NEW YORK: Oil prices spiked abruptly at midday on Thursday, extending an early bounce from new four-year lows as a combination of technical buying and options expiry for US crude triggered a sudden frenzy of buying.
Markets had gained earlier in the day, led by a pick-up in gasoline futures after data showed US stockpiles fell to their lowest level in two years, and as some traders bet that a more than 25 percent slump since June had been overdone.
At around 1700 GMT, the market suddenly surged by as much as $3 a barrel, a move traders said was fueled by investors covering positions tied to US WTI options trades, which expire later in the day, as well as automatic buy-stops.
By 1:18 p.m. EDT, oil prices had given up about half of the midday gains, but December Brent crude was up $2.18, or 2.6 percent, to $86.30 a barrel, putting it on track for the biggest one-day gain since the market began a lengthy slide in mid-June. Expiring November Brent rose 47 cents to $84.25 a barrel.
US November crude rose $1.37 to $83.15 a barrel, off the intra-day high of $84.83 a barrel.
The rally appeared partly to be a reaction to the steepening sell-off over the past week or two, fueled by a growing realization that Saudi Arabia and other OPEC members are in no hurry to cut production and shore up prices.
“The oil market is trying to find a bottom around $80, but there’s a lot of support and short covering,” said Andrew Lipow, president of Lipow Oil Associates.
US oil data earlier on Thursday set off a rally in New York gasoline futures, which rose more than 3 percent.
US gasoline stocks fell by 3.99 million barrels from the prior week to reach 205.6 million barrels, their lowest level since November 2012, according to weekly data from the US Energy Information Administration released on Thursday.
The data also showed US crude inventories rose 8.9 million barrels, far higher than analysts’ expectations for a build of 2.8 million barrels.
The global price of oil was relatively stable for nearly four years, averaging $110 per barrel.
Increased production in the US, Canada, Iraq and elsewhere made up for declining supplies in nations such as Iran and Libya and helped meet rising global demand.
The global sell-off in stock markets deepened on Thursday, with European indexes in particular suffering heavy losses amid growing concerns about Greece’s financial stability.
After being stable on the open, the German DAX stock index was down 1.8 percent by midday in Europe. France’s CAC 40 shed 2.3 percent and Britain’s FTSE 100 lost 1.8 percent.
Markets in economically weaker European countries fared worse — Spain’s was down 2.9 percent and Italy’s 2.8 percent.
Wall Street was expected to drop on the open, with Dow and S&P 500 futures down 1.1 percent and 1.4 percent, respectively.
Asian markets closed lower earlier, with Tokyo’s Nikkei 225 diving 2.2 percent.
Investors are worried about a downturn in global growth and inflation. Slowdowns in Europe and China are seen threatening the US recovery.
In Europe, the biggest concern was Greece, where investors are worried the country might need more financial support as its government borrowing rates have risen sharply in recent days.
The country’s benchmark 10-year bond yield was up a stunning 1.13 percentage points on the day on Thursday, to 8.86 percent. The rate was around 6.5 percent just earlier this week.
The rise suggests Greece is unlikely to be able to wean itself off its bailout loans as hoped, because borrowing on bond markets independently would be too expensive.
According to the Wall Street Journal, the European Central Bank agreed overnight to provide liquidity support to Greek banks to keep them stable.
A slump in energy prices has also shaken many global investors
Though lower oil prices can help consumer spending, they can weigh on inflation. Low inflation is a problem for many developed economies, particularly in Europe.
World stock market sell-off deepens
World stock market sell-off deepens
Saudi domestic tourism driving travel sector growth, Almosafer CEO says
RIYADH: Saudi Arabia’s domestic tourism is fueling a significant expansion in the Kingdom’s travel sector, with domestic bookings now making up over 40 percent of Almosafer’s overall travel market, according to CEO Muzzammil Ahussain.
This growth is underscored by a 45 percent year-on-year increase in domestic flight bookings in 2024, alongside a 39 percent rise in room night bookings, according to Almosafer’s latest travel trend report, released during the third Saudi Tourism Forum held in Riyadh.
The surge is linked to the country’s expanding tourism offerings and enhanced connectivity through low-cost carriers, with family and group travel seeing a particular boost, rising over 70 percent, the report added.
“The country has invested heavily in creating offerings and events to support domestic tourism,” Ahussain told Arab News on the sidelines of the event. “We see continued strength and sustainability in this, so we remain focused on domestic tourism.”
Almosafer, a Saudi travel company and part of Seera Group, is benefiting from this trend as domestic tourism becomes more sustainable. “In the report, over 40 percent of all of our bookings are now domestic,” Ahussain explained. “That doesn’t mean international travel is slowing down; overall travel is growing.”
He said flight prices dropped 7 percent year on year, prompting higher spending in destinations. “People are spending more on hotels, staying longer, and spending on experiences and events,” Ahussain said. “So overall, total spend is increasing.”
Despite the growth, challenges remain. Almosafer CEO said that the limited hotel supply during peak times, such as Riyadh season, leads to higher rates and makes it difficult for travelers to find accommodations.
