Oil Slips Over 1% on Bets that Crude Supply Growth Will Exceed Demand

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
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Oil Slips Over 1% on Bets that Crude Supply Growth Will Exceed Demand

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo

Oil prices fell for a third day straight on Wednesday on growing expectations that supply growth will outpace demand growth next year, even though the Omicron coronavirus variant is not seen curbing mobility as sharply as earlier COVID-19 variants.

US West Texas Intermediate (WTI) crude futures fell $1.05, or 1.5%, to $69.68 a barrel by 0734 GMT, after losing 56 cents in the previous session.

Brent crude futures fell 91 cents, or 1.2%, to $72.79 a barrel, after losing 69 cents on Tuesday.

Brent's prompt monthly spread was unchanged at 7 cents after flipping into contango briefly on Tuesday.

The International Energy Agency (IEA) on Tuesday said a surge in COVID-19 cases with the emergence of the Omicron variant will dent global demand for oil at the same time that crude output is set to increase, especially in the United States, with supply set to exceed demand through at least the end of next year.

In contrast, the Organization of the Petroleum Exporting (OPEC) on Monday raised its world oil demand forecast for the first quarter of 2022.

"The IEA's bearish view on the market was in stark contrast to OPEC's more positive view when it released its monthly outlook earlier this week. The divide suggests volatility is likely to remain high in the short term," ANZ commodity analysts said in a note.

Energy consultancy FGE said it has a more optimistic outlook than the IEA as the consultancy expects a smaller surplus of 400,000 barrels per day, based on a comparatively lower demand risk from Omicron, against IEA's forecast of 1.7 million bpd in the first quarter.

Also weighing on the market is a firming US dollar, which makes commodities priced in the greenback more expensive for other countries, Reuters reported. Markets are awaiting the outcome of a key US Federal Reserve policy meeting on Wednesday for signs of when the central bank may raise interest rates.

In another bearish indicator, industry data showed that US crude inventories last week did not decline as much as expected. American Petroleum Institute data showed US crude stocks fell by 815,000 barrels in the week ended Dec. 10, according to market sources, compared with a 2.1 million barrel drop that 10 analysts polled by Reuters had expected.

However, distillate stocks fell by 1 million barrels, compared with analysts' forecasts for an increase of 700,000 barrels, and gasoline stocks rose by 426,000 barrels, which was a smaller build than expected. Weekly data from the US Energy Information Administration is due later on Wednesday.



Saudi PIF Invests $200 Million in ETF Bond Fund

The fund is the first of its kind in Saudi Arabia to focus on fixed-income exchange-traded funds (ETFs). (Asharq Al-Awsat)
The fund is the first of its kind in Saudi Arabia to focus on fixed-income exchange-traded funds (ETFs). (Asharq Al-Awsat)
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Saudi PIF Invests $200 Million in ETF Bond Fund

The fund is the first of its kind in Saudi Arabia to focus on fixed-income exchange-traded funds (ETFs). (Asharq Al-Awsat)
The fund is the first of its kind in Saudi Arabia to focus on fixed-income exchange-traded funds (ETFs). (Asharq Al-Awsat)

State Street Global Advisors, a subsidiary of State Street Corporation, announced that Saudi Arabia’s Public Investment Fund (PIF) has invested SAR 750 million ($200 million) in the newly launched SPDR J.P. Morgan Saudi Aggregate Bond ETF.

According to a statement released by the company on Wednesday, this fund is the first of its kind in Saudi Arabia to focus on fixed-income exchange-traded funds (ETFs). It is listed in both the London Stock Exchange and Germany’s Xetra, offering investors the opportunity to track government and quasi-government bonds denominated in either the Saudi Riyal or the US Dollar, including sukuk (Islamic bonds).

This investment aligns with the objectives of Saudi Vision 2030, representing a significant step toward enhancing the international presence of Saudi Arabia’s financial markets and attracting foreign investments. The fund is available to investors across several European countries, including Austria, Denmark, France, Germany, and Italy.

Commenting on the investment, Yazid Al-Humaid, Deputy Governor and Head of MENA Investments at PIF, said: “The fund continues to create opportunities and enable access to diverse capital markets in the Kingdom. Investing in the first internationally listed Saudi fixed-income ETF underscores PIF’s commitment to deepening Saudi capital markets, attracting investors, and fostering partnerships across global financial centers.”

CEO of State Street Global Advisors Yi-Hsin Hung emphasized that the launch of the fund is a significant milestone in providing innovative opportunities for investors while contributing to Saudi Arabia’s economic growth.