Oil hovers near 13-month highs as storm dents US output
Severe winter storm in Texas caused US crude production to drop by more than 10 percent
Oil prices extended gains for a fourth session on Thursday to reach the highest levels in more than 13 months, underpinned by an assurance that US interest rates will stay low, and a sharp drop in US crude output last week due to the storm in Texas.
Brent crude futures for April gained 33 cents, 0.49 percent, to $67.37 a barrel by 0925 GMT, while US West Texas Intermediate crude for April was at $63.45 a barrel, up 23 cents, 0.36 percent. Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at $67.70 and WTI at $63.79. The April Brent contract expires on Friday. An assurance from the US Federal Reserve that interest rates would stay low for a while weakened the US dollar, while boosting investors’ risk appetite and global equity markets. A severe winter storm in Texas has caused US crude production to drop by more than 10 percent, or 1 million barrels per day (bpd) last week, the Energy Information Administration said on Wednesday.
“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.
Fuel supplies in the world’s largest oil consumer could also tighten as its refinery crude inputs had dropped to the lowest since September 2008,
EIA’s data showed.
ING analysts said US crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.
Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weakerthan-expected supply response by US tight oil operators to higher prices.
“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said.
The Organization
of
the
Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet on March 4.
The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.
Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.
Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher.
Jeffrey Halle
Senior market analyst at OANDA
Shopping habits have changed permanently for 42 percent of Saudi consumers during the pandemic, according to a new report by global consultancy firm SimonKucher & Partners.
Only 6 percent of respondents of the survey in Saudi Arabia said that their shopping habits had not changed at all while 52 percent said that their habits had changed temporarily.
In an interview with Arab News, Lovrenc Kessler, managing partner of Simon-Kucher’s Dubai office and co-author of the report, spoke in detail about the findings and his predictions for the future. “I found it very interesting that the pandemic had a very different impact on local shopping behavior,” he said. “Consumer behavior really shifted globally. So, for example, there was an increase in demand for toilet paper in Germany, or pasta in Italy. In the Middle East, there was a large increase in the demand for fitness equipment. Yoga mats, weights, kettle bells, and so on.” According to the report, 65 percent of Saudi consumers said that they would be willing to pay more for foods and drinks that do not contain undesirable ingredients; 58 percent wished for more “all-natural” food products on store shelves.
However, the fact remains that healthier food options are generally more expensive than processed or fast-food options, one of the main factors that contributes to the Kingdom’s staggering obesity rate of more than 40 percent.
The increased demand has nonetheless sparked companies in the region to provide more organic and healthy options. Carrefour, for example, is expanding their organic section of local produce and has signed an agreement with Emirates Bio Farm to source up to 450 tons of organic produce to support this drive.
Additionally, the Simon-Kucher and Partners report showed that, due to the pandemic, 44 percent of Saudis were looking to reduce spending, 44 percent were prioritizing value for money when making purchases, and 48 percent were constantly on the lookout for bargains and deals.
In terms of hygiene consciousness, Kessler also noted that retailers themselves were approaching the issue from different perspectives and trying to emphasize its importance. “Clearly, their efforts have eased the minds of shoppers to a very large extent. I have seen it myself in retail chains that operate in the UAE and the KSA, where they would be disinfecting carts, handing out gloves, making sure that people always have a mask on. That has been a part of the entire service proposition, and has even served as a sort of competitive aspect for them to differentiate themselves from the competition and attract customers,” he said. From a consumer aspect, the study found that 84 percent said that they were being hygiene cautious, 84 percent reported avoiding rush hours, and only 20 percent said they were shopping as usual.
As for e-commerce, Kessler believes that while the prevalence of shopping online has increased as a result of the pandemic, it is unlikely to ever replace the brickand-mortar stores completely. “E-commerce definitely will not replace the physical shopping experience, especially not in the GCC region or in the Middle East. Shopping malls will always be a place to visit with family and friends, especially during the hot summer months,” he said. However, he does believe that the e-commerce percentage will continue to increase, due to the convenience it offers, while the drawbacks of online shopping, such as being unable to choose your own produce or replace unavailable items with choices of your own, will ensure that physical shopping remains a strong option.
“It has opened up new options for shopping, such as grocery shopping online, something that was not very typical pre-COVID, but a lot of shoppers have now adapted to it. But the question of how much farther it will continue to rise, or whether it will experience a dip in future, really depends on companies and what type of offers they have,” he said.
Aston Martin expects to almost double sales and move back toward profitability this year after sinking deeper into the red in 2020, when the luxury carmaker was hit by the pandemic, changed its boss and was forced to raise cash.
The British company’s shares jumped 9 percent in early Thursday trading after it kept a forecast for around 6,000 sales to dealers this year as new management turns around its performance.
The carmaker of choice for fictional secret agent James Bond has had a tough time since floating in 2018, as it failed to meet expectations and burned through cash, prompting it to seek fresh investment from billionaire Executive Chairman Lawrence Stroll.
The firm made a 466-million pound ($660 million) loss last year, compared with a 120 million pound loss in 2019, as sales to dealers fell by 42 percent to 3,394 vehicles, hit by the closure of showrooms and factories due to COVID-19.
For 2021, it expects “to see the first steps toward improved profitability” but is still likely to post a
pre-tax loss, the carmaker said. “I am extremely pleased with the progress to date despite operating in these most challenging of times,” Stroll said.
Aston said demand for its first sport utility vehicle, the DBX, which rolled off the production line at its Welsh plant in 2020, was strong in a lucrative segment of the market it entered to widen its appeal.
The model accounted for 1,516 of deliveries to dealers last year and the company expects further growth in its first full-year of sales, including in the key market of China, where rivals such as Bentley are also seeing high demand.
“We had not even a half-year DBX production in wholesome so probably we are going to see overproportional growth in China,” Chief Executive Tobias Moers, who took over in August, told Reuters.