Tag Archives: Oil

Continued M&A Activity in the Sector

Continued M&A Activity in the Sector Amid Strong Demand and Oil Prices Near $80 per Barrel

Some shale oil producers are looking to strike new merger and acquisition (M&A) deals,
even as major oil and gas companies like ExxonMobil and
Chevron take a breather to absorb the intense activity that has led to significant deals.

 

 

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Oil

The merger and acquisition (M&A) activity in this sector will remain strong, possibly even involving more large-scale deals, driven by strong demand and oil prices hovering around $80 per barrel.
The largest oil producers in the United States have rushed into a wave of acquisitions over the past 12 months in response to investor demands to scale back exploration activities and reduce costs, while attempting to maintain their relevance in an industry that is no longer as favored as it once was but remains highly profitable.
They found an opportunity to enhance their production and asset reserves by acquiring smaller competitors.

 

 

 

 

 

 

 

Apple 

Apple allows third parties to use its electronic payment chip for the first time.
It will begin allowing third parties to use the payment chip in its iPhone to conduct financial transactions, a move that will allow banks and other service providers to compete with the Apple Pay platform.
This step, announced last Wednesday, comes after years of pressure from regulatory bodies, including those affiliated with the European Union. Apple said it will allow developers to use this chip starting with the upcoming “iOS 18.1” update for the iPhone operating system.
This chip relies on Near Field Communication (NFC) technology to exchange information when the phone is close to another device.
This change will allow external service providers to use the chip for payments in stores, public transportation costs, work badges, home and hotel keys, and reward cards. Apple will also later add support for government ID cards.
Users will be able to set a third-party payment app as the default payment option instead of Apple Pay.

 

 

 

 

 

 

 

China

China steps up efforts to boost private investment in infrastructure.
It Central Television, citing a statement from the Economic Planning Agency,
reported that the National Development and Reform Commission (NDRC) will work to present projects to private sector investors,
with a particular focus on major infrastructure in areas such as transportation and energy.


The government will also provide support from the central budget for qualified key private investment projects.
China Central Television reported that the NDRC will collaborate with the Ministry of Natural Resources and the Ministry of Environment to provide support in land and sea use and environmental impact assessment guarantees.
It added that the NDRC will draft financing support policies to boost private investment in cooperation with the National Financial Regulatory Administration.


Chinese Premier Li Qiang emphasized on Friday the importance of effectively utilizing government investments and ensuring the implementation of policies to support private investment.

 

 

 

 

Continued M&A Activity in the Sector

 

 

Chinese Economic Downturn Increases Cost of American and European Oil

Chinese Economic Downturn Increases Cost of American and European Oil

The declining Chinese economy is making oil from the United States and Europe increasingly uncompetitive in Asia, as refiners are likely to prefer supplies closer to home.

 

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Details
Significant Volatility
North Sea

 

 

 

 

Details

A closely watched oil market indicator, which measures the premium of Brent crude in Europe over Dubai crude – known as the Brent-Dubai EFS (Exchange of Futures for Swaps) – has widened to its highest level since early March in recent days, according to Bloomberg data. The related swap contracts, which usually move by a few cents daily, have surged by more than a dollar over the past two weeks.

 

 

 

 

 

 

Significant Volatility

The recent significant volatility in the oil market has been a major topic of discussion. Traders explained that the widening price differentials would make Dubai crude, traded in the Middle East, more attractive to Asian refineries, while making long-haul crude flows from Europe and the United States less appealing. This shift stems from two main forces: the strength of European oil prices and the decline in certain parts of the Dubai crude market.

In recent years, Dubai crude has generally strengthened against the global Brent benchmark, with the availability of Middle Eastern barrels restricted by OPEC+ supply cuts, while supplies from non-OPEC producers increased. This month’s movements mark a strong reversal of this trend, as China’s prolonged economic slowdown limits the country’s additional oil demand, while maintenance activities in European oil fields have reduced regional supplies.

