research and development sector.
The deal will see Lucid Group and KACST collaborating to leverage their expertise in scientific and technical research. Their joint efforts will focus on developing research programs geared toward creating technical solutions for the transportation and energy sectors, thereby bolstering the national economy.
In September 2023, Lucid opened its first plant outside the US in Saudi Arabia with an initial capacity to produce 5,000 EVs a year.
This came as the Kingdom’s government pledged to buy up to 100,000 vehicles from the company over 10 years.
Saudi Arabia open to financing up to 75% of certain industrial projects, says minister
RIYADH: Saudi Arabia is open to providing up to 75 percent of financing for certain industrial projects, a minister has revealed in a bid to incentivize foreign investment and private sector players.
During his discussion with several Qatari investors on the sidelines of the 52nd meeting of the Gulf Cooperation Council Industrial Cooperation Committee in Doha, Bandar Alkhorayef, the Kingdom’s minister of industry and mineral resources, highlighted the vast opportunities that Saudi Arabia’s untapped mining potential provides to global investors.
According to a release on X, he reaffirmed that in addition to the incentives provided by the industrial and mineral wealth system and the multiple sources of financing, the prepared infrastructure in more than 36 industrial cities around the Kingdom offers a sum of qualitative capabilities such as the production of prefabricated factories and long-term rentals.
SAR sees 9% annual growth in cargo transported
RIYADH: The volume of minerals and goods transported by Saudi Arabia Railways reached 6.34 million tonnes during the first quarter of 2024, an annual increase of 9 percent.
According to its quarterly report, SAR stated that over 2.7 million passengers utilized its services, marking a 23 percent growth compared to same period last year.
Passenger rides also increased by 3 percent, reaching a total of 8,252 trips across the East Train, North Train, and Haramain Express train networks.
Saudi financial sector expands ambitions, eyes foreign investment surge: report
RIYADH: Saudi Arabia aims to enhance its stock exchange appeal to foreign investors, targeting 17 percent ownership of free float shares by 2024, a new report has revealed.
According to the 2023 Financial Sector Development Program document, the Saudi Capital Market Authority plans to boost assets under management to 29.4 percent of gross domestic product by 2024 by increasing the investment environment and attracting more investors.
The report, published annually, highlights the achievements in the financial sector, particularly the Kingdom’s ongoing progress in competitiveness indicators related to the capital market, as stated by Mohammed Al-Jadaan, minister of finance and chairman of the FSDP.
Commenting on the development of the financial sector, Al-Jadaan emphasized the importance of innovation and investment in talent and technology.
“We have placed innovation and investment in both talent and technology at the top of our priorities, because we recognize the importance of building a dynamic financial environment that allows companies — especially startups — to flourish and succeed,” the minister stated.
In line with its commitment to facilitating financing in the capital market, the CMA also plans to accelerate the pace of listings by welcoming 24 new companies in 2024.
Moreover, there will be a focus on supporting the development of new and promising sectors, with a target of having micro and small enterprises account for 45 percent of total listings.
Another area of emphasis is the deepening of the sukuk and debt instruments market, with the goal of increasing the debt-to-GDP ratio to 22.1 percent by the end of 2024. These measures aim to provide diverse financing options for companies and further stimulate economic growth.
“The capital market ecosystem continued its efforts to contribute to developing the financial sector and achieving the Saudi Vision 2030,” stated Mohammed El-Kuwaiz, chairman of the CMA.
“By approving rules for foreign investment in securities and streamlining regulatory procedures, we have witnessed a significant increase in foreign investments in the capital market, reaching SR401 billion ($106.9 billion),” El-Kuwaiz added.
The Saudi Central Bank also reaffirmed its commitment to adhering to international standards and best practices to enhance the strength and stability of the financial sector.
Initiatives such as developing digital solutions for supervising the financial sector and enabling local and international FinTechs demonstrate the Kingdom’s dedication to embracing technological advancements.
Furthermore, the Financial Academy unveiled its new strategy for 2024-2026, focusing on enhancing human capabilities in the financial sector through training programs and professional certifications.
The academy aims to increase the number of trainees and improve the quality of its services to meet the evolving needs of the industry.
The 2023 FSDP report highlighted significant progress across sectors like fintech and digital banking.
The Kingdom saw a surge in fintech companies, surpassing 2023 targets with 216 in operation and launching two digital banks.
Saudi Arabia claimed the top spot in the Corporate Boards Index among G20 nations and secured second place in various indices. Foreign companies relocated headquarters to the Kingdom, deepening the capital market.
Moody’s, Fitch, and S&P Global Ratings revised Saudi Arabia’s outlook to “Positive” and affirmed its “A1” and “A+” credit ratings, citing fiscal policy development, economic reforms, and structural improvements.
Saudi Arabia led venture investments in the Middle East & North Africa, securing 52 percent of total investments in 2023, and allocated SR10 billion to support small and medium enterprises across economic activities and regions in the first half of the year.
