Oil bears and bulls grapple as market puzzles over pandemic exit

Oil bears and bulls grapple as market puzzles over pandemic exit
Oil futures have already recovered to pre-pandemic levels. (File/AFP)
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Updated 17 March 2021

Oil bears and bulls grapple as market puzzles over pandemic exit

Oil bears and bulls grapple as market puzzles over pandemic exit
  • Total monthly contracts for US WTI crude held by producers and merchants increased to more than 1 million in February for the first time since May

LONDON: Trading in oil futures is now as heavy as it was in the first months of the COVID-19 crisis, according to market data and analysts, with oil bulls and bears rushing to hedge against jolts in the steady rise of prices.
Oil futures have already recovered to pre-pandemic levels, with Brent crude futures spiking $55 in less than a year to $70 a barrel this week while actual fuel demand remains weak.
But speculation over when and if people will begin to travel and commute as they once did is driving dueling bets in the market and historic volumes of trade.
“What makes the current situation so pronounced is ... the duration of uncertainty around how the resolution will pan out,” said Marc Rowell, senior energy broker at Britannia Global Markets.
Total monthly contracts for US WTI crude held by producers and merchants increased to more than 1 million in February for the first time since May, according to the US Commodity Futures Trading Commission.
Meanwhile, market open interest in ICE’s Brent futures contract reached an all-time high of 2.8 million contracts on Feb. 19, topping its last record in April last year.
Open interest refers to a trader’s position in the market, long or short, and reflects their sentiment over future value.
Oil market participants engage in futures trading to mitigate risks by price changes to their business — producers generally use short positions to protect themselves from price increases while consumers use longs to hedge against decreases.
The recent surge in oil prices encouraged both producers and consumers to wade into the market with their competing bets, the US Energy Information Administration (EIA) said.
“The current prices provide an incentive for crude oil producers to secure a contract rate based on present highs,” the EIA wrote this week.
“The potential for continued crude oil price increases is an incentive for physical market buyers to secure a contract rate at present levels in case prices continue to rise.”

WAITING FOR DEMAND
Underscoring the instability is a disconnect between the four-month surge in the futures price and slow physical crude sales — with global demand expected to match supply only later in 2021.
“A key contributor to the ongoing volatility is speculative non-physical trading in the futures market,” Rowell added.
“Until there is a change in momentum and price stability in line with the physical market, volatility is here to stay.”
A solid return for global demand may be the only exit from the market’s bumpiest-ever periods. Price volatility from the close of one trading day to the next last March hit highs last seen in the Gulf War, and the current highs are the highest since November.
“This time, what is different is the dramatic decrease in consumer and commercial demand,” said Gianna Bern, finance professor at the University of Notre Dame in Indiana.
“Price volatility remains so long as the impact of the pandemic is being felt.”


New regulations soon to promote continued eduation

New regulations soon to promote continued eduation
Updated 5 sec ago

New regulations soon to promote continued eduation

New regulations soon to promote continued eduation

RIYADH: Saudi Arabia is considering introducing new rules to facilitate and encourage the culture of continued education, said Saudi Education Minister Dr. Hamd Al-Alsheikh.

He was addressing a conference in Riyadh on Monday launched under the auspices of the Human Capacity Development Program.  


Cryptocurrencies make a quick comeback from last week’s turmoil: Market wrap

Cryptocurrencies make a quick comeback from last week’s turmoil: Market wrap
Updated 27 September 2021

Cryptocurrencies make a quick comeback from last week’s turmoil: Market wrap

Cryptocurrencies make a quick comeback from last week’s turmoil: Market wrap
  • The two major cryptocurrencies regained most of their losses on Monday

RIYADH: The two major cryptocurrencies regained most of their losses on Monday, as the market quickly rebounded from last week’s turmoil sparked by the crackdown in China.

Bitcoin, the leading cryptocurrency in trading internationally, traded higher on Monday, rising by 3.5 percent to $44,008.57 at 12:32 p.m. Riyadh time.

Ether, the second most-traded cryptocurrency, traded at $3,130.43, up 8.56 percent, according to data from CoinDesk.

Meanwhile, the second-largest stablecoin by market valuation, USDC, has seen its capital increase significantly, rising by more than $10 billion in 125 days.

As of Sept.25, there are $129.3 billion worth of stablecoin assets in existence which represents 6.54 percent of the cryptocurrency economy.

Many US lawmakers see China’s crackdown on cryptocurrencies as a perfect opportunity for American leadership in the crypto space.

“China’s authoritarian crackdown on crypto, including Bitcoin, is a big opportunity for the US. It’s also a reminder of our huge structural advantage over China,” Sen. Pat Toomey from Pennsylvania said.

In comments to media, Indonesia’s Trade Minister Muhammad Luthfi asserted that the Indonesian government would not follow the lead of China, which has confirmed a ban on all cryptocurrency transactions.

