LONDON: Oil prices slumped on Thursday, dragged down by another record build-up in US crude inventories and the US Federal Reserve’s projections that the world’s biggest economy would shrink 6.5% this year.
Brent crude futures erased Wednesday’s gains, falling 6.6%, or $2.74, to $38.99 a barrel by 1342 GMT. US West Texas Intermediate (WTI) crude dropped 7.6%, or $3.02, to $36.58 a barrel.
Both benchmarks are set for their worst daily drops since April 21 and 27, respectively.
“Prices are once again under pressure as concerns over the pace of the demand recovery intensified,” said Rystad Energy’s oil markets analyst Paola Rodriguez Masiu.
US crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels — a record — as imports were boosted by the arrival of supplies bought by refiners when Saudi Arabia flooded the market in March and April, Energy Information Administration (EIA) data showed.
It also showed gasoline stockpiles grew more than expected to 258.7 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 1.6 million barrels, although the increase was smaller than in previous weeks.
Adding to the pressure on prices, the US Federal Reserve said US unemployment was set to reach 9.3% at the end of 2020 and it would take years to fall back, while interest rates were expected to stay near zero at least through next year.
Total US coronavirus cases topped 2 million on Wednesday, with new infections rising slightly after five weeks of declines, according to a Reuters analysis.
“No significant price relief is anticipated in 2020 but next year promises to become tighter due to improving consumption,” said PVM oil analyst Tmas Varga.
“For this forecast to prove accurate, however, assistance is required from the world’s swing producers. OPEC+ needs to stick to the April deal and keep its agreed 5.8 mbpd output restraints below the October 2018 baseline all through next year.”
Oil prices set for worst daily drop since April on inventories, bearish Fed
https://arab.news/gkkvk
Oil prices set for worst daily drop since April on inventories, bearish Fed
- Analyst Paola Rodriguez Masiu: Prices are once again under pressure as concerns over the pace of the demand recovery intensified
- US crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels
Closing Bell: Saudi main index closes in red at 10,818
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Thursday, losing 126.83 points, or 1.16 percent, to close at 10,818.32.
The total trading turnover of the benchmark index was SR4.5 billion ($1.2 billion), as 26 of the listed stocks advanced, while 233 retreated.
The MSCI Tadawul Index decreased, down 15.78 points, or 1.07 percent, to close at 1,457.04.
The Kingdom’s parallel market Nomu lost 137.69 points, or 0.58 percent, to close at 23,413.78. This comes as 26 of the listed stocks advanced, while 40 retreated.
The best-performing stock was Alistithmar AREIC Diversified REIT Fund, with its share price surging by 3.81 percent to SR7.36.
Other top performers included Etihad GO Telecom Co., which saw its share price rise by 3.08 percent to SR91.90, and Consolidated Grunenfelder Saady Holding Co., which saw a 2.55 percent increase to SR9.65.
On the downside, Thimar Development Holding Co. was among the weaker performers, with its share price falling 6.52 percent to SR33.
Baazeem Trading Co. fell 4.94 percent to SR6.35, while Fawaz Abdulaziz Alhokair Co. slipped 4.05 percent to SR18.02.
On the announcements front, Saudi Electricity Co. has officially commenced the offering of a US dollar-denominated senior unsecured sukuk, following its earlier announcement.
The two-day offering, running from Jan. 15 to Jan. 16, will be carried out through a special purpose vehicle and is open to eligible local and international investors.
According to a Tadawul statement, the final amount, pricing, and maturity terms of the sukuk will be determined based on prevailing market conditions, with a minimum subscription set at $200,000.
SEC has mandated a consortium of sixteen global and regional financial institutions, including J.P. Morgan, HSBC, and Standard Chartered Bank, as Joint Lead Managers for the issuance. Upon completion, the sukuk are expected to be listed on the London Stock Exchange’s International Securities Market.
This issuance falls under SEC’s international sukuk program and is being offered in reliance on Regulation S, meaning it will be sold exclusively outside the US to non-US persons.
SEC’s shares traded 0.07 percent higher on the main market to reach SR14.08.
