‘Worst is over’ as oil stages a comeback

West Texas Intermediate gained 20.5 percent. (AFP)
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Updated 06 May 2020

‘Worst is over’ as oil stages a comeback

  • Prices surge as big banks, analysts say global glut of crude is being drained

DUBAI: Oil markets breathed a sigh of relief on Tuesday amid tentative signs that the global glut of crude was being drained. 

Brent crude, the Middle East benchmark, traded above $30 a barrel for the first time since the middle of last month. It rose by $3.77, or 13.9 percent, to close at $30.97 a barrel.

West Texas Intermediate, the US standard that collapsed into negative territory last month, gained $4.17, or 20.5 percent, to settle at $24.56 a barrel.

Western markets had the weekend to assess the impact of the big OPEC+ cuts that came into effect on Friday, and liked what they saw. Two of the world’s biggest investment banks said oil markets had bottomed out, and predicted a mild recovery.


Two of the world’s biggest investment banks said oil markets had bottomed out, and predicted a mild recovery

Goldman Sachs said production has started to decline quickly, and raised next year’s forecast prices to $51.38 per barrel for WTI and $55.63 for Brent. “Demand is also beginning to recover from a low base, led by a restarting Chinese economy and improving transportation demand in developed market economies,” the bank said.

Morgan Stanley forecast Brent to rise steadily to $35 by the end of the year. The bank did not expect an immediate rally but “the greatest mismatch in supply/demand is probably behind us,” it said.

The bank said the peak of oversupply in global markets had probably been reached and a storage crunch was abating. “Inventories have built but not quite as strongly as feared. With social distancing measures ramped up in March ... the observed inventory increases have not been quite as strong as feared,” it said

Phil Flynn, senior analyst at Price Futures Group, said: “The market is starting to realize that demand destruction has been terrible, but we’re reopening and demand is going to get better. But the production pullback is just beginning.”

Saudi Arabia’s crude oil exports in May are expected to drop to about 6 million barrels a day, the lowest in almost a decade, under the OPEC+ agreement, analysts told the Reuters news agency.


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The Swiss bank UBS said the easing of coronavirus restrictions in many countries would help balance out supply and demand, leading to a shortfall in supply by the end of the year.

US President Donald Trump, who has attacked OPEC in the past for keeping oil prices high to the detriment of American consumers, tweeted: “Oil prices moving up nicely as demand begins again!”

However, oil trading professionals did not share his optimism. Matt Stanley, a broker in Dubai for the global trader Starfuels, said: “I am fearful of prices suffering another collapse on the back of hope and a perceived demand that is ultimately only going to end in disappointment.”

UAE’s ADNOC obtains global certification to supply sustainable aviation fuel 

Updated 5 sec ago

UAE’s ADNOC obtains global certification to supply sustainable aviation fuel 

RIYADH: The UAE is all set to lead the Middle East in producing sustainable aviation fuel, with Abu Dhabi National Oil Co.’s Ruwais refinery receiving the International Sustainability and Carbon Certification. 

According to the Emirates News Agency, or WAM, the certification makes ADNOC the first company in the Middle East to supply the aviation sector with SAF and reinforces its sustainability pledge. 

The SAF is produced using cooking oils as feedstock and is blended with jet fuel at the Ruwais refinery. 

“Developing sustainable aviation fuel is an essential part of the company’s strategy to provide low-emission fuel to its customers,” said Sultan Albigishi, the acting CEO of ADNOC Refining, in a statement. 

Based in Cologne, ISCC is a global system for certifying the sustainability of agricultural, industrial, and food products. ISCC covers a wide range of products across multiple markets. 

By obtaining the international certificate for SAF production through its existing refineries, ADNOC can supply biofuel to international airlines in Abu Dhabi.  

According to WAM, the company will release its first batch of SAF later this month, which will be enough to fuel a 787-10 Dreamliner flight from Abu Dhabi to Paris. 

“Obtaining the international certificate for sustainability and carbon represents an important progress in ADNOC’s journey to achieve sustainability,” said Ahmad bin Thalith, the acting CEO of ADNOC Global Trading, in the statement. 

ADNOC Global Trading is responsible for providing vital raw materials suitable for refining operations. Trading operations include biofuels and other sustainable fuel alternatives to its global and local customers. 

