Brent crude back above $75 on US inventory draw, positive Fed outlook

Brent crude back above $75 on US inventory draw, positive Fed outlook
Brent crude was set to close above $75 for the first time in two weeks. (Reuters)
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Updated 29 July 2021

Brent crude back above $75 on US inventory draw, positive Fed outlook

Brent crude back above $75 on US inventory draw, positive Fed outlook
  • US report showing falling oil supplies boosts market
  • Oil majors Royal Dutch Shell, Repsol post higher profits on oil gain

LONDON: Oil gained for a second day on Thursday as traders remained buoyed by yesterday’s data showing a bigger-than-expected drop in US inventories, while the Federal Reserve painted an optimistic picture of the American economy.

Brent crude gained 0.7 percent to $75.23 a barrel at 2:44 p.m. in London, set to close above the $75 mark for the first time in two weeks. US Benchmark WTI also added 0.7 percent, to $72.87.

Brent, the global benchmark, passed $75 a barrel in June for the first time in more than two years but has fallen below $69 on July 17 on concerns over the spread of the Delta coronavirus variant and an OPEC+ deal to increase production over the coming months.

Crude in storage fell to the lowest since January 2020, while distillate supplies posted the biggest decline since April, the US Energy Information Agency said in its weekly report on Wednesday. Fuel inventories fell by more than 2 million barrels.

The US economy is continuing to recover even as COVID-19 infections increase, the Federal Reserve said on Wednesday, sparking speculation as to when it will begin to taper its bond purchase program.

In a separate report from the US Commerce Department today, the economy was shown to have grown at a 6.5 percent annual pace in the second quarter, below the 8.5 percent predicted in a Reuters poll of economists, but still enough to bring the economy back to its pre-pandemic size.

“The (oil inventory) falls suggest the rise in cases of COVID-19’s Delta variant is having little impact on mobility,” ANZ analysts said in a note on Thursday.

Oil prices also benefited from a statement from Iran blaming the US for stalled progress in talks over its nuclear ambitions, potentially delaying the return of Persian crude to world markets.

Global oil companies, including Royal Dutch Shell and Spain’s Repsol reported blockbuster earnings today as higher oil prices boosted returns.

Shell boosted its dividend and launched a $2 billion share buyback program on Thursday as it reported the highest second quarter profits in more than two years.

Shell Chief Financial Officer Jessica Uhl said that global fuel demand was at 90 percent to 100 percent of its pre-pandemic levels, but consumption of aviation fuel remained weak.

Spanish energy giant Repsol booked a net profit of 587 million euros ($700 million) foer the second quarter, compared to a loss of 1.9 billion euros in the same period last year.

“Demand has also increased, thanks in large part to vaccination rollout,” it said.

Repsol said revenues at its petrol stations in Spain jumped by 63 percent in the second quarter when compared to the same period last year as travel picked up following the easing of lockdowns.


Dubai’s Amanat sells stake in Jeddah IMC hospital for $118m

Dubai’s Amanat sells stake in Jeddah IMC hospital for $118m
Amanat
Updated 16 sec ago

Dubai’s Amanat sells stake in Jeddah IMC hospital for $118m

Dubai’s Amanat sells stake in Jeddah IMC hospital for $118m
  • The divestment resulted in a cash return of 100 million dirhams
  • The move is part of the Dubai firm’s strategy to exit minority investments, and pursue more specialized opportunities in health and education

DUBAI: Dubai-based investment firm Amanat Holdings has completed the sale of its minority 13.13 percent share in Jeddah hospital International Medical Center (IMC) for SR443 million ($118 million).

The transaction was done through the Saudi Healthcare and Education fund, which is indirectly owned by Amanat through its subsidiaries.

The divestment resulted in a cash return of 100 million dirhams, and is expected to report a gain of 40 million dirhams, Amanat said in a statement.

