Oil Updates – crude rises on US crude inventory draw, Mideast tensions
Updated 03 July 2024
Reuters
SINGAPORE: Oil prices rose on Wednesday after industry data showed a bigger-than-expected draw in US crude stockpiles, while the market kept tabs on flaring tensions in the Middle East, according to Reuters.
Brent crude futures edged up 46 cents, or 0.5 percent, to $86.70 per barrel at 9:45 a.m. Saudi time. US West Texas Intermediate crude futures climbed 42 cents or 0.5 percent to $83.23 per barrel.
On Tuesday, both benchmarks rose to their highest since the end of April in intraday trading but closed down on the day as fears faded that Hurricane Beryl would disrupt production in the Gulf of Mexico. It is expected to weaken into a tropical storm by the time it enters the Gulf of Mexico later this week, according to the US National Hurricane Center.
“Having gained previously due to fears of supplies disruption from Hurricane Beryl, there may be some unwinding as greater clarity points toward limited potential impact,” said Yeap Jun Rong, a market strategist at IG.
“That said, a significant drawdown in US crude inventories offered some support for prices, while tensions in the Middle East continue,” Yeap added.
US crude oil inventories fell by 9.163 million barrels in the week ended June 28, according to market sources citing American Petroleum Institute figures on Tuesday. However, gasoline inventories rose by 2.468 million barrels, and distillates fell by 740,000 barrels.
Analysts in a Reuters poll had expected a 700,000-barrel draw in crude inventories, a 1.3-million-barrel drop in gasoline stocks, and a 1.2-million-barrel fall in distillates stocks.
“Oil prices were supported by a US crude inventories draw, but gains were limited as some investors were still seeking to take profits from the recent rally to reach the highest levels since April,” said Mitsuru Muraishi, an analyst at Fujitomi Securities.
The Energy Information Administration, the statistical arm of the US Department of Energy, is due to release its weekly data on Wednesday at 5:30 p.m. Saudi time.
Meanwhile, US gasoline demand is expected to ramp up as the summer travel season picks up with the Independence Day holiday this week. The American Automobile Association has forecast that travel during the holiday period will be 5.2 percent higher than in 2023, with car travel up 4.8 percent.
In the Middle East, Israeli forces bombarded several areas of the southern Gaza Strip on Tuesday, with thousands of Palestinians fleeing their homes. The Israeli military and the Lebanese armed group Hezbollah have also been trading fire across Lebanon’s southern border.
“The risk of an Israel-Hezbollah war, combined with the risk of a broadening conflict in the Middle East, likely means upside risks to our near-term outlook,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia.
The Organization of the Petroleum Exporting Countries’ oil output rose in June for a second consecutive month, a Reuters survey found on Tuesday, as higher supply from Nigeria and Iran offset the impact of voluntary supply cuts by other members and the wider OPEC+ alliance.
Middle East airlines see 9.7% passenger demand growth: IATA
Updated 05 July 2024
Nirmal Narayanan
RIYADH: Middle Eastern airlines saw a 9.7 percent annual growth in passenger demand in May fueled by an increase in Asia-related travel, according to an industry body.
In its latest report, the International Air Transport Association said that the total capacity of airlines in the region posted a growth of 9 percent year-on-year in May.
Moreover, the Middle East region handled 9.4 percent of the overall passengers globally in May, a figure that remained unchanged from the previous month.
Countries in the Middle East, including Saudi Arabia, have been strengthening their aviation sector over the past few years as they continue their economic diversification journey by reducing their decades-long dependence on oil.
Saudi Arabia’s national aviation strategy aims to triple the number of passengers compared to 2019, handling 4.5 million tons of cargo, and establishing more than 250 direct destinations from the Kingdom’s airports to global locations.
In May, a report released by the Kingdom’s General Authority of Civil Aviation revealed that the sector contributed $21 billion to the Kingdom’s gross domestic product in 2023.
The IATA report notes that the Asia – Middle East route “ranks second only to within Asia in terms of RPK (revenue passenger kilometers) levels” as it highlighted the strength of travel between the two regions.
It went on: “The route pair has regained 2019 levels and set new records to-date for the whole 2024, standing 32 percent above the corresponding value of 2019 thus demonstrating strengthening flight demand between the two regions. Contributing factors to this disproportionate demand are geopolitical tensions and war in Ukraine which would divert passengers through the Middle East to reach Asia as a safer route.”
The Russia-Ukraine war was also cited as a potential influence on the continued growth of the Europe-Middle East route, which saw an April-May RPK increase for two years in a row, reversing the previous historic pattern of a decline between these months, noted the report.
