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Oil Eases on Higher US Stockpiles, Caution Ahead of Likely Fed Hike

FILE PHOTO: An oil and gas processing plant fed by local shale wells is pictured along a highway outside Carrizo Springs, about 30 miles (48 km) from the Mexican border, May 2, 2014. REUTERS/David Alire/File Photo
FILE PHOTO: An oil and gas processing plant fed by local shale wells is pictured along a highway outside Carrizo Springs, about 30 miles (48 km) from the Mexican border, May 2, 2014. REUTERS/David Alire/File Photo
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Oil Eases on Higher US Stockpiles, Caution Ahead of Likely Fed Hike

FILE PHOTO: An oil and gas processing plant fed by local shale wells is pictured along a highway outside Carrizo Springs, about 30 miles (48 km) from the Mexican border, May 2, 2014. REUTERS/David Alire/File Photo
FILE PHOTO: An oil and gas processing plant fed by local shale wells is pictured along a highway outside Carrizo Springs, about 30 miles (48 km) from the Mexican border, May 2, 2014. REUTERS/David Alire/File Photo

Oil prices eased on Wednesday off three-month highs as industry data showed a stock build in US crude inventories and investors remained cautious ahead of a likely Fed rate hike.

Brent crude futures slipped 46 cents, or 0.55%, to $83.18 a barrel by 0451 GMT, while US West Texas Intermediate (WTI) crude was at $79.18 a barrel, down 45 cents, or 0.57%.

US crude stocks rose by about 1.32 million barrels in the week ended July 21, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters also expect a 2.3 million barrel drawdown.

US government data on inventories is due on Wednesday.

"The market will continue to be in a tug-of-war between tightening global supply and fears of slowing demand due to global economic slowdown," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that investors had also squared their positions ahead of another expected interest rate increase by the US Federal Reserve.

Investors are also cautious about the impact of the Fed decision on oil demand. The Fed meeting ends on Wednesday.

"Whilst the market is largely expecting the Fed to hike rates today, any signals that they still have more to do after this would likely put some pressure on risk assets," said ING head commodities strategist Warren Patterson.

The Fed's policy meeting started on Tuesday, with most market participants expecting the central bank to deliver a 25 basis-point rate hike when it concludes.

The US dollar has been on a gradual uptrend, rebounding from a 15-month low last week and making it more expensive for buyers to procure commodities such as oil.

Crude prices slipped after Brent and WTI on Tuesday hit their highest since April 19 amid concerns about supply due to output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies, and pledges by Chinese authorities to shore up the world's second-largest economy.

However, concerns about how China, the world's No.2 oil consumer, will actually step up economic policy support remained, keeping a further lid on prices.

"We still need to wait for actual policies - the risk is that these policies fall short of expectations," ING's Patterson said.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.