Oil price – Atlanti Gaz http://atlantigaz.com/ Tue, 27 Sep 2022 20:09:10 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://atlantigaz.com/wp-content/uploads/2021/04/cropped-icon-1-32x32.png Oil price – Atlanti Gaz http://atlantigaz.com/ 32 32 Oil rises 2% from multi-month low on U.S. Gulf production cuts, supply outlook https://atlantigaz.com/oil-rises-2-from-multi-month-low-on-u-s-gulf-production-cuts-supply-outlook/ Tue, 27 Sep 2022 20:05:00 +0000 https://atlantigaz.com/oil-rises-2-from-multi-month-low-on-u-s-gulf-production-cuts-supply-outlook/
  • BP begins to redeploy workers to offshore platforms
  • Iraq says OPEC is monitoring prices and seeking market balance
  • Coming soon: API supply report at 4:30 p.m. EDT, 2030 GMT

NEW YORK, Sept 27 (Reuters) – Oil rose around $2 a barrel on Tuesday from a nine-month low a day earlier, supported by supply restrictions in the U.S. Gulf of Mexico before Hurricane Ian and as the US dollar depreciated from its all time high. level in two decades.

Prices were supported by analysts’ expectations of possible supply cuts from the Organization of the Petroleum Exporting and Allied Countries (OPEC+), which is due to meet to set policy on Oct. 5.

Brent crude stood at $86.27 a barrel, up $2.21, or 2.6% On Monday, it fell to $83.65, the lowest since January. U.S. West Texas Intermediate (WTI) crude settled at $78.50, up $1.79 or 2%.

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U.S. offshore oil producers said they were monitoring the path of Hurricane Ian as the powerful storm stalled about 11% of oil production in the U.S. Gulf of Mexico as it headed toward Florida.

The outages can only provide a momentary reprieve for oil prices, said Bob Yawger of Mizuho in New York.

“Barrels will come back very soon, I imagine,” Yawger said, adding that there’s a small chance the storm will change course and force more closures.

After shutting down some of its offshore crude production, BP Plc (BP.L) said the storm posed no threat to its assets in the Gulf of Mexico and was redeploying workers to oil rigs . Read more

Crude prices had soared after Russia invaded Ukraine in February, with Brent nearing an all-time high of $147 in March. Recently, concerns about the recession, high interest rates and the strength of the dollar have weighed.

“Oil is currently under the influence of financial forces,” said Tamas Varga of oil broker PVM.

The US dollar, which has eased from a 20-year high, also helped support oil. A strong dollar makes crude more expensive for buyers using other currencies.

The fall in oil prices over the past few months has sparked speculation of a possible intervention by OPEC+. Iraq’s oil minister said on Monday that the group was monitoring prices and did not want a big jump or a slump. Read more

“Only an OPEC+ production cut can break the short-term negative momentum,” said Giovanni Staunovo and Wayne Gordon of Swiss bank UBS.

The market awaits the latest U.S. inventory reports, which analysts say will show a 300,000 barrel increase in crude inventories. The American Petroleum Institute report was released at 4:30 p.m. EDT (2030 GMT) on Tuesday.

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Additional reporting by Alex Lawler in London and Mohi Narayan in New Delhi; Editing by David Evans, Mark Potter, David Gregorio and Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

Some Saudis fear being left behind despite soaring oil prices https://atlantigaz.com/some-saudis-fear-being-left-behind-despite-soaring-oil-prices/ Sun, 25 Sep 2022 04:00:36 +0000 https://atlantigaz.com/some-saudis-fear-being-left-behind-despite-soaring-oil-prices/

Every evening in Hail, a Saudi town at the foot of a jagged mountain range, Mona heads to her roadside tea stall, turns on the lights and waits for customers to show up. She keeps a printed resume handy, hoping one might offer her a better job.

“It’s worse now,” the former clerk said, despite widespread reforms and a spike in oil prices that will make Saudi Arabia the fastest growing economy in the world this year.

Jobs in Hail, at least the ones Mona would consider, are few and far between. The government’s efforts to increase Saudi employment, and women’s employment in particular, were laudable but failed, she said. “They supported women. But all of those jobs were quickly filled,” said Mona, who did not want her real name published.

Under the daily leadership of Crown Prince Mohammed bin Salman, the kingdom is going through a period of rapid reform. Riyadh wants to restructure the country’s economy by 2030 to reduce its dependence on oil, develop the private sector and reduce the subsidies people have traditionally relied on. The stakes are high for the prince, who counts young Saudis – who want jobs and homes – as a base of support. The risk is that poorer and less educated people, especially those living outside major cities, will fall behind as they compete for well-paying jobs, many of which are in the capital.