“In the coming months, it will become clearer to what extent these trends could be related to the Russia-Ukraine war,” said IATA.
Earlier this month, another report released by IATA revealed that Middle Eastern airlines witnessed a 15.3 percent year-on-year demand growth for cargo in May, driven by growing e-commerce and maritime issues.
The report also added that the total cargo capacity of carriers in the region increased by 2.7 percent in May compared to the same month of the previous year.
IATA further pointed out that the Middle East region handled 13.5 percent of the overall cargo globally, a figure that remained unchanged from the previous month.
Global outlook of passenger demand
According to the report, global passenger demand – measured in RPK – rose by 10.7 percent in May compared to the same period of the previous year.
Similarly, total capacity, measured in available seat kilometers, also rose by 8.5 percent year-on-year in the fifth month of the year.
“Airlines filled 83.4 percent of their seats, a record for the month. With May ticket sales for early peak-season travel up nearly 6 percent, the growth trend shows no signs of abating,“ Willie Walsh, director-general of IATA.
He added: “Airlines are doing everything they can to ensure smooth journeys for all travelers over the peak northern summer period.”
Asia-Pacific region leads passenger demand
According to the report, airlines operating in the Asia-Pacific region led passenger demand globally, marking a 27 percent growth in May compared to the same month in 2023.
IATA noted that the total capacity of airlines in the APAC region rose by 26 percent year-on-year, while the load factor increased to 81.6 percent.
Moreover, Asia-Pacific airlines handled 31.7 percent of the passengers globally in May, followed by Europe and North America at 27.1 percent and 24.2 percent, respectively.
Airlines from the Latin American region witnessed a passenger demand growth of 15.9 percent in May compared to the same month of the previous year. Moreover, the total capacity of these carriers also rose by 9.7 percent.
Similarly, the load factor among airlines in Latin America hit 85.1 percent in May, the highest among all regions.
On the other hand, African airlines saw a 14.1 percent year-on-year increase in demand, while the total capacity of these carriers surged by 8.2 percent during the same period.
The load factor among African airlines also rose to 72.3 percent in May, representing an annual rise of 3.7 percentage points.
This was the fastest increase in load factor among all regions, although Africa still has the lowest load factor overall.
Similarly, European airlines witnessed a passenger demand growth of 11.7 percent year-on-year in May.
Additionally, the total capacity of these carriers rose by 11.3 percent in May compared to the year-ago period, while their load factor edged up by 0.03 percentage points to 84.7 percent.
However, the passenger demand growth among North American carriers stood at 8.7 percent, the lowest among all regions.
Even though the capacity of airlines in North America edged up by 7.7 percent year-on-year in May, the load factor declined by 1.2 percentage points to 84 percent during the same period.
On the other hand, IATA revealed that domestic traffic globally increased by 4.7 percent in May compared to the same month in 2023, while the load factor rose by 3.8 percentage points to 84.5 percent.
IATA also noted it is optimistic about the future growth of passenger demand globally.
“Overall, the increase in trip bookings made in May and the first half of June for travel during the second half of June and the whole of the month of July suggests that air traffic and demand in both domestic and international segments are expected to maintain a positive trend,” said the industry body.
Saudi growth
Riyadh Air is set to take to the skies in 2025. File
Boosting Saudi Arabia’s aviation sector is a key pillar of the Kingdom’s Vision 2030 economic diversification plan, and in May a new roadmap was unveiled which will seek to boost the business travel sector.
Saudi Arabia’s aviation sector contributed $21 billion to the Kingdom’s gross domestic product in 2023 while generating an additional $32.2 billion in tourism receipts.
Speaking at the Future Aviation Forum in Riyadh in May, Abdulaziz Al-Duailej, president of the General Authority of Civil Aviation, said Saudi Arabia’s aviation sector in 2023 saw its number of passengers reach a record 112 million, up from 88 million in 2022, marking a 27 percent year-on-year increase.
As part of the plan to boost the sector further, the Kingdom is set to see its newest airline – the Public Investment Fund-backed Riyadh Air – take to the skies in 2025, with an aim of flying to 100 countries by 2030.
Oil Updates – prices on track for 4th straight week of gains
Updated 05 July 2024
Reuters
SINGAPORE: Oil prices were little changed in Asian trade on Friday but were on track for a fourth straight week of gains and holding near their highest levels since late April on hopes of strong summer fuel demand and some supply concerns, according to Reuters.