The group continues to implement a qualitative shift and take practical steps to make today’s energy cleaner while investing in future clean energies to enhance its position as a reliable global energy provider. 

As part of its ongoing efforts to support the UAE’s strategic initiative to achieve climate neutrality by 2050, ADNOC recently announced that it will bring the date of attaining its climate neutrality goal closer to 2045 instead of 2050. 

Closing bell — Saudi main index drops 54 points to close at 10,952

Updated 6 min 4 sec ago

Closing bell — Saudi main index drops 54 points to close at 10,952

RIYADH: Saudi Arabia’s Tadawul All Share Index continued its downward trend for the third consecutive day, as it shed 53.60 points or 0.49 percent to close at 10,952.34 on Tuesday.

The total trading turnover of the benchmark index was SR4.89 billion ($1.30 billion) as 74 stocks advanced, while 143 declined.

Saudi Arabia’s parallel market Nomu slipped on Tuesday, declining by 247.82 points to 22,544.21, while the MSCI Tadawul Index also fell by 0.44 percent to close at 1,407.13.

Alinma Tokio Marine Co. was the best-performing stock of the day on the main index. The company’s share price soared by 9.99 percent to SR15.20.

Other top firms include Middle East Healthcare Co. and Al Sagr Cooperative Insurance Co., whose share prices edged up by 4.92 percent and 3.69 percent, respectively.

Electrical Industries Co. was the poorest performer of the day, with its share price declining by 8.02 percent to SR1.95.

On the announcements front, Saudi Top for Trading Co., listed on the Kingdom’s parallel market, announced that it has signed a Shariah-compliant credit facility agreement with Riyad Bank worth SR30 million.

The newly-listed company said that SR20 million would be allocated to repay suppliers’ dues, while the remaining SR10 million will be used to issue letters of guarantee.

Meanwhile, Saudi multinational dairy firm Almarai said that its board has approved an investment plan of SR405 million to increase its fresh bakery capacity, expand its products, and enter the frozen bakery segment in the Kingdom.

According to a Tadawul statement, the new investment plan will be financed by Almarai’s internal cash flow, with an expected completion period of two years.

Bahrain’s economy grows 2% as non-oil sector expands

Updated 15 min 51 sec ago

Bahrain’s economy grows 2% as non-oil sector expands

RIYADH: Bahrain recorded a 2 percent growth in real gross domestic product in the second quarter compared to the same period last year, according to its Ministry of Finance and National Economy. 

In its latest report, the department disclosed that the growth in real GDP was fuelled by a rise in the non-oil sector, also of 2 percent. 

The transportation and communication activities topped the rankings, reporting an annual growth of 13.3 percent in the second quarter, followed by hotels and restaurants, which grew by 9.6 percent. 

Real estate and business activities rose 4.9 percent, while financial corporations advanced by 4.7 percent annually over the second quarter of last year. 

The oil sector also reported an annual increase of 2.2 percent in business activity, spurred by a 2.9 percent rise in the combined production of Abu Sa’afa and the onshore Bahrain oil fields.   

Like many oil-dependent nations, Bahrain has recognized the need to diversify its economy.   

Various initiatives have been taken to support this, including in the financial services, tourism and hospitality, and real estate sectors.

The report further stated that the non-oil industry contributed 82.9 percent of Bahrain’s real GDP between April and June,

The financial sector made up the largest segment of the total, with its size reflecting the government’s focus on financial technology and digital banking.

The oil sector was the second-largest contributor to real GDP at 17.1 percent, while government services came in third, accounting for 14.1 percent.

The manufacturing sector dropped by 0.9 percent in the second quarter compared to last year’s corresponding period yet controlled 13.6 percent of the country’s real GDP. 

Bahrain has also been promoting the manufacturing and industrial sectors to reduce dependency on oil, including nurturing Aluminum Bahrain – one of the largest producers of the metal in the world – and growing the petrochemical industry. 

These diversification efforts align with Bahrain Economic Vision 2030, a comprehensive development plan to transform the country’s economy. 

The quarterly report further projects real GDP growth of 2.9 percent in 2023 and 3.2 percent in 2024, with the non-oil sector growing by 3.5 percent and 3.8 percent, respectively, during those years. 