As a result of the reforms, Saudis who relied on cradle-to-grave government support in the form of public sector jobs and subsidies would increasingly have to compete for private sector jobs. The reforms “rebalance the social contract. It’s a necessary initiative, but one that causes problems along the way,” said Sanam Vakil, Chatham House’s deputy director for the Middle East and North Africa.

Economic reforms were accompanied by social reforms, including allowing women to drive and ending the role of religious police. These have earned Prince Mohammed praise from many young Saudis. But it has also been criticized for its crackdown on critics, including journalists and bloggers, who recently saw a doctoral student and mother of two jailed for decades for her tweets.

The reforms affected a large part of the population. The government, which introduced VAT in 2018 and tripled it to 15% during the coronavirus pandemic, has also cut electricity and fuel subsidies, raising the cost of living. Unemployment fell to 10.1 percent this year, the lowest since 2008. Youth unemployment was 15 percent in the first quarter of this year. More than 400,000 citizens entered the labor market last year as the government pushes for more citizens to join the private sector. Women’s participation in the labor market has reached a record high of 35%.

“The issue of economic development and creating jobs and stimulating investment across the country is the signature issue for the Crown Prince, and so that means all citizens must be in one way or another. another one. . . impacted by transformation,” said Karen Young, a senior fellow at Columbia University’s Center for Global Energy Policy.

The IMF welcomed the reforms and advised further tax adjustments while saying the kingdom should increase targeted social spending. Saudi Arabia’s GDP rebounded from the pandemic to 3.2% in 2021. Thanks to the oil boom, it is expected to reach 7.6% this year. While previous oil windfalls have been followed by increased government spending, Saudi Arabia this time plans to use the windfall to shore up its reserves and invest in its sovereign wealth fund, which oversees tens of billions of dollars of projects in the kingdom. . Inflation this year has been among the lowest of the G20 countries, with the consumer price index hitting around 3% last month.

Saudis with sought-after qualifications and experience are in high demand, but many other jobs cluster around the minimum wage of 4,000 riyals ($1,000) a month, according to a working paper released by Harvard’s Center for International Development. . Although well above the wages paid to migrants in the same jobs, some Saudis complain that it is not enough, and some have taken two jobs.

The mixed effects of the reforms can be seen in Hail, where new buildings have sprung up around the city as more Saudis have bought homes with government-backed mortgages as part of a campaign to housing which has driven homeownership rates from 47% in 2016 to over 60% this year.

“There are lots of opportunities, you just have to want to work,” said Ahmed, who drives an Uber and is saving up to start his own restaurant franchise.

But at a social gathering in Hail over coffee and dates, Omar, a socially conservative Saudi, could not hide his contempt for the changes.

It was not just the sight of men and women dancing together at concerts in Riyadh – something unimaginable a few years ago – that upset him, but the harsher living conditions, he said. -he declares. “You have three-quarters of the world’s oil, you have tourism. Where is the money going? said Omar, who did not want his real name published. “I hire a Saudi and pay him the minimum of 3,000 riyals. What is it going to do with that? How can he live off it? The strong eat the weak,” he said.

Government officials say they are aware that some people and regions could be left behind. They plan to fill the gaps with regional development projects, vocational training and support for families to start businesses. It will also expand its Saudiization program, which mandates the hiring of Saudis in a growing number of sectors. In June, the royal court paid around $2.8 billion in direct payments to people registered with Social Security and the Citizen Account, a basic income program.

Hundreds of billions of riyals have been invested or committed by government and the private sector in the regions, an official said. This includes 60 billion riyals for the northern region, where Hail is located.

In the meantime, many Hail travel to the capital for work. Some have returned, dissatisfied with the opportunities available to them. A young man, illegally selling cigarettes from the trunk of a car in Hail, said he had returned from Riyadh after finding only restaurant jobs there. “I was unlucky,” he said.

Energy earnings set to decline, but oil services remain strong https://atlantigaz.com/energy-earnings-set-to-decline-but-oil-services-remain-strong/ Fri, 23 Sep 2022 00:00:00 +0000 https://atlantigaz.com/energy-earnings-set-to-decline-but-oil-services-remain-strong/

The energy sector has made bumper profits in the current year, with major oil companies setting records right, left and center. ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX) and Shell (NYSE:SHEL) together generated $46 billion in second-quarter earnings, with all three setting new quarterly earnings records. Overall, high commodity prices are a big part of the big profits for oil and gas companies.
And now energy experts say the party is set to continue into 2023, only that it won’t be quite as wild. In a recent Moody’s Research Reportanalysts say they have changed their outlook for the global energy sector from stable to positive.

According to the report, profits for the sector will broadly stabilize in 2023, but will remain below the levels reached by recent peaks. Analysts note that commodity prices have fallen from very high levels at the start of 2022, but predicted that prices are likely to remain cyclically high through 2023. This, combined with modest volume growth, will support a strong cash flow generation for oil and gas producers. .