“IMC has a unique market position in Saudi Arabia and is a reputable provider of quality healthcare. We invested through the Fund in IMC nearly five years ago, with a different vision to obtain exposure across recognized assets through minority stakes,” Hamad Alshamsi, Amanat chairman, said.

The move is part of the Dubai firm’s strategy to exit minority investments, and pursue more specialized opportunities in health and education.

IMC is a 300-bed multi-disciplinary tertiary care hospital that serves the Kingdom’s western region.


Saudi mining portal received 4,073 license applications since launch

Saudi mining portal received 4,073 license applications since launch
Updated 25 September 2021

Saudi mining portal received 4,073 license applications since launch

Saudi mining portal received 4,073 license applications since launch
  • The Kingdom plans to launch a comprehensive geological survey to map the country’s mining potential

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources has received 4,073 applications through its online portal since it was launched earlier this year, it said in a statement on Saturday.

The ministry has issued 1,092 licenses to investors seeking opportunities in the Kingdom’s mining sector, and is processing a further 1,446, it said.

The sector is witnessing a rapid transformation and attracting investors from around the globe since the launch of a new mining law earlier this year.

According to geological surveys dating back 80 years, the Kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion.

Saudi Arabia’s mining industry has already attracted some major foreign investors. American industrial corporation Alcoa has a 25.1 percent stake in two companies, Ma’aden Bauxite and Alumina and Ma’aden Aluminum, as part of $10.8 billion joint venture with the Saudi Arabian Mining Co., Ma’aden, located in Ras Al-Khair Industrial City in the Eastern Province.

The Kingdom plans to launch a comprehensive geological survey to map the country’s mining potential.

The five-year program will conduct geophysical and geochemical surveys and create detailed mapping of more than 700,000 sq. km of the mineral-rich Arabian Shield area in Saudi Arabia.

The Vision 2030 reform plan identified the mining sector as a potential third pillar of the Kingdom’s industrial growth, alongside petroleum and petrochemicals. The country is investing SR14 billion to develop the sector.

About $45 billion in private and public sector investments have gone into the mining sector over the past decade, mainly in phosphate and aluminum production.

The Kingdom also plans to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, as the Kingdom aims to triple the mining sector’s contribution to the national gross domestic product to SR240 billion ($64 billion) and double the number of jobs to 470,000 by 2030.


Egypt extends natural gas exploration auctions to end of September

Egypt extends natural gas exploration auctions to end of September
Updated 25 September 2021

Egypt extends natural gas exploration auctions to end of September

Egypt extends natural gas exploration auctions to end of September
  • Nine new exploration licence awards announced

CAIRO: Nine international natural gas exploration auctions that were announced in March have been extended until the end of September, said the Magdy Galal, chairman of the Egyptian Natural Gas Holding Company.

Galal also announced that nine new natural gas exploration agreements have been signed with international companies, bringing the total number to 44. The new exploration licenses will lead to investment of nearly $1 billion with signature grants amounting to $24 million, he said during the company’s general assembly headed by the Minister of Petroleum.

Last year witnessed eight new discoveries of natural gas, two discoveries in the Mediterranean and six in the Western Desert, adding an estimated 600 billion cubic feet of new reserves.

Four projects were implemented for the development and production of gas from the discovered fields with investments of more than $4 billion, and 15 new wells were placed on the gas production map, with an average daily production of 1.4 billion cubic feet of gas and more than 25,000 barrels of condensate.

The total average production of natural gas amounted to more than 6.8 billion cubic feet, covering the entire needs of the local market. The average daily local consumption of natural gas amounted to more than 6 billion cubic feet.

The electricity sector consumed the most gas, accounting for more than 60 percent of production, followed by the industrial sector with more than 22 percent and the petrochemical and gas derivatives industry with about 11 percent. Domestic home and vehicle use took and 6 percent.

Exports of natural gas were made to Jordan through pipelines, and liquefied natural gas has been exported to global markets with a total of 71 shipments from the Idku and Damietta facilities.