The Brent-Dubai EFS is an indicator of the strength of oil markets in the Atlantic Basin versus Asia, where the bulk of Middle Eastern oil is sold. The number of open contracts on Brent-Dubai swaps has reached its highest level since last October, indicating significant investment in that part of the market. Several traders attributed at least part of this movement to traders exiting bullish bets on the Dubai market’s recovery. The so-called time spread differentials, which measure market strength, have weakened in the Dubai market in recent days.

 

 

 

 

 

 

 

North Sea

Traders noted that North Sea markets have also contributed to the recent rise, with increased activity during the wide-ranging pricing window. Last month, Trafigura and Gunvor made large purchase bids for physically traded crude grades that set Brent’s price, boosting price premiums for those crude grades.

Additionally, traders pointed out that the strength of the U.S. market, driven by wildfire threats to Canada’s production and the diversion of imports via a new pipeline, has also supported West Texas Intermediate (WTI) crude. They noted that the rise in WTI has kept shipments within the Americas rather than moving to Europe, further boosting Brent prices.

Across Asia, the long-term economic slowdown in China, the region’s largest oil importer, has affected Dubai crude outlooks. Chinese refineries resumed operations after scheduled maintenance at a slower pace than usual. According to a Bloomberg survey, the decades-long oil processing boom in the country is expected to decline this year, while private sector refinery operating rates in Shandong province have approached their lowest levels since the pandemic.

 

 

 

Chinese Economic Downturn Increases Cost of American and European Oil

 

Steel Continues to Decline to Its Lowest Level in 7 Years

Steel Continues to Decline to Its Lowest Level in 7 Years: In late July, the price of rebar futures fell below 3,100 Chinese yuan per ton,
reaching its lowest level in over seven years amid weak demand and abundant supply in China, the largest consumer.

 

Content

Oil Prices

Steel
Next Week

 

 

 

 

Oil Prices Close Lower Due to Chinese Demand Concerns

West Texas Intermediate crude oil futures fell by 1.4% to settle at $77.16 per barrel on Friday,
marking a third consecutive weekly decline due to weak Chinese demand despite positive U.S. inventory data.
Concerns about economic growth in China, highlighted by interest rate cuts in Beijing to stimulate the economy,
negatively impacted market sentiment.
The decline in China’s oil imports and refinery activity due to slowing economic growth affected prices.
Furthermore, ceasefire talks between Israel and Hamas eased supply concerns, adding more pressure.
Meanwhile, strong economic growth in the United States in the second quarter
Rising expectations of a potential federal interest rate cut in September could boost oil demand.
On Wednesday, the U.S. Energy Information Administration reported
a larger-than-expected decline in U.S. crude inventories by 3.7 million barrels and a significant drop in gasoline inventories by 5.6 million barrels.
Market watchers are divided on whether OPEC+ will ease production restrictions in the next quarter,
with a meeting scheduled for August 1.

 

Steel Continues to Decline to Its Lowest Level in 7 Years

The price of rebar futures fell below 3,100 Chinese yuan per ton in late July,
reaching its lowest level in over seven years amid weak demand and abundant supply in China, the largest consumer.
The Chinese government imposed new quality standards for rebar to take effect in late September,
prompting mills and traders to flood the market with old stock before the new standards for the metal took effect.
Meanwhile, China’s economy grew less than expected in the second quarter,
and housing prices fell to their lowest level in June of nine years, highlighting the severity of the real estate crisis in China.
The data weakened expectations for future construction activity.
They increased the likelihood of liquidation by debt-laden real estate developers in China,
erasing a key source of global demand and Chinese economic output.
The downturn caused by the housing recession prevented the Chinese government from aiding real estate developers,
as such measures would exacerbate the current oversupply of housing.

 

 

 

Next Week – July 29

In the United States, key events will include the Federal Reserve’s interest rate decision and the non-farm payroll report.
Other significant events include job openings in JOLTs, consumer confidence from CB,
the ISM manufacturing PMI, factory orders, the S&P Case-Shiller home price index,
pending home sales and the employment cost index.
The earnings season will enter one of its busiest weeks,
with giant companies like Microsoft, Meta, Apple, and Amazon taking center stage. 