Moody’s estimates that U.S. energy sector EBITDA for 2022 will be $623 billion, but will fall to $585 billion in 2023. Analysts say weak capital spending, growing uncertainty over to future supply expansion and the high geopolitical risk premium will continue however. to sustain cyclically high oil prices. Meanwhile, strong US LNG export demand will continue to support high natural gas prices.

Bullish on OFS

A particular element of this report is how bullish analysts are about the Oil Field Services (OFS) sector.

Growing demand for oilfield services (OFS) amid growing drilling and completions activity will continue to drive pricing power and support significant earnings growth for OFS companies,” the analysts wrote.

While discipline will always be the name of the game when it comes to capacity, Moodys says pricing power will continue to strengthen next year, “enabling OFS companies to increase profit margins, even with the ‘labour and material cost inflation’.

Moodys also expects improved profit margins for OFS from increased daily rates for onshore and offshore platforms, as well as higher future rates as customers renew their contracts.

US rigs are up around 30% since January and have recovered to around 95% of their January 2020 levels, according to the report.

OFS companies have reported that drilling and completions activity and prices have increased slightly, while thugs also say they are seeing an increase in job vacancies. Oilfield workers have been among the hardest hit demographics by the Covid-19 pandemic in 2020. Nationally, the oil and gas industry is believed to have lost 107,000 jobs according to global consultancy Deloitte, with an estimated 200,000 thugs losing their jobs at the height of the global lockdowns. Related: Putin forces all energy workers to sign up for military draft

Here are some OFS actions to keep on your radar.

Market cap: $25.1 billion

Cumulative returns since the beginning of the year: 15.8%

One of the largest oil service companies, based in Texas Halliburton Company (NYSE: HAL) provides products and services to the energy industry worldwide, including well completion drilling and appraisal services.

Halliburton provides various production solutions in the areas of exploration, drilling, production software and data management services to upstream oil companies through its Landmark Software and Services product line. In addition, the company’s Testing & Subsea and Project Management product line specializes in reservoir optimization and related technologies. Thailand PTT Exploration and Production and Kuwait Oil Company are among notable oil and gas companies that have awarded contracts to Halliburton to implement digital transformation and improve the efficiency and production of their oilfields.

Halliburton is among the international OFS companies that have been caught in the Russian-Ukrainian crossfire. In April, Halliburton announced that she had immediately suspended future activities in Russia and terminate its remaining activities there. Previously, the company halted all shipments of sanctioned parts and specific products to Russia, although the company says it has no active joint ventures in the country.

Fortunately, HAL is not as heavily exposed to the Russian market, with JPMorgan believing that it derives only 2% of its income from the country.

HAL has an average Strong Buy analyst recommendation with a price target of $31.84, good for a 15% upside.

Market cap: $6.5 billion

Cumulative returns since the beginning of the year: 16.3%

Based in Texas NOV inc. (NYSE: NOV) is a leading global supplier of equipment and components used in oil and gas drilling and production operations, oilfield services and supply chain integration services for the upstream oil and gas industry. NOV was formerly known as National Oilwell Varco.

Wall Street has been downgrading on NOV lately, thanks to valuation and supply chain issues.

Bank of America issued a double downgrade for NOV stock to underperform the buy with a price target of $22 (up 31.2%).

Russia will only create a tighter global supply chain that could delay the margin recovery story that was central to our bullish thesis. We’re not 100% sure that developments in Russia don’t make sourcing materials like aluminum, copper, nickel and steel more problematic for a company that was already struggling with its supply chain. supply and material cost inflation. » BofA’s Chase Mulvehill wrote.

Meanwhile, Gruber improved Nabors (NYSE:NBR) to hold, as global exposure and improving drill rate killed its free cash flow thesis.

Market capitalization: $837.2 million

Cumulative returns since the beginning of the year: 61.6%

precision drilling company (NYSE: PDS) is a Canada-based company, which provides contract drilling, completions and production services primarily to oil and natural gas exploration and production companies in Canada, the United States and certain international websites.

BMO Capital Markets has distributed upgrades to a number of Canadian oil service companies, including Precision Drilling Corporation, CES Energy Solutions Corp. (OTCPK: CESDEF), Pason Systems Inc. (OTCPK:PSYTF), and Secure Energy Services Inc. (OTCPK: SECYF) as drilling activity increases.

“We believe the sector is poised to reach multi-year levels of activity, while prices continue to rise,” he added. John Gibson, an analyst at BMO Capital Markets, wrote in a note to clients titled “Glory Days Ahead, but Expect Volatility to Continue.”

Gibson says Precision, CES and Pason each have high market share in North America, leverage to increase business levels and strong free cash flow generation capabilities.