PIF creates Al Balad Development Co. to boost historic Jeddah area

Updated 1 min 31 sec ago

PIF creates Al Balad Development Co. to boost historic Jeddah area

RIYADH: The Public Investment Fund has established a new company to develop the historic Jeddah district of Al Balad into a global tourist destination.

Al Balad Development Co. will work to improve the infrastructure of the region, supervise the restoration of historical buildings in the area, and develop service facilities, according to a statement from PIF. 

It will also oversee the creation of 9,300 homes and 1,800 hotel units, across an area of 2.5 million sq. meters.

Developing the tourism sector is a crucial part of Saudi Arabia’s Vision 2030 – the Kingdom’s plan to diversify its economy away from oil.

Saudi Arabia aims to attract over 100 million visitors by 2030, along with increasing the tourism sector’s contribution to the Kingdom’s gross domestic product to more than 10 percent.

In its statement, PIF noted that the newly formed company is expected to offer attractive investment opportunities and quality commercial options for the people of Jeddah.

“The company will collaborate with the private sector and specialists to develop the area’s infrastructure according to the best standards of urban planning for historic areas, taking into account environmental sustainability and preserving the unique heritage of Historic Jeddah: a UNESCO World Heritage site,” added PIF. 

The development will also see the creation 1.3 million sq. meters of commercial and office space.

The sovereign wealth fund has been spearheading the Kingdom’s economic diversification efforts since the launch of Vision 2030. 

According to its latest annual report, PIF currently holds assets under management worth SR2.23 trillion ($595 billion). 

The fund has already established 70 companies, and 25 of them were founded in 2022, including Saudi Coffee Co. and Halal Products Development Co. 

In 2022 alone, PIF-owned companies created over 181,000 jobs, the annual report added. 

Saudi Tourism Authority joins forces with Huawei to boost Chinese tourism

Updated 03 October 2023

Saudi Tourism Authority joins forces with Huawei to boost Chinese tourism

RIYADH: In a bid to enhance the experience for travelers and bolster Chinese visits to Saudi Arabia, the Saudi Tourism Authority has collaborated with Huawei Mobile Services and its advertising branch, Petal Ads. 

The partnership was cemented through a memorandum of understanding signed during the Approved Destination Status launch ceremony in Beijing, according to a press release. 

Fahd Hamidaddin, CEO of the Saudi Tourism Authority, signed the deal alongside Walter Ji Rengui, president of Huawei Consumer Cloud Service Global Ecosystem Development & Operations. 

The primary objective of this collaboration is to reshape the way visitors explore Saudi Arabia by digitizing travel services, with a specific focus on attracting Chinese tourists, the press release added. 

Choon Yang Quek, chief technology officer at the STA, stated: “The partnership with Huawei Mobile Services and Petal Ads is part of Saudi’s innovative approach to marketing tourism and enhancing visitor experiences.”  

He added: “By joining forces with Huawei, known for its strong consumer connections, and combining it with Saudi’s commitment to visitor satisfaction, we can now reach new audiences more effectively through established Huawei channels and gain deeper insights into Chinese travelers to tailor their Saudi journeys.” 

This agreement reflects the ongoing partnership between the two entities and their shared dedication to showcasing Saudi Arabia as a dynamic destination to Chinese audiences, the press release added. 

Alhasan Al-Dabbagh, president of Asia-Pacific markets at the STA, said: “By incorporating Huawei’s cutting-edge technology into the travel experience, we can leverage established channels to reach a wider audience and gain a deeper understanding of potential visitors.” 

Through the integration of Huawei Mobile Services’ advanced technology solutions, tourists visiting Saudi Arabia can anticipate a smarter travel experience. 

This includes features such as seamless navigation, language translation services, and augmented reality-guided tours, all aimed at helping tourists make the most of their time while exploring the Kingdom. 

The partnership is part of the STA’s efforts to enhance the tourist experience through technology while highlighting Saudi Arabia’s cultural heritage, landscapes, and hospitality. 

This comes as the Kingdom aims to deliver personalized experiences for Chinese tourists, with readily available support throughout their trip. 

In partnership with Petal Ads, the STA looks to attract more Chinese tourists to discover Saudi Arabia’s attractions.