On the other hand, the Bank of England, the Bank of Japan,
and the Central Bank of Brazil will provide updates on their monetary policies.
Inflation rates will be released for Spain, Germany, Australia,
the Netherlands, France, Poland, the Eurozone, Italy, South Korea, and Switzerland.
GDP growth rates will also be announced for France, Spain, Germany, Italy, the Eurozone, and Mexico.
In China, manufacturing and services PMI indicators will be closely watched.
Manufacturing PMI indicators for South Korea, Russia, Spain, Italy, and Canada will also be published.

 

Steel Continues to Decline to Its Lowest Level in 7 Years

Oil Price Rise on Expectations of Declining U.S. Inventories

Oil Price Rise on Expectations of Declining U.S. Inventories: Oil prices rose, halting several losses that lasted several sessions.
They rose on expectations of declining U.S. crude and gasoline inventories despite concerns about weak global demand amid a slowing economic recovery in China.

 

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Ethereum Funds
Oil prices

Russia’s oil production

 

 

 

 

 

$107 Million Flows into Ethereum Funds on First Day of Trading in the U.S.

According to Bloomberg data, the first U.S. exchange-traded funds
investing directly in the Ethereum cryptocurrency recorded a net inflow of $107 million after their official launch on Tuesday.

 The “iShares Ethereum Trust” by BlackRock achieved the highest total of $267 million,
followed by “Bitwise Ethereum” at $204 million, and then “Fidelity Ethereum Fund” at $71 million.

 

 

 

 

 

Oil Price Rise on Expectations of Declining U.S. Inventories

Oil prices rose, halting a series of losses that lasted several sessions.
They rose on expectations of declining U.S. crude and gasoline inventories
despite concerns about weak global demand amid a slowing economic recovery in China.

 

Russia’s Oil Production Approaches OPEC+ Agreed Quotas

Russian Deputy Prime Minister Alexander Novak stated that
Russia’s oil production is approaching the quotas agreed upon with the OPEC+ group without providing details on the production volume.

Russia admitted last month that its oil production in May exceeded
the quotas set by the OPEC+ group but pledged to meet its commitments.

 

Oil Prices Rise on Expectations of Declining U.S. Inventories

Five Commodities to Watch This Week Amid Market Volatility

Five Commodities to Watch This Week Amid Market Volatility

As global markets continue to experience volatility,
there are five key commodities to watch this week due to significant price changes and economic shifts.
From gold approaching new record highs to a coffee shortage driving up Arabica prices,
these commodities present both challenges and opportunities for investors. Here’s a closer look:

 

Topic

Coffee

Palm Oil
Gold

Oil

LNG

 

 

 

 

 

Coffee

Coffee markets have seen notable fluctuations this year,
with the price of premium Arabica beans rising sharply due to a shortage of the cheaper Robusta beans.
This shortage has forced coffee companies like Starbucks to rely more on Arabica,
pushing its prices up by over 30% this year.
Concerns about production in Brazil, the world’s largest coffee producer,
add to market uncertainty, as dry weather has affected the expected crop size.

 

 

Palm Oil

Palm oil stocks in Malaysia, the world’s second-largest producer,
have increased, putting downward pressure on prices.
Stocks rose by 4.4% in June compared to the previous month, reaching their highest level since February.
This surplus led to the largest weekly loss for palm oil futures in Kuala Lumpur since mid-April,
as they competed with abundant soybean oil supplies from South America and the United States.

 

 

Gold

Gold is nearing new record highs as investors bet that slowing inflation will lead to U.S. interest rate cuts.
Spot gold prices recently approached $2,450.07 per ounce,
supported by economic data indicating potential rate cuts.
This year, gold has risen by 16%, bolstered by strong central bank purchases
and increased demand from investors, particularly in China.

 

 

 

 

 

 

 

Oil

Oil market volatility has reached its lowest level since June 2015,
due to ongoing geopolitical tensions and concerns about slowing economic growth.
Brent crude futures have been trading within a $15 per barrel range since February,
reducing the demand for protective options.
Implied volatility for Brent, a key metric for option pricing,
has fallen to its lowest level in nine years for the second consecutive month.