By Alex Kimani for Oilprice.com

More reading on Oilprice.com:

Are energy stocks always cheap? https://atlantigaz.com/are-energy-stocks-always-cheap/ Wed, 21 Sep 2022 00:00:00 +0000 https://atlantigaz.com/are-energy-stocks-always-cheap/

Energy stocks are outperforming the stock market — by a mile — this year. Record profits for oil and gas companies amid soaring commodity prices have made the energy sector attractive to investors. Yet record earnings for energy and materials stocks mask a weaker S&P 500 market, where earnings growth has slowed markedly this year — it even flattened out when energy stocks are excluded.

Analysts say energy stocks are much cheaper than other sectors based on upcoming price-to-earnings (P/E) ratios. Second-quarter S&P 500 earnings growth was double-digit. But excluding energy, earnings were actually down year over year.

The outperformance of the energy sector thus masks the weakness of the stock market and distorts a valuation tool on which many investors swear: the price-to-earnings ratio.

Even though the energy sector’s weight in value in the S&P 500 is only 2.7%, energy earnings account for a tenth of earnings growth as oil and gas stocks are the cheapest among the sectors. in terms of P/E ratios, James Mackintosh, senior columnist at the Wall Street Journal, Remarks.

The energy sector is the best performer in the S&P 500

Year-to-date, the energy sector is the best performing sector in the S&P 500 index, according to market data compiled by Yardeni Research.

The S&P 500 energy sector had gained 41.2% year-to-date through September 19. By comparison, the S&P 500 is down 18.2%, and all other sectors except utilities have also lost ground since January.

Within the energy sector, the integrated oil and gas subsector jumped 47.6%, and the oil and gas exploration and production subsector jumped 46%. 5% amid tighter supply, soaring commodity prices and expected energy shortages and rationing in Europe this winter.

Additionally, equity strategists, portfolio managers and retail investors increased increasingly optimistic about energy stocks, the latest Bloomberg MLIV Pulse survey conducted earlier this month shows.

Related: U.S. natural gas prices plummet on rail deal, storage construction

The survey of 814 respondents, including retail and portfolio investors, risk managers, buy-side and sell-side traders, equity strategists and economists, showed that two-thirds of all respondents had the intention to increase their exposure to energy-related stocks and bonds. over the next six months.

Excluding energy, S&P 500 earnings are down

However, record earnings in the energy sector mask a much weaker overall earnings trajectory for the S&P 500.

For the second quarter, the energy sector posted the strongest earnings growth of all 11 sectors at 299%, John Butters, vice president and principal earnings analyst at FactSet, said last month. According to FactSet.

For the third quarter, the earnings growth rate has been lowered since June 30, and in mid-September the S&P 500 is expected to show annual earnings growth of 3.5%, compared to the earnings growth rate. estimated at 9.8% as of June 30, according to FactSet. Butters said in a benefit Overview Last week. The energy sector was the only sector that saw an increase in expected earnings due to upward revisions to earnings estimates. As a result, the industry’s estimated annual earnings growth rate has risen from 103.4% to 120.2% since June 30. The sector is also expected to be the biggest contributor to S&P 500 earnings growth in the third quarter. If that sector were excluded, the index would be expected to show a 2.9% revenue decline rather than a 3.5% revenue growth, according to FactSet.

The coming weeks will show whether economic weakness manifests itself in weak S&P 500 earnings, Liz Ann Sonders, managing director, chief investment strategist at Charles Schwab, and Kevin Gordon, senior director of investment research at Charles Schwab, wrote this week.

“In a few weeks, the third quarter earnings season will begin, with much hesitation about whether this will be the season where economic weakness translates into weak earnings. We believe that the weakness in expected earnings growth is at the start of its journey to an ultimate negative (year-over-year decrease),” Sonders and Gordon say.

“Last week’s news from FedEx of an expected earnings implosion and the company’s removal of all forward guidance is a likely canary.”

Last week, FedEx reported quarterly figures below its own expectations due to macroeconomic weakness in Asia and service problems in Europe. Amid expectations of a still-volatile operating environment, FedEx is withdrawing its fiscal 2023 earnings guidance starting in June.

A weaker macro environment could mean further downward revisions to earnings estimates for many S&P 500 companies, as the energy sector continues to reap the rewards of higher oil and gas prices relative to levels of the previous year.

This makes the forward price/earnings ratio even more difficult to use as a valuation tool.

As Charles Schwab’s investment strategists put it in their research, “Our goal in this article is to reinforce the fact that no single valuation measure acts as the holy grail in determining whether the market is properly assessed.”

By Tsvetana Paraskova for Oilprice.com

More reading on Oilprice.com:

Gasoline prices in Georgia fall another 7 cents, despite rising crude oil prices https://atlantigaz.com/gasoline-prices-in-georgia-fall-another-7-cents-despite-rising-crude-oil-prices/ Mon, 19 Sep 2022 10:30:58 +0000 https://atlantigaz.com/gasoline-prices-in-georgia-fall-another-7-cents-despite-rising-crude-oil-prices/

Gasoline prices in Georgia continue to decline, consistent with the national trend, dropping seven cents per gallon on average for regular unleaded over the past week. But the recent rise in crude oil prices could initiate a reversal of this trend.