Noting that the state will limit itself to ensuring that it is not used in illegal activities, the statement comes after local cryptocurrency exchanges reported a significant increase in trading volume this year. “We don’t prohibit it, but we will tighten the regulations,” said Luthfi

Cryptocurrency trading on 13 local exchanges licensed by the Indonesian Futures Exchange Supervisory Board also increased by 40 percent in the first five months of 2021. During 2020, the volume of transactions reached 65 trillion rupees ($4.5 billion), according to the reports.

 

Crash ahead

Renowned author and investor Robert Kiyosaki, author of the bestselling book “Rich Dad Poor Dad,” predicts that a giant stock market crash is coming in October, noting that gold, silver and bitcoin may also crash.

"Giant stock market crash coming October. Why? Treasury and Fed short of T-bills. Gold, silver, bitcoin may crash too. Cash best for picking up bargains after crash. Not selling gold, silver, bitcoin, yet have lots of cash for life after stock market crash. Stocks dangerous. Careful,” Kiyosaki tweeted.

 

Tipping point

Twitter users on Apple’s iOS will now be able to link third-party tipping services to their profile on the social networking site. This will include the ability to link both Bitcoin and Lightning Network addresses.

The tipping feature will be entirely dependent on third-party payment services such as the Jack Mallers Strike app. The company said that it “is not in the flow of funds" and will not take a percentage of tipping proceeds.

Company representatives said that the Tips feature will be rolling out to the Twitter app for iOS and will be available on Android soon.

Twitter also announced that it will add non-fungible tokens verification features to the platform. No specific timeline has been set for this, which is still under development.


More than 50 companies plan listing on Saudi stocks market, regulator says

More than 50 companies plan listing on Saudi stocks market, regulator says
Updated 27 September 2021

More than 50 companies plan listing on Saudi stocks market, regulator says

More than 50 companies plan listing on Saudi stocks market, regulator says

More than 50 companies are waiting to be listed on the Tadawul, according to the chairman of the Capital Market Authority.

Speaking at the Financial Sector Conference on Monday, Mohammed Al-Quwaiz said he expected to have over 30 listed by the end of the year.

“If we look at the numbers today we have over 50 files that are either offering or listing either in the primary market or the Tadawul market,” he said.

“Our expectation is obviously this is subject to market norms and the readiness of these businesses but we imagine that we will end the year with over 30 listed,” he added.


Switching to renewables will save Kingdom's businesses $13bn, Saudi debt office chief claims

Switching to renewables will save Kingdom's businesses $13bn, Saudi debt office chief claims
Updated 27 September 2021

Switching to renewables will save Kingdom's businesses $13bn, Saudi debt office chief claims

Switching to renewables will save Kingdom's businesses $13bn, Saudi debt office chief claims

The transition to renewable energy will save companies $13billion, the CEO of the National Centre for Debt Management said on Monday.

Speaking at the Financial Sector Conference in Riyadh, Hani Al-Madini said many local entities are already transforming towards sustainable energy, which can decrease expenses by SR50 billion.

His comments were echoed by Mohammed Al Kuwais, chairman of the capital market authority, who said: “Companies are doing this because they recognize their responsibility, and to relate to investors’ demands.” 


Consortium signs financing deals for world’s largest IGCC complex in Jazan

Consortium signs financing deals for world’s largest IGCC complex in Jazan
Updated 27 September 2021

Consortium signs financing deals for world’s largest IGCC complex in Jazan

Consortium signs financing deals for world’s largest IGCC complex in Jazan
  • The JV is purchasing the ASUs, gasification, syngas cleanup, utilities and power assets from Aramco

RIYADH: A consortium of Saudi Aramco, Air Products, ACWA Power and Air Products Qudra on Monday signed asset acquisition and project financing agreements for a $12 billion air separation unit, gasification and power joint venture in Jazan Economic City, said a press release.

“This JV is meant to be central to the self-sufficiency of our megaprojects at Jazan,” said Mohammed Al-Qahtani, senior vice president of downstream, Saudi Aramco.

It serves Aramco’s Jazan Refinery, a megaproject to process 400,000 barrels per day of the crude oil to produce the main products such as ultra-light sulfur diesel, gasoline, and other products.

All parties under the joint venture expect asset transfer and funding to occur during October 2021. Air Products intends to conduct a public investor call at that time.

Seifi Ghasemi, Air Products chairman, president and CEO, said the project is a “perfect fit with our growth strategy.”

The JV is purchasing the ASUs, gasification, syngas cleanup, utilities and power assets from Aramco. The JV owns and operates the facility under a 25-year contract for a fixed monthly fee. Aramco will supply feedstock to the JV, and the JV will produce power, steam, hydrogen and other utilities for Aramco.

Mohammad Abunayyan, chairman of ACWA Power, said:  “Jazan IGCC is set to be the largest integrated project for gasification and combined cycle energy production in the world.”

Aramco via its subsidiary Saudi Aramco Power Co. has a 20 percent share in the JV; Air Products 46 percent; ACWA Power 25 percent; and Air Products Qudra 9 percent. Air Products’ total ownership position is 50.6 percent by owning an additional 4.6 percent through Air Products Qudra.