 

 

LNG

(Liquefied Natural Gas)

President Joe Biden’s freeze on new LNG licenses has reduced the U.S.’s ability to secure new deals,
compared to the surge in long-term agreements following Russia’s invasion of Ukraine.
Building LNG export projects requires massive investments,
often reaching billions of dollars, and relies on securing long-term contracts to attract financing.
The future of U.S. LNG exports to major markets in Europe and Asia will depend on political will
and the outcome of the upcoming U.S. elections.

These five commodities play a crucial role in shaping the global economic landscape,
and monitoring their developments will be essential for understanding market shifts
and making informed investment decisions.

 

 

 

Five Commodities to Watch This Week Amid Market Volatility

U.S. Energy Information

U.S. Energy Information Administration Reveals Its Global Oil Demand Forecasts

The U.S. Energy Information Administration (EIA) released its monthly short-term energy outlook report yesterday, Tuesday. Below are the key points from the report:

 

 

 

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Global Oil Demand

The global oil demand for 2024 is expected to increase by about 1.10 million barrels per day year-on-year. The EIA has raised its global oil demand forecast for 2025 by 300,000 barrels per day, with the annual increase now expected to reach 1.80 million barrels per day.

 

 

U.S. Oil Production

The administration expects U.S. oil production to rise by 10,000 barrels per day in 2024 and predicts that production will now grow by 320,000 barrels per day year-on-year to 13.25 million barrels per day. The EIA has increased its U.S. oil production forecast for 2025 by 60,000 barrels per day and now expects production to grow by 520,000 barrels per day year-on-year to 13.77 million barrels per day.

 

 

U.S. Oil Demand

The EIA has raised its U.S. oil demand forecast for 2024 by 100,000 barrels per day and now expects demand to grow by 200,000 barrels per day year-on-year to 20.4 million barrels per day. The U.S. oil demand forecast for 2025 remains unchanged at 20.6 million barrels per day, with a growth of 200,000 barrels per day compared to 2024.

 

 

 

 

 

 

Global Oil Production

The EIA has lowered its global oil production forecast for 2024 by 200,000 barrels per day,
expecting production to grow by 600,000 barrels per day year-on-year to 102.4 million barrels per day.
The administration has reduced its global oil production forecast for 2025 by 100,000 barrels per day,
with production now expected to grow by 2.2 million barrels per day year-on-year to 104.6 million barrels per day.

 

 

Crude Oil Price Forecasts

The EIA has raised its forecast for the price of West Texas Intermediate (WTI) crude oil in 2024 to $82.03 per barrel (previously $79.70 per barrel). For 2025, the WTI price is expected to rise to $83.88 per barrel (previously $80.88 per barrel). The administration has also raised its forecast for Brent crude oil prices in 2024 to $86.37 per barrel (previously $84.15 per barrel) and expects Brent prices to rise to $88.38 per barrel in 2025 (previously $85.38 per barrel).

 

 

 

U.S. Energy Information Administration Reveals Its Global Oil Demand Forecasts

 

Gold Prices Drop in the Asian Markets

Gold Prices Drop in the Asian Markets: In Wednesday’s trading, gold prices slightly decreased in the Asian markets,
adding to the losses incurred in the previous session.
Traders’ significant shift toward the dollar caused this decrease,
as they awaited the release of key U.S. inflation data.


Content
Gold Prices Drop

Oil Prices Rise

Federal Reserve  

 

Gold Prices Drop 

In Wednesday’s trading, gold prices slightly decreased in the Asian markets,
adding to the losses incurred in the previous session.
Traders’ significant shift toward the dollar caused this decrease,
as they awaited the release of key U.S. inflation data.

Gold prices continued to trade within the low range of $2,300 per ounce, formed during most of June.
This is attributed to the expectations of rising U.S. interest rates, which affected price forecasts.

At the end of trading, spot gold fell by 0.1% to $2,317.02 per ounce,
while gold futures for August delivery decreased by 0.1% to $2,328.40 per ounce.

 

Oil Prices Rise

Oil prices rose during Asian trading on Wednesday despite a sudden increase in U.S. oil inventories.
This rise is attributed to geopolitical risks arising from conflicts in the Middle East
and expectations of inventory declines during the peak demand season in the third quarter.