According to the weekly press release from Montrae Waiters, spokesperson for AAA – The Auto Club Group, drivers in Georgia are now paying an average of $3.18 per gallon.

“As the cost of living continues to rise in the United States, prices at the pumps in Georgia are falling,” Waiters said. “Cheaper crude oil prices generally lead to cheaper gas prices. This trend has helped prices at the pump steadily decline for months. However, we have seen oil prices recover, which could impact the future of pump prices.

Prices in Cobb County

The price of a gallon of regular unleaded in Cobb County is $3,328 at the time of this writing, about 15 cents more expensive than the state average. This 15-cent spread is typical of recent weeks, but consistent with higher prices in Fulton County, several adjacent counties west of Cobb.

It’s still possible to find lower than average gas prices by doing comparisons or using tools like http://gasbuddy.com.

AAA’s weekly report indicated the following on national oil and gas trends:

Since last Monday, the national average for a gallon of regular gas is down 4 cents to $3.67 (subject to change overnight). According to data from the Energy Information Administration (EIA), gas demand fell from 8.73 million barrels per day to 8.49 million barrels per day last week. Additionally, according to the EIA, total national gasoline inventories fell by 1.8 million barrels to 213 million barrels. Although demand for gasoline declined, fluctuating oil prices led to smaller declines in prices at the pump. If oil prices continue to rise, the national average will likely reverse as pump prices rise.

How does AAA determine gas prices?

According to AAA:

AAA updates fuel price averages daily at www.GasPrices.AAA.com. Every day, up to 130,000 stations are queried based on credit card swipes and direct feeds in cooperation with the Petroleum Price Information Service (OPIS) and Wright Express for unparalleled statistical reliability. All average retail prices in this report are for one gallon of regular unleaded gasoline.

India should not support G-7 Russian oil price cap https://atlantigaz.com/india-should-not-support-g-7-russian-oil-price-cap/ Sat, 17 Sep 2022 19:06:34 +0000 https://atlantigaz.com/india-should-not-support-g-7-russian-oil-price-cap/

A country that imports more than 85% of its fuel needs must ensure that there is no disruption in the supply of this strategic product. It is therefore good news that India is trying to diversify its sources of crude oil supply. This will help insulate the country from the impact of geopolitical developments that could reduce availability at any time. Currently, the majority of crude oil purchases are made from countries in West Asia, the traditional source of supply for the past decades.

Over the past six months, however, imports from Russia have increased largely due to reduced tariffs offered to that country. Prices were well below the average Indian crude basket which was around $110 in May and $116 a barrel in June. For example, Russian bids were $16 lower in May and $14 lower in June. Reduced rates are now offset by lower offers from other countries such as Iraq.

The Indian crude basket is the weighted average of Dubai, Oman and Brent crude oil prices. This gives a better price indicator for this country, especially since most purchases are made from the West Asian region.

The net result of the cheaper prices offered by Russia is that import volumes from that country have risen from a meager 1% in February, before the conflict in Ukraine, to 18% currently. This brings Russia to third place after Saudi Arabia and Iraq.

But media reports indicate that the oil ministry wants to reduce its dependence on oil from West Asian countries, particularly Iraq, given the unstable political conditions in the region. It is therefore suggested to buy more oil from countries like Canada, Brazil, Colombia, Guyana and Gabon. The country already imports small amounts of oil from some of these countries, but this is only about 2-3% of the total import volume. Efforts are currently being made to increase these quantities so that oil imports are not blocked due to unfavorable geopolitical developments.

Diversification is also being considered in light of projections that many natural gas users will switch to oil in the near future. This would create huge demand for existing suppliers and could even crowd out India despite being a long-term buyer. It is therefore advisable to seek a variety of sources for oil imports to ensure there is no disruption in availability.

The effort is being made against the backdrop of G-7 countries seeking to induce a ceiling on Russian oil prices to prevent that country from profiting from its hydrocarbon resources. The G-7, which includes the United States, United Kingdom, Japan, Germany, France, Italy, Canada and the European Union, is keen for India to join the coalition to ensure the success of the price cap system. But there is an opinion among Western allies that even if India does not join, it will have an impact on other countries in the region.

The price cap system being considered involves participating countries denying critical services to oil cargoes priced above the limit. This could include insurance, financing, brokerage and shipping services where Western companies are primarily used for crude shipments. As for the ceiling itself, the figures mentioned are around 40 to 60 dollars per barrel.