“We’ve already seen a number of initiatives to improve hotel capacity and rooms across the country,” Ahussain said, adding that such improvements would make domestic tourism more attractive at all levels, from luxury to economy.
The company’s ongoing efforts to enhance partnerships with regional authorities and airlines are also key to this growth, and Almosafer said it collaborates closely with the Saudi Tourism Authority and regional bodies like the Aseer Investment Authority.
“We’ve had a number of signings at the Saudi Tourism Forum with different authorities from around the country to promote and market key destinations,” he added.
Ahussain also highlighted the strong partnerships Almosafer has with low-cost carriers like flynas and flyadeal, as well as its new partnership with Riyadh Air, which is set to launch later in 2025.
Looking ahead, Ahussain is optimistic about the impact of global events, such as Expo 2030 and the 2034 FIFA World Cup, on the Kingdom’s tourism sector. “These projects and events, as we saw with Expo 2020 Dubai, help build a brand for a city or country, and that brand creates awareness,” Ahussain said.
He continued: “When people come, whether domestically or internationally, we are working to build a foundation that supports them throughout their travel — before, during, and after these events.”
Almosafer is also preparing for an initial public offering as part of its long-term strategy, with a target IPO date in 2025 or 2026.
“In November 2023, Seera Group announced that Almosafer would be targeted for an IPO in two to three years,” he said.
“We’re still on track with that plan and working toward it.”
With domestic tourism growing rapidly, Almosafer is enhancing its digital offerings through partnerships aimed at streamlining travel services.
During the forum, Almosafer signed a memorandum of understanding with the Saudi Tourism Authority to integrate digital platforms, enhancing access to travel services.
Ahussain explained that the partnership also aimed to improve Sara Al, the smart guide for Saudi tourism, by adding booking services for flights and accommodations.
Egypt’s inflation drops to 23.4% in December amid falling food prices
- Banking sector shows strong resilience with record capital adequacy
RIYADH: Egypt’s annual inflation rate slowed to 23.4 percent in December 2024, down from 25 percent in November, according to figures from the Central Agency for Public Mobilization and Statistics.
The consumer price index for the country stood at 239.7 points in December, reflecting a deceleration largely driven by a drop in food prices.
Key food categories saw notable price decreases, with vegetables falling by 14 percent, dairy products, cheese, and eggs decreasing by 0.7 percent, fish and seafood dropping by 0.6 percent, and meat and poultry experiencing a slight reduction of 0.1 percent.
However, other sectors showed price increases, putting upward pressure on the overall inflation rate.
For example, telephone and fax services surged by 11 percent, fruit prices rose by 7.5 percent, and medical products, devices, and equipment saw a 5.5 percent increase.
Other notable price hikes included postal services (up 3.6 percent), hotel services (up 3.2 percent), and recreational and cultural services (up 2.8 percent).
Meanwhile, costs for telephone and fax equipment grew by 2.6 percent, while actual housing rentals increased by 1.6 percent. Hospital services saw a rise of 1.4 percent, with furniture, carpets, and floor coverings up by 1.3 percent.
Smaller price increases were recorded in oils and fats, electricity, gas, and fuel materials (up 0.7 percent), transportation services (up 0.5 percent), and basic foodstuffs like grains and bread (up 0.3 percent). Sugar and sugary foods, as well as private transportation costs, also saw slight increases of 0.2 to 0.3 percent.
Banking sector
Egypt’s banking sector continues to demonstrate stability and resilience, playing a vital role in maintaining the country’s economic, financial, and monetary stability, according to the Central Bank of Egypt’s latest Financial Soundness Indicators.
The sector’s capital adequacy ratio reached 19.1 percent by the end of Q3 2024, comfortably surpassing the regulatory minimum of 12.5 percent. This marks a 0.5 percent improvement from the previous period, highlighting the sector’s growing financial health.
In terms of asset quality, nonperforming loans represented just 2.4 percent of total loans, with provisions coverage for these loans standing at a strong 87.4 percent.
Liquidity levels remained robust, with local currency liquidity at 32.1 percent and foreign currency liquidity at 77.7 percent, well above the regulatory requirements of 20 percent and 25 percent, respectively.
The banking sector’s loan-to-deposit ratio was recorded at 61.3 percent by the end of Q3 2024, reflecting conservative lending practices. Meanwhile, profit margins remained impressive, with a return on equity of 32.2 percent for the 2023 fiscal year.
Saudi Arabia’s flynas begins Jeddah-Djibouti flights; flyadeal launches 5 routes
RIYADH: Saudi low-cost airline flynas launched its first direct flight between Jeddah and Djibouti on Jan. 8, further expanding its network in Africa.
According to a press statement, the inaugural celebration was held at King Abdulaziz International Airport and was attended by Djibouti’s Ambassador to the Kingdom Dya-Eddine Said Bamakhrama and representatives from flynas and Jeddah Airport Co.
The inaugural flight was welcomed at the African country by Faisal Al-Qabbani, Saudi Arabia’s ambassador to Djibouti, and Hassan Humad Ibrahim, theDjibouti’s minister of infrastructure and transport.
