LONDON: Stocks of distillate fuel oil, which have been trending downwards all year, now look tight following disruption to major refineries caused by Hurricane Harvey.
The position is a marked turnaround from the start of the year, when distillate stocks were at record levels following the second warm winter in a row and a prolonged slowdown in freight movements since 2015.
Distillate fuel oil is used mostly for high-horsepower diesel engines in trucks, trains, barges and pipelines as well as some industrial engines, so demand is closely linked to manufacturing activity and freight movements.
Distillates are still used as heating oil for some homes, schools and commercial buildings, especially in the Northeast, though this source of seasonal demand has become less important in recent years.
By the second week of February 2017, distillate stocks stood at 170 million barrels, which was 8 million higher than at the same point in 2016 and 33 million above the 10-year seasonal average.
But a recovery in freight, coupled with a boom in oil and gas drilling, which relies heavily on diesel, and record exports to Latin America and other markets have steadily whittled away the surplus.
By the end of August, stocks had fallen almost 14 million barrels since the start of the year, were 5 million barrels below the corresponding point in 2016, and just 8 million above the long-term average.
Refinery outages in Texas and Louisiana following Hurricane Harvey have caused stocks to decline by another 10 million barrels since the start of September, leaving inventories looking tight with winter approaching.
Distillate stocks had fallen to just 139 million barrels by the end of last week, which was 25 million barrels below 2016 and 5 million barrels below the long-term seasonal average.
In response, futures prices for ultra-low sulfur diesel (ULSD) this winter have moved in a big backwardation since the end of August, reflecting concerns about scarcity.
The calendar spread between ULSD for delivery in November 2017 and April 2018 has swung from a contango of $1.40 per barrel in late June to a backwardation of $2.80.
Distillate prices have also moved to a significant premium over crude oil to encourage refiners to maximize crude processing and the yield to middle distillates rather than other products.
The refining margin for making distillate from US crude oil for November delivery has risen to $25 per barrel up from $19 in late August and $15 in late June.
The strengthening of both crack and calendar spreads was already well underway before Hurricane Harvey but accelerated significantly as a result of the disruption to refineries.
Hedge funds have amassed a net long position in heating oil futures and options equivalent to 46 million barrels, anticipating a further rise in prices. The current position contrasts with a net short of 32 million barrels in late June.
Portfolio managers have also accumulated a record net long position in European gasoil in the expectation that US diesel exports will be cut in the coming months.
US distillate prices are already rising to reduce exports and encourage refineries in the US and elsewhere to ramp up production.
The last two winters have been exceptionally mild in most of the US which has limited heating oil demand.
But if temperatures in the forthcoming winter are closer to the long-term average, distillate stocks could become very tight without very high refining runs.
— Reuters
Heating oil market looks tight this winter oil market looks tight this winter
Heating oil market looks tight this winter oil market looks tight this winter
Lucid beats estimates for EV deliveries as price cuts, cheaper financing spur demand
- Company handed over 3,099 vehicles in the fourth quarter ended Dec. 31
- For 2024, production rose 7% to 9,029 vehicles, topping Lucid’s target of 9,000 vehicles
LONDON: Lucid Group beat expectations for quarterly deliveries on Monday, as the Saudi Arabia-backed maker of luxury electric vehicles lowered prices and offered cheaper financing to drive demand, sending its shares up more than 6 percent.
The company handed over 3,099 vehicles in the fourth quarter ended Dec. 31, compared with estimates of 2,637, according to six analysts polled by Visible Alpha. That represented growth of 11 percent over the third quarter and 78 percent higher than the fourth quarter a year earlier.
Production rose about 42 percent to 3,386 vehicles in the reported quarter from a year earlier, surpassing estimates of 2,904 units.
For 2024, production rose 7 percent to 9,029 vehicles, topping the company’s target of 9,000 vehicles. Annual deliveries grew 71 percent to 10,241 vehicles.
Lucid, backed by Saudi Arabia’s sovereign wealth fund, started taking orders for its Gravity SUV in November, in a bid to enter the lucrative SUV sector and take some market share from Rivian and Tesla.