Although the program is ambitious, the fact is that so far the economic sanctions, particularly on oil and gas, have backfired on Western allies. For example, the decision to reduce purchases of Russian oil has led to the emergence of alternative buyers such as India and China. This has also led Russia to cut gas supplies to European countries through the Nordstream-1 gas pipeline. This has been attributed to technical maintenance issues, but is clearly a response to economic sanctions. Gas supply is still ensured by older pipelines that cross Ukraine but the quantities are not sufficient for Europe.

The net result was a sharp rise in global gas prices which fueled inflationary pressures in many countries. This has led to a crisis in countries like Germany which depend up to 40% of their energy needs on Russian gas supplies. The gas shortage has also caused electricity prices to spike, as many power plants run on gas. Reports from Europe indicate that hydropower is in the doldrums due to a drought this year, while nuclear power plants in France are operating at half capacity due to technical maintenance issues.

In other words, the goal of crippling the Russian economy by imposing sanctions has instead created a situation in which Western countries themselves face a serious energy crisis. Oil and gas prices soared in the months following the conflict in Ukraine, while electricity prices also rose sharply. This is causing a lot of concern, as the demand for heating fuels will simultaneously increase in the coming winter months.

In such a scenario, it would be desirable for India to stay away from the latest Russian oil price cap plan. It should be borne in mind that even the Western coalition had carefully excluded gas supplies from the sanctions list, in order to ensure the economic well-being of European countries. Similarly, India must also keep its best interests in mind when considering such measures. Oil is a strategic commodity and policy measures must ensure sufficient availability, otherwise it could affect the country’s economic recovery process.

Rising oil prices could improve the financial situation of the Gulf countries – ARAB TIMES https://atlantigaz.com/rising-oil-prices-could-improve-the-financial-situation-of-the-gulf-countries-arab-times/ Thu, 15 Sep 2022 18:47:47 +0000 https://atlantigaz.com/rising-oil-prices-could-improve-the-financial-situation-of-the-gulf-countries-arab-times/

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Solvency will depend on sudden oil gains

KUWAIT CITY, September 15: The rating agency “Moody’s” has indicated that the rise in oil prices over the next two years will lead to a significant improvement in the financial and external positions of the Gulf countries, reports the daily Al-Rai . However, the agency clarified that the substantial improvements that will occur in creditworthiness will depend on the size of the sudden oil gains these countries will reap and their use to deal with structural pressures on credit caused by their exposure to cyclical fluctuations. global oil demand and prices, and because of the risks of transitioning to green energy in the long term.

The agency added that the recovery in global oil demand and prices from the recession has allowed major oil and gas producers, including the Gulf states, to increase production, offsetting most of the cuts in production implemented by the Organization of the Petroleum Exporting Countries (OPEC) and its allies in May 2020.

As a result, OPEC producers jointly increased crude oil production to 28.9 million barrels per day in July 2022 from an average of 26.3 million barrels per day in 2021, an increase of 9 .7%. During the same period, the United Arab Emirates and Kuwait increased their crude oil production by almost 15%, while Saudi Arabia’s production increased by 17.6%. Bahrain and Qatar are not members of the OPEC-led coalition and have not significantly reduced production in recent years, nor significantly increased production.

Their major oil and gas production will take place in 2022. On the other hand, Moody’s said that governments whose economies and finances are more sensitive to fluctuations in oil prices due to their heavy reliance on the hydrocarbon sector are those who will benefit more than others from the current high oil prices in terms of significant improvement in debt burden and sustainability measures. This confirms the agency’s assessment of the financial strength of these countries.

However, for many Gulf countries, including Kuwait, Abu Dhabi and Saudi Arabia, their financial strength is already very high due to relatively low indebtedness and the availability of large financial reserves in the form of assets held by sovereign wealth funds, which will limit the extent of strong upward pressure on solvency only Due to the high level of financial performance.

These governments have also experienced the least deterioration in their financial strength since 2015, as despite some significant balance sheet erosion over the 2015-2020 period, Kuwait, Abu Dhabi and Saudi Arabia were able to avoid a significant increase in their debt, mainly due to the strength of their financial reserves which allowed them to reduce the need for debt accumulation, especially in the case of Kuwait, and a low fiscal break-even point for the price of oil in the budget, which has limited the size of the budget deficit despite the significant decline in oil revenues, as in the case of Abu Dhabi, or its ability to mitigate the shock of oil revenues by significantly reducing major expenditures or imposing new important measures for non-oil revenues, as is the case for Saudi Arabia.

According to Moody’s data, Kuwait and Abu Dhabi have the largest oil sectors compared to the rest of their economies, as the total value added of the oil and gas sector in Kuwait exceeds 41% of the country’s GDP in 2021, while the agency noted that Kuwait has the highest financial strength among the Gulf countries thanks to the low proportion of debt. Moody’s believes that upward pressures on credit in Gulf countries with high ratings – other than Qatar – will be limited to modest improvements in economic strength, but credit factors will remain constant and constrained higher in due to the high exposure of sovereigns to the risks of the transition to green energy in the long term, and their ability to mitigate these risks over time.