The expansion is part of the airline’s “We Connect the World to the Kingdom” initiative and supports Saudi Arabia’s National Civil Aviation Strategy, which aims to expand connectivity to 250 international destinations and reach 330 million passengers.
The initiative is also expected to strengthen the Kingdom’s National Tourism Strategy, which aims to attract more than 150 million tourists by the end of this decade.
In the statement, flynas said it will operate three weekly flights from Jeddah to Djibouti.
Flyadeal launches five new routes
In a separate statement, Saudi low-cost airline flyadeal said that it launched five routes from its operating bases of Dammam, Riyadh, and Jeddah, marking the start of a major expansion drive that includes entry to Pakistan next month.
According to the statement, the routes include 14 domestic flights a week from Dammam to Najran, Tabuk, and Yanbu.
The airline said that it launched flights from Riyadh and Jeddah to the Jordanian capital, Amman, with a total of 10 flights a week.
The statement added that preparations are also underway for the start of twice-weekly flights to Pakistan’s financial capital, Karachi, from Riyadh and Jeddah, effective Feb. 2.
“Expanding our domestic and international networks has been the focus of our planning team in recent months to provide leisure and business travelers with more choice, options and more importantly, greater air connectivity,” said Steven Greenway, CEO of flyadeal.
He added: “As more aircraft join flyadeal’s fleet during 2025, we will continue to inject additional capacity into our three bases with new routes and extra frequencies, part of a system wide expansion plan over the next 12 months.”
Launched in 2017, flyadeal currently serves almost 30 year-round and seasonal destinations in Saudi Arabia and selected Middle East, European, and North African cities. The airline operates a fleet of 36 Airbus A320 narrowbody aircraft.
Oil Updates — crude prices steady as winter fuel demands balance US fuel inventories activity
SINGAPORE: Oil prices were little changed on Thursday, with investors weighing firm winter fuel demand expectations against large builds of fuel inventories in the US, the world’s biggest oil user, and macroeconomic concerns.
Brent crude futures fell 6 cents to $76.1 a barrel by 10:27 a.m. Saudi time. US West Texas Intermediate crude futures fell 5 cents to $73.27.
Both benchmarks fell more than 1 percent on Wednesday as a stronger dollar, and the bigger-than-expected rise in US fuel stockpiles weighed on prices.
“The oil market is still grappling with opposite forces — seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further,” said OANDA senior market analyst Kelvin Wong.
JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day year-on-year to 101.4 million bpd, primarily driven by “increased use of heating fuels in the Northern Hemisphere.”
“Global oil demand is expected to remain strong throughout January, fueled by colder-than-normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays,” the analysts said.
The market structure in the Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time the demand is increasing.
The premium of the first-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.
Nevertheless, official Energy Information Administration data showed rising gasoline and distillates stockpiles last week in the US.
The US dollar firmed further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump’s entrance into the White House on Jan. 20.
Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55-$77.95 into February as the market awaits more clarity on Trump’s administration policies and fresh fiscal stimulus measures out of China, said OANDA’s Wong.
Saudi Industrial Production Index up 3.4% as output expands: GASTAT
RIYADH: Saudi Arabia’s Industrial Production Index climbed 3.4 percent year on year in November to reach 103.8, driven by an uptick in mining and quarrying activities, official data showed.
According to data from the General Authority for Statistics, the mining and quarrying sub-index recorded a 1.2 percent annual rise, underpinned by a modest increase in the Kingdom’s oil output, which grew to 8.93 million barrels per day in November from 8.82 million bpd in the same month of the previous year.
Manufacturing activities also showed robust growth, expanding 7.2 percent year on year, driven largely by a 17.6 percent surge in the manufacture of coke and refined petroleum products. Additionally, the production of chemicals and chemical products rose 1.6 percent, while food manufacturing increased by 1.5 percent during the same period.
This comes as Saudi Arabia emphasizes industrial production under Vision 2030, aiming to diversify its economy and reduce oil dependence by fostering growth in mining, manufacturing, and other non-oil sectors.
The report noted a mixed performance in other sectors. The sub-index for electricity, gas, steam, and air conditioning supply fell by 2.1 percent year on year, while water supply, sewerage, waste management, and remediation activities surged 10.5 percent.
The index for oil activities rose 3.8 percent in November compared to the same month in 2023, reflecting the increased output in the Kingdom’s mining sector. Meanwhile, non-oil activities grew 2.4 percent, buoyed by gains across most non-oil economic activities, except for the electricity and utilities sector, which posted declines.
Despite the annual growth, the IPI fell 2.3 percent in November compared to October 2024. Mining and quarrying activities declined 0.5 percent month on month, while manufacturing contracted by 3.1 percent over the same period.
The electricity, gas, steam, and air conditioning supply sub-index posted a steep 21.5 percent monthly drop, and water supply, sewerage, waste management, and remediation activities decreased by 4.7 percent.
Oil activities fell by 2.1 percent month on month, while non-oil activities recorded a 2.7 percent decline in November compared to October.
The mixed performance highlights the volatility in industrial activity, but the overall annual growth underscores progress in Saudi Arabia’s ongoing efforts to diversify its economy and reduce dependence on oil revenues.