Brent crude futures, which have risen 7 percent over the last four weeks, slipped 2 cents to $87.41 a barrel by 3:43 a.m. Saudi time.
US West Texas Intermediate crude futures, which have climbed 9 percent over the past four weeks, inched up to $83.97, up 9 cents from Wednesday’s close. With the US market shut for the Fourth of July holiday on Thursday, trading was thinned and there was no settlement for WTI.
Oil rose this week on strong summer demand expectations in the US, the world’s largest oil consumer.
“Market sentiment has been supported this week by strong mobility indicators and intensifying geopolitical tension in the Middle East,” analysts at ANZ Research said in a note on Friday.
The US Energy Information Administration reported a massive 12.2 million barrels draw in inventories last week, compared with analysts’ expectations for a draw of 700,000 barrels.
US data on Wednesday showed that first-time applications for US unemployment benefits increased last week while jobless numbers also rose, which analysts said could potentially hasten interest rate cuts by the US Federal Reserves and support oil markets.
On the supply side, Reuters reported on Thursday that Russia’s oil producers Rosneft and Lukoil will sharply cut oil exports from the Black Sea port of Novorossiisk in July.
Meanwhile, Saudi Arabia’s Saudi Aramco cut the price for the flagship Arab Light crude it will sell to Asia in August to $1.80 a barrel above the Oman/Dubai average, underscoring pressure faced by OPEC producers as non-OPEC supply grows.
Traders were also tracking the war in Gaza and elections in France and the United Kingdom, analysts said.
Closing Bell: TASI closes in green to reach 11,658 points
Updated 04 July 2024
Arab News
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 63.46 points, or 0.55 percent, to close at 11,658.66.
The total trading turnover of the benchmark index was SR4.94 billion ($1.31 billion) as 122 of the listed stocks advanced, while 100 retreated.
The Kingdom’s parallel market Nomu surged 164.81 points, or 0.64 percent, to close at 25,909.95. This comes as 33 of the listed stocks advanced, while as many as 34 retreated.
Similarly, the MSCI Tadawul Index also gained 5.92 points, or 0.41 percent, to close at 1,454.65.
The best-performing stock of the day was Al-Rajhi Co. for Cooperative Insurance, whose share price surged 8.85 percent to SR209.
Other top performers include Al-Jouf Agricultural Development Co. as well as Saudi Arabian Cooperative Insurance Co., whose share prices soared by 6.18 percent and 5.93 percent, to stand at SR72.20 and SR16.08, respectively.
In addition to this, other top performers included The Co. for Cooperative Insurance and Middle East Specialized Cables Co.
The worst performer was Al-Baha Investment and Development Co., whose share price dropped by 7.69 percent to SR0.12.
Other companies to see falls were Miahona Co. as well as Saudi Manpower Solutions Co., whose share prices dropped by 4.16 percent and 2.62 percent to stand at SR27.65 and SR8.91, respectively.
Takween Advanced Industries Co. and Ataa Educational Co. also saw share price falls.
In Nomu, Arabian Plastic Industrial Co. was the top gainer with its share price rising by 11.20 percent to SR39.70.
Other best performers in Nomu were Group Five Pipe Saudi Co. as well as Armah Sports Co., whose share prices soared by 9.71 percent and 7.91 percent to stand at SR54.80 and SR60, respectively.
Other top gainers also include Lana Medical Co. and Clean Life Co.
Arabian Food and Dairy Factories Co. was the major loser on Nomu, as the company’s share price dropped by 5.29 percent to SR80.50.
The share prices of Horizon Educational Co. as well as Pan Gulf Marketing Co. also fell by 4.79 percent and 4.68 percent to stand at SR55.70 and SR29.55, respectively.
Other major fallers include Osool and Bakheet Investment Co. and Mohammed Hasan AlNaqool Sons Co.
PIF’s SAMI inks 3 deals with Turkish defense firms to propel aviation, space and technology sectors
Updated 04 July 2024
ARAB NEWS
RIYADH: Saudi Arabian Military Industries inked three agreements with Turkish firms to localize defense businesses in the Kingdom’s aviation, space and technology fields.
The Public Investment Fund-owned group signed the memorandum of understandings with Turkiye’s drone maker Baykar, tech firm Fergani Space, and aerospace and defense company Aselsan, according to a statement.
This falls in line with SAMI’s aim to contribute to the localization of 50 percent of the Kingdom’s total government defense spending, in alignment with Saudi Vision 2030.
It also aligns well with the company’s efforts to be among the world’s top 25 defense industry companies by 2030.