Rivian on Friday topped analysts’ estimates for quarterly deliveries and said its production was no longer constrained by a component shortage. But Tesla reported its first fall in yearly deliveries, in part due to the company’s aging lineup.
Demand for EVs, already squeezed by competition from hybrid vehicles, could face another challenge as President-elect Donald Trump is expected to reverse many of the Biden administration’s EV-friendly policies and incentives.
The company also raised $1.75 billion in October through a stock sale that CEO Peter Rawlinson believes will provide Lucid with a “cash runway well into 2026.”
Lucid, whose stock was down about 28 percent in 2024, is scheduled to report its fourth-quarter results on Feb. 25.
Saudi Arabia’s PIF completes $7bn inaugural murabaha credit facility
- Shariah-compliant financing is backed by a syndicate of 20 international and regional financial institutions
- Facility builds on PIF’s recent success with sukuk issuances over the past two years
RIYADH: The Saudi Public Investment Fund has closed its first Murabaha credit facility, securing $7 billion in funding. This is a key step in the fund's plan to raise capital over the next several years.
The Shariah-compliant financing is backed by a syndicate of 20 international and regional financial institutions, according to a press release.
A murabaha credit facility is a financing structure compliant with Islamic principles, where the lender purchases an asset and sells it to the borrower at an agreed profit margin, allowing repayment in installments. This structure avoids interest, adhering to Shariah laws.
“This inaugural murabaha credit facility demonstrates the flexibility and depth of PIF’s financing strategy and use of diversified funding sources, as we continue to drive transformative investments, globally and in Saudi Arabia,” said Fahad Al-Saif, PIF’s head of the Global Capital Finance Division and head of Investment Strategy and Economic Insights Division.
The facility builds on PIF’s recent success with sukuk issuances over the past two years, further bolstering its financial strength and commitment to best practices in debt management.
Rated Aa3 by Moody’s and A+ by Fitch, both with stable outlooks, PIF continues to solidify its position as a global financial powerhouse.
The fund’s capital structure is supported by four main funding sources, including contributions from the Saudi government, asset transfers, retained investment earnings, and financing through loans and debt instruments.
PIF’s strategy focuses on financing initiatives that contribute to economic growth in Saudi Arabia and internationally.
The $7 billion murabaha credit facility is expected to bolster PIF’s liquidity, supporting its investments both locally and globally.
By diversifying its funding sources through a Shariah-compliant structure, PIF looks to enhance its financial partnerships while complementing its existing financing tools, such as sukuk issuances.
This aligns with its medium-term capital strategy, ensuring flexibility, competitive financing terms, and risk mitigation.
Earlier in January, the National Debt Management Center also secured a Shariah-compliant revolving credit facility worth SR9.4 billion ($2.5 billion).
The three-year facility, supported by three regional and international financial institutions, is designed to meet the Kingdom’s general budgetary requirements.
Aligned with Saudi Arabia’s medium-term public debt strategy, the arrangement focuses on diversifying funding sources to meet financing needs at competitive terms.
It also adheres to robust risk management frameworks and the Kingdom’s approved annual borrowing plan.
PIF has been actively engaging in credit arrangements to support its investment initiatives and the Kingdom’s Vision 2030 economic diversification plan.
In August 2024, PIF secured a $15 billion revolving credit facility for general corporate purposes, replacing a similar facility agreed upon in 2021.
In addition to the revolving credit facility, PIF has diversified its financing instruments by issuing a $2 billion seven-year Islamic sukuk earlier in 2024 and planning to issue bonds in pounds sterling.
These efforts are part of PIF’s strategy to leverage a variety of funding sources to support its expansive investment activities.
Closing Bell: Saudi main market gains to close at 12,105 points
- MSCI Tadawul Index increased by 1.07 points, or 0.07%, to close at 1,510.91
- Parallel market Nomu lost 190.29 points, or 0.61%, to close at 30,864.09
RIYADH: Saudi Arabia’s Tadawul All Share Index edged up on Monday, gaining 34.87 points, or 0.29 percent, to close at 12,104.69.
The total trading turnover of the benchmark index was SR6.43 billion ($1.71 billion), as 137 of the listed stocks advanced, while 94 retreated.
