Saudi doubts extension to oil output cap needed

Khalid Al-Falih, minister of energy, industrial and mineral resources, speaks during the World Future Energy Summit in Abu Dhabi on Monday. (AFP)
Updated 17 January 2017
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Saudi doubts extension to oil output cap needed

ABU DHABI: Saudi Arabia’s Energy Minister Khaled Al-Falih said Monday it was “unlikely” oil producers would need to extend a six-month cap on output, pointing to a pick-up in global demand.
“Based on my judgment today, I think it is unlikely that we will need to continue” after June, Falih told reporters at an energy forum in Abu Dhabi.
“Demand will pick up in the summer and we want to make sure that the markets continue to be supplied well and we don’t want to create a shortage or a squeeze,” he added.
Falih said oil markets began rebalancing in 2016, which “will have its full impact in the first half” of this year.
“Of course, there are many variables that could come into play between now and June. At that time, we’ll be able to assess,” he said.
Falih said all concerned producers have expressed “their willingness to extend if necessary.”
“The extension will only happen if there is a need, and if there is a need we will do it,” he added.
The UAE’s Energy Minister Suhail Al-Mazrouei said Wednesday it was too early to consider extending the deal.
Oil prices were down on Monday due to doubts that large crude producers will reduce production as promised and on expectations that US production would increase again this year.
The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear global oversupply that has depressed prices for more than two years.
Russia and other key exporters outside OPEC have said they will also cut output.
But global oil production remains high and, with inventories near record levels in many areas, investors doubt that OPEC and its allies can trim output enough to push up prices.
Benchmark Brent crude oil was down 4 cents a barrel at $55.41 by 11:14 a.m. EST (1613 GMT) and US West Texas Intermediate crude was down 10 cents at $52.27 a barrel.
“Cuts by OPEC and non-OPEC countries have just started and it will take some time for them to filter through,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.
“We do not really expect the oil price to strengthen much more in the first quarter of 2017.”
Rising US oil output is also preventing crude from climbing.
Goldman Sachs said it expects year-on-year US oil production to rise by 235,000 bpd in 2017, taking into account wells that have been drilled and are likely to start producing in the first half of the year.
US oil output is now at 8.95 million bpd, up from less than 8.5 million bpd in June last year and at similar levels to 2014, when overproduction send the market into a tailspin.
Russian oil and gas condensate production averaged 11.1 million bpd for Jan. 1-15, two energy industry sources said on Monday, down only 100,000 bpd from December. Russia has committed to a 300,000 bpd cut during the first half of 2017.


UAE property developers’ earnings give Gulf markets a boost

Updated 17 February 2019
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UAE property developers’ earnings give Gulf markets a boost

  • Real estate sector gets confidence boost
  • DAMAC gains despite 87 pct drop in Q4 net profits

DUBAI: Most stock markets in the Middle East closed higher on Sunday, reflecting a rally in global stock markets on Friday, and were also boosted by better-than-expected company results, particularly in real estate.

The Abu Dhabi index gained 0.7 percent and the Dubai index 0.6 percent, as two of the largest property developers in the United Arab Emirates posted positive fourth-quarter financial results last week that beat market expectations.

“The market is starting to rebuild confidence in earnings as a driver for sentiment,” said Arqaam Capital in a research note. “Sentiment on the UAE was very weak in 2018, specifically for real estate, on concerns over oversupply risk, pricing pressure that is leading to extended payment plans, and a rental yield compression that is continuing to fall,” Arqaam said.

“But Q4 numbers provided evidence that a few developers have emerged as winners (Emaar Co’s, Aldar) out of market consolidation.” Emaar Properties, Dubai’s largest listed developer, reported a 27 percent rise in fourth-quarter profit.

The stock rose 2 percent on Sunday. DAMAC Properties closed up 0.8 percent, despite having reported a nearly 60 percent fall in full-year profit and an 87 percent drop in fourth-quarter net profits.

In Abu Dhabi, Aldar Properties gained 3.6 percent. Last week, the developer reported a rise in fourth-quarter earnings and higher dividends for 2018. In other sectors, Abu Dhabi Islamic Bank rose 0.5 percent after saying it had no merger and acquisition plans. This was in response to a Bloomberg report last week which said the bank was considering such options.

The Saudi index closed 0.4 percent down, in contrast to the rest of the region’s markets. Arab National Bank reported an increase in full- year net profit to 3.13 billion riyals ($834.62 million) from 3.03 billion riyals one year earlier.

The stock remained unchanged and this failed to give support to the banking sector. Alinma Bank < 1150.SE> and Al Rajhi Banking & Investment Corp. lost 0.3 percent and 0.6 percent, respectively.

In Egypt, where the main index gained 1.4 percent, Orascom Investment Holding, up 3.2 percent, was among the stocks attracting the highest trading volume. Shares in the company jumped last week after its chairman, Egyptian billionaire businessman Naguib Sawiris, said he saw possible investment opportunities in North Korea if a summit between its leader Kim Jong Un and US President Donald Trump later this month was successful.

SAUDI The index lost 0.4 pct to 8,592 points ARABIA DUBAI The index rose 0.6 pct to 2,550 points ABU DHABI The index rose 0.7 pct to 5,070 points QATAR The index gained 0.7 pct to 10,011 points EGYPT The index rose 1.4 pct to 15,199 points KUWAIT The index gainedd 0.1 pct to 5,427 points OMAN The index was down 0.8 pct at 4,077 points BAHRAIN

The index went up 0.6 pct to 1,381 points ($1 = 3.7502 riyals)