The deals were signed in the presence of Saudi Arabia’s Minister of Defense Prince Khalid bin Salman bin Abdulaziz, and SAMI CEO Waleed Abukhaled said the agreements “will contribute to enhancing our capabilities and contributing to the continued development of the national defense industry.”
He added: “These strategic agreements will contribute to increasing the percentage of the gross domestic product through international cooperation and working with local supply chains.”
The deal with drone maker Baykar includes establishing manufacturing capabilities and developing systems for the firm’s unmanned aerial vehicles in the Kingdom.
It will also see joint development and the transfer of technology and intellectual property to Saudi Arabia.
The MoU with Fergani Space entails establishing a center of excellence for the development of emerging technologies in the Kingdom to serve the global space sector.
The agreement with Aselsan seeks to explore opportunities for transferring, localizing, and developing advanced electronics technologies to enhance and build domestic capabilities in this field.
In a post on X, Prince Abdulaziz said: “During my visit to Turkiye, I had the opportunity to see the capabilities of several leading companies in the space and defense industries. I explored their innovative technological projects and latest products, as well as their future plans and strategies.”
He further noted: “Additionally, I met with President of the SSB, Dr. Haluk Görgün, and CEOs of major industrial companies to discuss opportunities for defense cooperation in line with Saudi Vision 2030. We also witnessed the signing of several MoUs between Saudi companies and Turkish companies.”
The deals were signed as the Kingdom’s Minister of Municipal, Rural Affairs and Housing Majid Al-Hogail was also in Turkiye to attend a special forum focused on boosting ties between businesses in the country and Saudi Arabia.
The Saudi-Turkish Contracting Forum in Istanbul, organized by the Saudi Contractors Authority, has the aim of “enhancing cooperation and creating partnerships to achieve the Kingdom’s 2030 vision in supporting the private sector and attracting and transferring international investments and experiences,” the minister said in a post on X.
He added: “During the forum, I listened to representatives of Saudi and Turkish companies in an open dialogue to discuss the best solutions and enablers to advance the contracting sector, employ global expertise in developing Saudi city services, and create the appropriate investment environment for successful partnerships with Saudi companies in the contracting sector in the Kingdom.”
Business registrations see 78% annual growth as Saudi private sector booms
Updated 04 July 2024
ARAB NEWS
RIYADH: More than 120,000 commercial registrations were issued by the Saudi Ministry of Commerce in the second quarter of 2024, marking a 78 percent year-on-year increase.
According to data from the ministry, a total of 121,521 official identification cards for businesses were issued during the three months to the end of June, up from 68,222 in the same period last year.
The data also revealed registration growth across several key sectors. E-commerce saw a 17.47 percent yearly increase in issued records, reaching 40,697 registrations.
Container handling services experienced a 48 percent growth with 2,457 registrations, while logistics services saw a 76 percent increase, totaling 11,928 registrations.
Urban and suburban passenger transportation, arts, entertainment and recreation, and short-term accommodation all saw increases in registrations, as did cloud computing services.
Notably, artificial intelligence commercial registrations rose by 53 percent, reaching 8,948.
The electronic games industry, mining and quarrying, and the manufacture of pharmaceuticals and medicinal products also recorded rises in commercial registrations.
This surge comes as the Kingdom ranks among the top 20 countries with the most competitive global markets, holding the 16th position out of 67 countries, according to the World Competitiveness Ranking by the International Institute for Management Development
Additionally, Saudi Arabia ranks fourth among the G20 countries in terms of business legislation and infrastructure, highlighting its commercial appeal.
The Saudi Ministry of Commerce’s vision is to achieve a pioneering position for the commerce sector in the Kingdom within a fair and stimulating environment. To this end, the ministry aims to develop and implement effective policies and mechanisms to contribute to sustainable economic development.
Riyadh recorded the highest number of commercial registrations during the second quarter of the year with 52,192, followed by the Eastern Provinces with 20,148, and Makkah with 18,904.
The report also indicated that 45 percent of registrations were issued to females. Currently, the Kingdom has granted over 1.5 million commercial instruments.
Additionally, Saudi Arabia’s non-oil private sector showcased robust growth in June, driven by increased demand, higher output levels, and a rise in employment, according to a report.
The latest S&P Global Purchasing Managers’ Index showed that the Riyad Bank Saudi Arabia PMI stabilized at 55 from 56.4 in May, marking the lowest reading since January 2022.
Despite the slowdown in new orders, which saw the slowest growth in nearly two and a half years, non-oil businesses reported a substantial rise in output, helping the Kingdom lead the region with the strongest expansion figures.
