Saudi Arabian stocks lower as weak banks outweigh rising petrochems

Saudi Arabian shares fell on Sunday as weakness in banks more than offset a rise in petrochemicals after Brent crude oil rebounded. (REUTERS)
Updated 25 February 2018
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Saudi Arabian stocks lower as weak banks outweigh rising petrochems

DUBAI: Saudi Arabian shares fell on Sunday as weakness in banks more than offset a rise in petrochemicals after Brent crude oil rebounded to around $67 a barrel at the end of last week.
The Saudi stock index fell 0.4 percent. Ten of 14 petchems climbed, with the biggest, Saudi Basic Industries , adding 0.6 percent.
Saudi Kayan Petrochemical gained 0.3 percent after swinging to a fourth-quarter loss of 220 million riyals ($58.7 million) due to scheduled maintenance at its plants. The loss was larger than 90 million riyals forecast by SICO Bahrain but much smaller than 417 million riyals predicted by NCB Capital.
Nine of 12 banks fell. Reuters reported on Thursday about rising Islamic tax liabilities at Saudi banks. In the last couple of weeks, several major banks have disclosed that the government is seeking additional zakat — or alms-giving — payments from them for years going back as far as 2002.
In some cases, the demands exceed half of a bank’s annual net profit, and analysts expect more banks to disclose additional zakat demands in coming weeks.
Abdulmohsen Al Hokair Group for Tourism and Development sank 6.1 percent after reporting annual net profit fell to 8.7 million riyals from 126.3‍ million riyals. The figures implied a 23.1 million riyal loss in the fourth quarter.
Dubai’s index added 0.6 percent as Dubai Islamic Bank rose 1.2 percent after saying its planned issue of up to 1.65 billion new shares would be offered at a discount of 45 percent to the market price.
DP World edged down 0.2 percent after saying on Thursday it would take legal action after Djibouti ended a contract with the company to run its Doraleh Container Terminal, a move which DP World called an illegal seizure.
The company said terminating the contract would have no material financial impact on it. The terminal has annual capacity of 1.25 million twenty-foot equivalent units, compared to 70.1 million TEU handled across DP World’s global portfolio of container terminals in 2017. ‍​
In Manama, Bahrain Telecommunications Co. jumped 4.9 percent to 0.216 dinar, rising above technical resistance on its February peak.
The company reported a 21.7 million dinar ($57.6 million) loss during the fourth quarter, compared to a net profit of 5.2 million dinars a year ago, because of impairment losses related to its investments in Yemen and Jordan.
But executives predicted profit of 40 to 45 million dinars in 2018 and said they were on the lookout for acquisition opportunities in the telecommunications and digital spaces.
Egypt’s index climbed 1.0 percent as Qalaa Holdings surged 3.6 percent after saying its unit Egyptian Refining Co. had obtained about $500 million of additional financing for a refinery project.


Oil near 4-year high as producers resist output rise to offset Iran sanctions

Updated 10 min 30 sec ago
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Oil near 4-year high as producers resist output rise to offset Iran sanctions

  • The United States from November 4 will target Iran’s oil exports with sanctions
  • US President Donald Trump has demanded that OPEC and Russia increase their supplies to make up for the expected fall in Iranian exports

SINGAPORE: Oil prices on Tuesday were within reach of four-year highs hit in the previous session, as looming US sanctions against Iran and unwillingness by the Organization of the Petroleum Exporting Countries (OPEC) to raise output supported the market.
Brent crude futures were at $81.45 per barrel at 0421 GMT, up 25 cents, or 0.3 percent, and close to the intraday peak touched the previous day at $81.48, the highest level since November 2014.
US West Texas Intermediate (WTI) crude futures were at $72.27 a barrel, up 19 cents, or 0.3 percent from their last settlement.
The United States from Nov. 4 will target Iran’s oil exports with sanctions, and Washington is putting pressure on governments and companies around the world to fall in line and cut purchases from Tehran.
“Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,” Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told the Reuters Global Oil Forum on Tuesday.
OPEC+ is the name given to the group of oil producers, including non-OPEC supplier Russia, that agreed to curtail output starting in 2017.
While Britain, China, France, Germany, Russia and Iran on Tuesday said they were determined to develop payment mechanisms to continue trading despite the sanctions by the United States, most analysts expect Washington’s actions to knock between 1 million and 1.5 million barrels per day (bpd) of crude oil supplies out of markets.
“We view Brent’s rally above $80 per barrel as fundamentally justified,” said Fitch Solutions in a note.
US President Donald Trump has demanded that OPEC and Russia increase their supplies to make up for the expected fall in Iranian exports. Iran is the third-largest producer in OPEC.
OPEC and Russia, however, have so far rebuffed such calls.
“Any formal decision on oil output by the producer group, barring an extraordinary meeting, will only take place at the December meeting. Thus, the window period for oil prices to potentially extend gains is quite wide as Iran loses exports and OPEC+ remains on standby,” Tchilinguirian said.
Ashley Kelty, oil analyst at financial services firm Cantor Fitzgerald said crude could soon hit $90 per barrel.
“We don’t believe OPEC can actually raise output significantly in the near term, as the physical spare capacity in the system is not that high,” Kelty said.
Bank of America Merrill Lynch has lifted its average Brent price forecast for 2019 from $75 per barrel to $80, while it increased its WTI crude oil forecast by $2 to $71 per barrel.
The bank said “the Iran factor may dominate the market near-term and cause a (crude price) spike,” although it added that emerging market “demand concerns could reappear thereafter.”
Indian refiners — struggling from high crude feedstock prices and a sliding rupee — are planning to reduce oil imports in what could be a first sign that high prices are starting to hurt demand.
Despite the bullish sentiment, some traders said current prices already reflected the tighter market, and that more oil would be coming in 2019.
Commodity trading giant Vitol said on Tuesday that non-OPEC producers, especially the United States, may insert up to 2 million bpd of new crude into the market in 2019.
To reflect rising US oil exports, CME Group Inc. said on Monday it will launch a WTI Houston crude futures contract in the fourth quarter.
CME’s announcement comes after rival Intercontinental Exchange said in July it would offer a Houston crude futures contract.