Geopolitical risks are increasing due to Houthi attacks in the Red Sea and escalating
hostilities between Israel and Hezbollah in Lebanon, leading to rising oil prices.

Crude oil futures rose during Wednesday’s Asian session.
According to the New York Mercantile Exchange,
August delivery futures were trading at $81.19 per barrel at the time of reporting, an increase of 0.45%.

 

 

 

Federal Reserve Member’s Remarks on Interest Rates:

In her speech on Tuesday during the economic conference in New York, Lisa Cook,
a member of the Board of Governors of the U.S. Federal Reserve, stated
that the central bank will continue its efforts to curb inflation despite the volatile start to 2024,
which saw an acceleration in inflation growth during the first quarter.

Cook added in her remarks that lower interest rates would be appropriate later.
The current monetary policy is well-positioned in line with economic expectations.
Rising inflation expectations will require the Federal Reserve to continue its tight policy for longer.

 

 

Gold Prices Drop in the Asian Markets

Important News to be Traded This Week

Important News to be Traded This Week: As we enter the last week of June 2024,
financial markets are poised for significant movements driven by crucial economic reports and data releases.
This week’s trading calendar features high-impact events that are likely to influence major currencies, commodities, and indices.
Key highlights include the U.S. Consumer Confidence Index, New Home Sales, Gross Domestic Product,
the Federal Reserve’s Monetary Policy Committee Report, and the UK’s GDP figures.
Traders and investors closely monitor these releases to gauge the economic health and adjust their strategies accordingly.
Here’s a detailed look at the important news and market forecasts for the week ahead.

 

Content
Economic Calendar
Gold

Oil
Dow Jones

GBPUSD
EURUSD

USDJPY

 

 

 

Economic Calendar

Tuesday, June 25, 2024

USD – CB Consumer Confidence Index (June)

Wednesday, June 26, 2024

USD- New Home Sales (May)

Thursday, June 27, 2024

USD – Gross Domestic Product (Quarterly) (Q1)

Friday, June 28, 2024

USD – Core Personal Consumption Expenditures Price Index (Yearly) (May)

GBP – Gross Domestic Product (Quarterly)

USD – Federal Reserve Monetary Policy Committee Report

 

Gold

Gold dropped by approximately 0.5% during last week’s trading.
The markets are awaiting this week’s data on the Consumer Confidence Index, Gross Domestic Product, and Personal Consumption Expenditures Price Index.
Technically, the price reached the support level of 2315, which is the lower bound of the ascending price channel, suggesting an expected rise in gold to the 2355 level.

 

Oil

Light crude futures are trading above $80 per barrel. From a technical perspective,
we observe a breakout above the pivotal level and a liquidity concentration of around $78.25.
If prices remain above this level, it will likely enhance the probability of a rise to the resistance level of $82.70.
If this resistance is broken, it is expected to visit the main peak at around $87.65.
However, if it falls below the pivotal level, it will likely retest the support level at $72.50.

 

Dow Jones Industrial Average

The index rose by approximately 1.55% during last week’s trading.
The markets are awaiting this week’s data on the Consumer Confidence Index, Gross Domestic Product,
and Personal Consumption Expenditures Price Index.
Technically, the index climbed from the support levels of 38470-38600, and we expect the price to reach 39600.

 

 

 

GBPUSD

The pound fell to 1.26 against the dollar, failing to hold above the pivotal level of 1.2710,
which it traded above in mid-week sessions last week.
Increasing selling pressure indicated by the momentum index suggests a likely test of the support at 1.2585.
A break below this level may push prices down to 1.2444, followed by testing the main bottom at 1.2300.
If it rises above the pivotal level, it will likely enhance the chances of climbing to the resistance at 1.2816, then 1.2895.

 

EURUSD

The pair dropped by approximately 0.15% during last week’s trading.
The markets are awaiting this week’s data on the Consumer Confidence Index, Gross Domestic Product,
and Personal Consumption Expenditures Price Index, all from the U.S. side.
Technically, the pair reached the support level of 1.0675
with the presence of the harmonic shark pattern, suggesting an expected rise in the price to 1.0770.