The MSCI Tadawul Index also increased by 1.07 points, or 0.07 percent, to close at 1,510.91.
The Kingdom’s parallel market Nomu dropped, losing 190.29 points, or 0.61 percent, to close at 30,864.09. This comes as 36 of the listed stocks advanced, while 43 retreated.
Al Majed Oud Co. was the best-performing stock of the day, with its share price surging by 5.62 percent to SR158.
Other top performers included SAL Saudi Logistics Services Co., which saw its share price rise by 5.42 percent to SR276, and Riyadh Cables Group Co., which saw a 5.17 percent increase to SR158.80.
Al Mawarid Manpower Co. and Astra Industrial Group also saw a positive change, with their share prices surging by 5.17 percent and 5.05 percent to SR114 and SR195.40, respectively.
United International Holding Co. saw the steepest decline of the day, with its share price easing 2.45 percent to close at SR183.40.
Zamil Industrial Investment Co. and Nayifat Finance Co. both recorded falls, with their shares slipping 2.43 percent and 2.43 percent to SR36.15 and SR14.44, respectively.
National Co. for Learning and Education and Saudi Electricity Co. also faced losses in today’s session, with their share prices dipping 2.27 percent and 2.25 percent to SR197.80 and SR16.54, respectively.
On the announcement front, the Saudi Exchange announced the listing and trading of shares for Almoosa Health Co. on the main market starting Jan. 7.
During the first three days of trading, daily price fluctuation limits will be set at plus or minus 30 percent, while static price fluctuation limits will also apply.
From the fourth trading day onward, the daily fluctuation limits will revert to plus or minus 10 percent, and the static limits will no longer be enforced.
In a separate development, Almujtama Alraida Medical Co. announced the signing of a credit facility agreement with Alinma Bank worth SR45 million.
Alinma Bank saw a 0.17 percent decrease in its share price on Monday to settle at SR29.90.
The financing package includes an SR35 million revolving facility aimed at purchasing goods and an SR10 million revolving facility for capital expenditures.
The credit facilities have a duration of three years and are secured by a promissory note. The objective of the financing is to support working capital requirements and fund capital expenditures, the company stated.
Meanwhile, Mufeed Co. revealed the awarding of an SR41.5 million project focused on the development of concept, content, and execution of events aimed at reviving the Kingdom’s cultural and historical heritage.
The contract, which is set to be signed on Jan. 20, will involve a legal entity as the counterparty.
The project entails organizing unique activities designed to showcase and enhance the Kingdom’s rich historical and cultural narratives.
Mufeed Co. saw a 2.93 percent increase in its share price by the close of Monday’s trading session to reach SR73.80.
Saudi Arabia’s expat remittances up 19% to $3.21bn: SAMA
- Remittances sent abroad by Saudi nationals totaled SR6.17 billion, reflecting a 22.71% increase
- Kingdom ranks among the most affordable countries for remittance transfers, according to the World Bank
RIYADH: Expatriate remittances from Saudi Arabia rose to SR12.03 billion ($3.21 billion) in November, marking an 18.73 percent increase compared to the same month of 2023, new data showed.
Figures from the Kingdom’s central bank, also known as SAMA, indicated that remittances sent abroad by Saudi nationals totaled SR6.17 billion, reflecting a 22.71 percent increase during this period.
Saudi Arabia’s rising remittance flows underscore its growing prominence as a global economic hub and a premier destination for expatriate workers.
According to the latest Saudi government census released in May 2023, expatriates comprise 41.6 percent of the Kingdom’s population. Among the largest expatriate communities are 2.12 million Bangladeshi nationals, followed by 1.88 million Indians and 1.81 million Pakistanis.
These sizable populations highlight the scale of remittance transfers from the Kingdom, driven by competitive salaries, tax-free income, and comprehensive employee benefits.
This dynamic has positioned Saudi Arabia as a major contributor to remittance-dependent economies, supporting millions of families in South Asia, the Middle East, and Africa.
The Kingdom ranked second in the 2024 InterNations Working Abroad Index, reflecting its appeal to professionals across sectors such as finance, health care, and technology.
The Vision 2030 initiative, aimed at diversifying the economy and boosting investment, has spurred unprecedented growth in job opportunities, particularly as new industries emerge and existing sectors expand.