Wall Street is increasingly bullish on energy stocks https://atlantigaz.com/wall-street-is-increasingly-bullish-on-energy-stocks/ Wed, 14 Sep 2022 00:00:00 +0000 https://atlantigaz.com/wall-street-is-increasingly-bullish-on-energy-stocks/

Oil and gas stocks, the best performing stocks on the S&P 500 so far this year, still have room for improvement as retail and portfolio investors seek to increase exposure to traditional energy , expecting a worsening energy crisis and fuel shortages. This winter. Despite market concern that soaring energy prices will continue to increase their upward pressure on inflation and that central banks will continue to try to combat said inflation with continued and large hikes in interest rates, the energy space currently looks attractive to investors as Europe jostles for energy supply .

Investors are looking to increase their exposure to energy stocks

Equity strategists, portfolio managers and retail investors are increasingly bullish on energy stocks, according to the latest Bloomberg MLIV Pulse survey conducted last week shows.

The survey of 814 respondents, including retail and portfolio investors, risk managers, buy-side and sell-side traders, equity strategists and economists, showed that two-thirds of all respondents intended to increase their exposure to energy-related stocks and bonds over the next few years. six months.

In addition, nearly three-quarters (74%) of respondents see soaring electricity and natural gas prices as the main source of global inflation this year, especially if Russia further disrupts supply. gas by pipeline to Europe this fall and winter.

“I definitely want to stay invested in energy stocks due to the massive supply constraints,” Chris Wood, global head of equity strategy at Jefferies, told Bloomberg TV in an interview.

Energy Supply Constraints

Despite oil prices falling in recent weeks due to recession fears, supply from Russia could be reduced in December when the EU ban on imports of Russian oil by sea comes into effect. force, which will lead to a tightening of the market despite a potential slowdown in demand growth. The Russian oil price cap imposed by the G7 and a possible Russian gas price cap in the EU could further complicate the energy supply of the world’s most developed economies if Putin continues his action. threatens to stop supply all energy products to Europe if the EU and its Western allies impose price caps on Russian oil and natural gas. Related: OPEC stays below production target despite further production increase

A shortage of critical fuels such as natural gas and diesel could boost the stocks and bonds of energy companies as they have the ability to invest in more oil and gas.

Years of underinvestment in the oil and gas sector have come back to haunt the world’s energy supply, according to Jeff Currie, global head of commodities research at Goldman Sachs, who was bullish on oil all year.

“The only way to solve the long-term energy problem is through investment — and oil companies are the channel for capital spending to solve the problem,” Currie told Bloomberg.

In natural gas, Russia’s cutoff of all supplies via Nord Stream to Germany is a bullish argument for energy companies producing and/or trading and selling LNG on the spot market, including supermajors such as Shell , TotalEnergies or BP.

Respondents to the Bloomberg MLIV Pulse survey expect natural gas to be the most constrained commodity in the near term. Most of them also believe that OPEC+ will not let oil prices fall too low and would intervene with a cut in production in the market if a recession undermines demand for oil.

In addition, almost half, or 44%, of respondents say that the current price of oil does not adequately reflect real supply and demand.

Saudi Energy Minister Prince Abdulaziz bin Salman last month highlighted the “disconnect” between paper and physical markets, saying OPEC+ was ready to cut production at any time, in any form, if he believes it would bring stability to the “schizophrenic” oil market.

Energy: better return and outlier in a falling stock market

Energy supply constraints expected this winter aren’t the only factors drawing more investors into oil and gas stocks and bonds. Despite significantly outperforming the S&P 500 this year, the energy sector has room for further growth. Energy stocks are still significantly cheaper than other sectors based on upcoming price-to-earnings (P/E) ratios, analysts say.

Year-to-date, the energy sector is the best performing sector in the S&P 500 index, according to market data compiled by Yardeni Research.

The S&P 500 energy sector had gained 47.4% year-to-date through September 12. By comparison, the S&P 500 is down 13.8%, and all other sectors except utilities have also lost ground since January.

Within the energy sector, the integrated oil and gas subsector jumped 53.7%, and the oil and gas exploration and production subsector jumped 52%. 4% amid tighter supply, soaring commodity prices and expected energy shortages and rationing in Europe this winter.

Even some ESG-focused funds are do not reject immediately oil and gas stocks, as years of underinvestment in new supplies, the energy crisis and the Russian invasion of Ukraine have highlighted energy security and accessibility. Recent analysis has suggested that some ESG funds are now including traditional energy stocks in their portfolios, something unimaginable just two years ago.