China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
Updated 25 September 2021

China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
  • All crypto trading and mining deemed illegal in China
  • China's central bank digital currency could launch as soon as 2022

LONDON: If there’s one thing the Chinese Communist Party likes it is control.

A raft of edicts from President Xi Jinping this year have asserted the government’s control over ever larger swathes of the Chinese economy and the everyday life of Chinese people.

The financial cost of these measures is difficult to accurately gauge, but billions of dollars have been wiped off the value of tech companies, including Alibaba, Didi and Tencent, following a squeeze on their activities, including limits on how long children can spend playing online games.

There have been considerable financial costs too from China’s crypto crackdown, which intensified yesterday with a blanket ban on all crypto transactions and mining. Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.

That represents a major escalation from May this year, when China banned financial institutions and payment companies from providing services related to cryptocurrency transactions. It had issued similar bans in 2013 and 2017.

Despite an initial drop in the value of cryptocurrencies on Friday, they stabilized on Saturday and most analysts don’t see the measures having a long-term effect on the value of crypto assets.

“For the institutional crypto industry, it won’t change much as those who could leave already left and those who couldn’t have either closed or gone under the radar,” said George Zarya, CEO at digital asset prime brokerage and exchange BEQUANT. “The retail market most likely has gone under the radar and will continue to support market volumes.”

The biggest financial cost is to Chinese businesses involved in trading and mining cryptocurrencies.

Virtual currency mining had been big business in China before May, accounting for more than half the world’s crypto supply, but miners have been moving overseas.

“[China] will now lose around $6 billion worth of annual mining revenue, all of which will flow to the remaining global mining regions,” said Christopher Bendiksen, head of research at digital asset manager CoinShares, citing Kazakhstan, Russia and the United States as beneficiaries.

Crypto exchanges OKEx and Huobi, which originated in China but are now based overseas, are likely to be the worst affected since they still have some China users, analysts said. Tokens associated with the two exchanges plunged over 20 percent on Friday.

Despite all this disruption and loss of wealth, there is a major upside for China.

The Chinese government has repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.

Most of all, cryptocurrencies are a threat to China’s sovereign digital yuan, which is at an advanced pilot stage. The People’s Bank of China, the country’s central bank, plans an official launch of the digital yuan as soon as 2022, following testing at the Winter Olympics.

Widespread use of the digital yuan would give Chinese policy makers greater visibility into how money flows around China’s economy.

This would help them track any illicit flows of funds, such as money laundering or terrorist financing, and it would also allow them to experiment by targeting monetary policy interventions on specific economic classes, regions or other groups.

However, by killing off independent cryptocurrencies, China closes off a huge area of financial innovation and risks reducing the dynamism of its economy in the future.


Europe needs long-term energy plan, Eni CEO says

Europe needs long-term energy plan, Eni CEO says
Updated 25 September 2021

Europe needs long-term energy plan, Eni CEO says

Europe needs long-term energy plan, Eni CEO says
  • Households across Europe face much higher energy bills due to surging wholesale power and gas prices

MILAN: Soaring gas prices as winter approaches are evidence that the EU needs to work out a long-term energy security plan, the head of Italy’s Eni has told La Repubblica newspaper.

Claudio Descalzi noted the EU imports almost all the natural gas and most of the oil it needs, making it structurally dependent on foreign supplies.

“Europe needs to have what it hasn’t got today, a structured and long-term energy security plan,” Descalzi said in an interview published on Saturday.

“I don’t think there will be problems with gas procurement, but it will cost more,” he said regarding this winter.

Eni has strategic long-term gas supply contracts with a series of gas-producing countries including Russia.

Households across Europe face much higher energy bills due to surging wholesale power and gas prices, and consumer groups have warned the most vulnerable could experience fuel poverty.

Spain has urged the European Commission to devise guidance to help member states react consistently to power price spikes without testing the rules of the bloc.

Italy’s Prime Minister Mario Draghi this week also said Europe needed to act to diversify its energy supplies and strengthen the bargaining power of purchasing countries to help curb power and gas price rises.