Expatriates in Saudi Arabia often benefit from attractive compensation packages that include housing allowances, health insurance, children’s education funding, and annual flights home.
With limited personal living expenses and no income tax, expatriates enjoy significant disposable income, enabling them to remit substantial amounts to their home countries.
According to World Bank data, the Kingdom ranks among the most affordable countries for remittance transfers, thanks to competitive fees and streamlined processes.
Digitalization is reshaping how remittances are managed, further enhancing efficiency and accessibility. Saudi Arabia’s fintech landscape, buoyed by the Vision 2030 Financial Sector Development Program, has introduced a range of innovations.
Mobile banking apps, online payment gateways, and partnerships with global remittance platforms have simplified transactions. Services such as the Saudi Payments Network, or Mada, and the adoption of blockchain technology by local banks have improved transfer security and speed.
Additionally, increased competition in financial services has driven down costs, making transfers more affordable compared to global standards.
The growing reliance on digital channels aligns with the Kingdom’s broader push toward a cashless economy. Remittance platforms integrated with mobile wallets and QR-based payments have democratized financial access, especially for lower-income workers.
As Saudi Arabia continues to implement Vision 2030’s transformative agenda, remittance flows are expected to remain robust.
The Kingdom’s focus on diversifying its economy, creating a business-friendly environment, and investing in technology will likely attract even more expatriates.
With stronger remittance infrastructure and growing digital adoption, the ease, affordability, and volume of transfers will further enhance the global economic impact of expatriate labor in Saudi Arabia.
Saudi Arabia’s e-commerce sector sees 10% growth, official figures reveal
- Logistics sector recorded 82% surge in the issuance of records in the fourth quarter of 2024
- Fintech solutions sector recorded 12% year-on-year increase with the issuance of 3,152 records
RIYADH: Saudi Arabia’s e-commerce sector saw its upward momentum continue in the fourth quarter of 2024, with 40,953 businesses now registered across the Kingdom— a 10 percent increase year on year.
The latest data from the Ministry of Commerce revealed that Riyadh led with 16,834 registrations, followed by Makkah with 10,314, and Eastern Province with 6,488. In the Madinah and Qassim regions, e-commerce enrollments reached 1,952 and 1,324, respectively.
The growth falls in line with Saudi Arabia’s ongoing transition toward a diversified, digitally-driven economy, with e-commerce playing a crucial role. The Kingdom now ranks among the top 10 countries globally in expansion of this sector.
These figures align with the nation’s goal to increase modern commerce and e-commerce’s share of the retail sector to 80 percent by 2030, as well as the government’s aspiration to raise online payments to 70 percent by the same year.
The Ministry of Commerce’s latest quarterly report further revealed that the logistics sector recorded an 82 percent surge in the issuance of records in the fourth quarter compared to the same period of 2023 to reach 16,561 registrations.
The capital led the list with 8,074 registrations, followed by Makkah with 4,235 and Eastern Province with 2,038. The Madinah and Qassim regions recorded 486 enrollments each.
Regarding application development, the report showed that the sector witnessed a 36 percent year-on-year jump in the issuance of records to reach 15,775 registrations in the final quarter of 2024, compared to the corresponding quarter of 2023.
Riyadh topped the list with 9,647 registrations, followed by Makkah with 3,191 and the Eastern Province with 1,590.
The Kingdom’s fintech solutions sector also recorded a 12 percent year-on-year increase with the issuance of 3,152 records in the fourth quarter of 2024, compared to the same period a year earlier.
The bulletin also underscored significant growth across various promising sectors, aligning with Saudi Arabia’s Vision 2030 goals.
Notable expansions were observed in several key fields, including cloud computing services, manufacturing solar panels and their parts, and real estate activities.
Growth was also seen in organizing tourist trips, entertainment events, conferences, and trade fairs.
These developments reflect the Kingdom’s strategic focus on fostering innovation and sustainable growth across diverse industries.
The ministry’s quarterly business sector bulletin provides an overview of the latest developments in the nation’s commercial environment, highlighting Saudi Arabia’s economy’s continued growth and diversification.