By Tsvetana Paraskova for Oilprice.com

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Europe’s natural gas shortage could trigger a food crisis https://atlantigaz.com/europes-natural-gas-shortage-could-trigger-a-food-crisis/ Mon, 12 Sep 2022 11:00:00 +0000 https://atlantigaz.com/europes-natural-gas-shortage-could-trigger-a-food-crisis/

The problem with an energy crisis is that it is actually a crisis of everything. In a world where virtually every industry depends on energy in one form or another, runaway inflation is inevitable. This phenomenon is not new – you have been experiencing it for a good part of two years now. But while world governments are using all the tools in their kit to rein in rising inflation rates, there is little they can do in the face of the coming food shortage.

For months, the agriculture industry has been warning the rest of the world that next year’s food production is in serious jeopardy, as the fertilizer industry is in shambles. Industrial NPK fertilizers (so named for their nitrogen, phosphorus and potassium oxide composition) are highly dependent on natural gas supplies. About 70 percent of the cost of fertilizer production is the price of natural gas alone, which is used in generous quantities to make the ammonia phosphate sludge that turns into fertilizer. Indeed, according to the CRU group, European fertilizer producers in the region are currently losing around $2,000 for each tonne of ammonia product. While Russia has then stemmed indefinitely halted the flow of natural gas to Europecausing gas prices to explode, the continent’s fertilizer sector came to a halt as much as 70% of its production capacity.

This is an extremely frightening number. Commercial fertilizers play a vital role in 40 to 60 percent of world food production. Unless you grow your own food or buy from a patchouli-scented co-op, chances are most of your staples are entirely NPK-dependent. Food safety experts have warned of this type of crisis for years, and this specific crisis since the beginning of this year. After so many decades of liberal use of chemical fertilizers, the world’s agricultural soils are significantly depleted of nutrients. Without increased fertilizer use each year, these degraded lands could produce only a fraction of their current capacity, and with lower nutrient content.

And it all adds up to other ongoing food crisis. Together, Russia and Ukraine produce so much grain for the world market that they are often referred to as the breadbasket of the world. The conflict in the region has also jeopardized the delivery of the region’s grain to market, creating a food crisis in sub-Saharan Africa, which is dependent on imports. earlier this summer. A recent grain trade agreement between the United Nations, Moscow and Kyiv – which attempted to alleviate this problem while providing income to occupied Ukraine – enraged Russian President Vladimir Putin. Although he agreed to let the ‘scam’ deal go ahead – for now – the back and forth highlighted the extreme volatility of the grain and fertilizer supply chains involving Russia .

In July (when gas prices were much lower and the food security situation was not as dire as it is now), the International Fertilizer Association estimated that if the Russia in Ukraine continues and as high gas prices continue to drive down fertilizer use, nearly 2 percent of global corn, wheat, rice and soybean production could be lost. “Even small declines in grain production can lead to significant price increases,” Newsweek reporting. As always, the poorest countries will pay the highest price; this summer’s grain crunch in Africa will pale in comparison to the food crises likely to hit African countries, Mexico and other developing nations with large input-dependent agricultural sectors.

So why isn’t the world just directing more dollars and gas to fertilizer, given what is at stake? “Countries can’t tax fertilizer production because they’re so worried about having enough natural gas to heat people’s homes,” said John Harpole, a natural gas broker for the fertilizer business at Newsweek. “They have to choose between future food production and heat and they’re going to choose heat.”

By Haley Zaremba for Oilprice.com

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Soybean oil price may fall once dollar price stabilizes: Tipu https://atlantigaz.com/soybean-oil-price-may-fall-once-dollar-price-stabilizes-tipu/ Sat, 10 Sep 2022 17:06:00 +0000 https://atlantigaz.com/soybean-oil-price-may-fall-once-dollar-price-stabilizes-tipu/

Trade Minister Tipu Munshi said he was optimistic that the price of soybean oil could fall over the next two months.

“Due to the high value of the US dollar, the price of commodities is not falling in the country. Commodity prices are expected to fall after the price of the dollar stabilizes in the coming months,” he said.

The Minister of Commerce said this during a conversation with local journalists at his residence on Central Road in the city of Rangpur on Saturday.

He said the import price of soybean oil in the world market has been falling.

As a result, edible oil prices fell. The problem is also that the value of the US dollar has increased.

“Hopefully the price of the US dollar will stabilize soon. Soybean oil prices will stabilize again when the US dollar price stabilizes. We also expect the prices of other raw materials and products to decline within one to two months,” said Tipu Munshi.

Regarding Prime Minister Sheikh Hasina’s most recent visit to India, Tipu Munshi said the visit has become a success.

“Discussions with India on investment and bilateral trade have been fruitful. The Prime Minister of India has requested support from Bangladesh to move forward,” he said, adding that West Bengal has responded positively to the Teesta River Water Sharing Treaty.

The trade minister also said that the prime ministers of the two neighboring countries showed enthusiasm on various issues and positive discussions took place.

Local leaders of the Awami League and its associated organizations were present.