 

USDJPY

The dollar rose strongly, closing above 159 against the yen.
After stabilizing above the pivotal level of 157.75 at the beginning of last week,
it approached a major resistance level of around 160.20.
If the price breaks this resistance to the upside, it will likely increase the chances of continuing the upward trend.
However, with the oscillation indicator reaching the overbought area,
there is a possibility of retesting the level of 157.75.
If this level is broken down to the downside, it may push prices towards support at 154.60.

 

Important News to be Traded This Week

 

Aramco’s Secondary Offering Priced at SAR 27.25 per Share to Raise $11.2 Billion

Aramco’s Secondary Offering Priced at SAR 27.25 per Share to Raise $11.2 Billion

In a significant move to bolster its financial position, Saudi Aramco has announced the final pricing for its secondary offering at SAR 27.25 per share. This pricing, determined through a book-building process, is expected to enable the company to raise approximately $11.2 billion, marking the largest transaction of its kind globally in the past three years.

 

Topic

Offering Details

Conclusion

 

 

 

 

 

 

Offering Details

Aramco has issued 1.545 billion shares, representing about 0.64% of its total issued shares.
The shares allocated to individual investors were fully subscribed, attracting 1.33 million individual subscribers. Consequently, 10% of the offering shares will be allocated to individual investors, while the remaining 90% will be designated for institutional investors.

 

 

Greenshoe Option:

To provide greater flexibility in covering short sales resulting from additional share allocations,
the government has granted a “greenshoe” option.
This option allows the stabilization manager to purchase up to 10% of the offering shares
from the government at the final offering price.
The stabilization manager can exercise this option,
either wholly or partially, during a 30-day period starting from the first day of trading of the offering shares on the Saudi Stock Exchange, expected to commence on June 9, 2024, and concluding on July 9, 2024.
If the greenshoe option is fully exercised, the offering shares will represent approximately 0.7% of the company’s total issued shares.

 

 

Ownership and Control:

The Saudi government will retain a significant stake in Aramco, holding about 82%,
while the Public Investment Fund (PIF) holds approximately 16%.
This structure ensures that the Kingdom remains the primary shareholder in the company after the offering.

 

 

Management and Coordination:

Al Ahli Financial Company is leading the offering management and is acting
as a global coordinator alongside major global banks including Citi Group,
Goldman Sachs, HSBC Holdings, JPMorgan, Bank of America,
and Morgan Stanley. Additionally, M. Klein & Co and Moelis & Co
are serving as independent financial advisors for the offering.

 

 

 

Conclusion of the Offering and Trading:

The trading of the offering shares is anticipated to begin on the Saudi Stock Exchange
on Sunday, June 9, 2024, marking a new phase for Aramco,
reinforcing its economic position and supporting its strategic ambitions.

 

 

 

 

 

 

Conclusion

With its pricing strategy that has attracted investors and positioned it at the forefront of global financial news,
Saudi Aramco continues to solidify its status as a major player in global financial markets,
reaffirming its commitment to providing robust and diverse investment opportunities.

 

 

 

Aramco’s Secondary Offering Priced at SAR 27.25 per Share to Raise $11.2 Billion

 

Continued Decline in Oil Prices

Continued Decline in Oil Prices: On Wednesday, oil prices moved to their lowest levels in four months today,
As markets absorbed the OPEC+ decision to increase supplies later this year, U.S. crude and fuel inventories increased.

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Details

 

 

Details

This decline came following news from OPEC and its allies about plans
to increase supplies from October despite recent signs of weak demand growth.
In the United States, crude oil and gasoline inventories rose last week,
according to figures from the American Petroleum Institute.

According to the New York Mercantile Exchange, crude oil futures for July traded at $73.25 per barrel.
The dollar index contracts, which measure the performance
of the U.S. dollar against a basket of other major currencies, rose by 0.08% to trade at 104.

At the same time, Brent oil prices for August rose by 0.03% to trade at $77.54 per barrel,
while the price difference between Brent oil and crude oil contracts is $4.29 per barrel.

Continued Decline in Oil Prices