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Palm oil gains over 1% tracking rival oils

October 18, 2021: Malaysian palm oil futures rose on Monday as the contract rolled over to a new month, supported by strength in rival oils on the Dalian and Chicago exchanges.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 61 ringgit, or 1.26%, to 4,920 ringgit ($1,183.83) a tonne during early trade.

FUNDAMENTALS

* Global vegetable oil prices, which have hit multi-year highs in recent months, are set to decline during the first half of 2022 due to a strong recovery in production and inventories, according to a forecast from leading analyst Thomas Mielke.

* The Indian Vegetable Oils Producers Association says it is seeing early signs of demand shifting from palm oil to soft oils after India's duty cut made soft oil more attractive.

* Malaysia's crude palm oil production in 2021 is forecast to decline to 18.4 million tonnes due to a labour shortage and will keep prices above 4,600 ringgit a tonne for the rest of the year, the Malaysian Palm Oil Council said.

* Dalian's most active soyoil contract rose 1.3%, while its palm oil contract gained 1.4%. Soyoil prices on the Chicago Board of Trade were up 0.2%.

* Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

* Palm oil may retest a resistance zone of 5,032-5,048 ringgit per tonne, a break above which could lead to a gain into a range of 5,187-5,274 ringgit, Reuters technical analyst Wang Tao said.

* The Malaysian bourse will be closed on Tuesday for a public holiday.

Reuters

 

 

 

Chinese and HK shares fall as China Q3 GDP...

October 18, 2021: Mainland Chinese and Hong Kong equity markets fell on Monday after data showed China's economy grew more slowly than expected in the third quarter, weighing on regional stocks, although losses were capped by hopes of support from policymakers.

Oil prices, meanwhile, hit new multi-year peaks, continuing their recent surge amid a global energy shortage, with U.S. crude at a fresh seven-year high and Brent at a three-year high.

China's gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest pace since the third quarter of 2020, as China grappled with power shortages, supply bottlenecks and sporadic COVID-19 outbreaks as well as rising jitters over the property sector.

Chinese blue chips were down 1.53% and the Hong Kong benchmark lost 0.56%, although most of the falls came right after the bell, prior to the release of the data.

"In response to the ugly growth numbers we expect in the coming months, we think policymakers will take more steps to shore up growth," said Louis Kuijs, head of Asia economics, Oxford Economics.

"We think the electricity shortages and production cuts will become less of a problem later in Q4. In line with our expectation, senior policymakers have started to stress growth and we expect them to start calling for the pursuit of climate targets on a more measured timeline."

The weaker-than-expected data weighed on regional benchmarks. MSCI's broadest index of Asia-Pacific shares outside Japan was last down 0.2%, while Japan's Nikkei lost 0.3%. U.S. stock futures, the S&P 500 e-minis , were steady.

The Asian declines come after stocks globally finished last week in a bullish mood posting their best day in five months on Friday as strong U.S. corporate earnings reports fuelled optimism about the economy, although firm oil prices kept inflation risks alive and lifted government bond yields.

Investors, meanwhile, continue to fret over inflation, driven by a reopening from COVID-19 and supply chain issues, said Shane Oliver, chief economist at AMP, pointing as an example to New Zealand, which on Monday reported a 2.2% rise in its consumer price index in the third quarter, the fastest pace in over a decade.

"But in the last two weeks share markets have been shrugging off most things" he added.

Analysts at CBA said as inflation pressure builds, they expect U.S. rates to rise, supporting the U.S. dollar which "has further upside on our view".

The yield on benchmark 10-year Treasury notes rose as high as 1.5930% on Monday, heading back towards the four-month high of 1.6310% hit early Tuesday, before a wobble later in the week.

The pound could gain on the dollar this week as "UK economic and inflation dynamics support the upward shift to the UK interest rates", the CBA analysts added.

In early trading on Monday, most currencies were quiet. The greenback was little changed against a basket its peers at 93.992, off its one-year high of 94.563 hit last Monday, while the yen hovered near its almost three-year low against the dollar.

U.S. crude was last up 1.28% at $83.33 a barrel, while Brent crude was last 0.85% higher at $85.58 per barrel.

Gold was last up 0.14% at $1,769.60 an ounce, after falling 1.5% on Friday on higher U.S. bond yields and a rise in U.S. retail sales.

Bitcoin was within sight of its all-time high, sitting at $62,000 and not far from April's record of $64,895, having gained last week on hopes that U.S. regulators would allow a futures-based exchange-traded fund.

Reuters

 

 

 

Talks with IMF moving forward positively: Finance Division

Rebutting the claim that talks with IMF have stalled, the Finance Division issued a statement saying the negotiations are moving forward.

Weekly Market Roundup

October 17, 2021 (MLN): Following four weeks of negative close, the benchmark KSE-100 index closed this week in green as it gained 344 points (0.77%) over last Friday to settle at 44,821 points.

During the early part of the week, investors resorted to panic selling mainly on the decision on waiving off the 10-Year tax holiday on refineries along with the hike in electricity prices by Rs1.68/unit. Furthermore, lack of clarity on the continuation of the IMF package as well as delay in the process to appoint a new Director-General of the ISI (DG ISI) also caused the KSE100 index to mark an intra-week low of 43,042 index level.

However, with Finance Minister assuring that the government would soon address concerns of the global lender and resume the IMF’s EFF, as well as PM’s statement allaying any rumours of a military-political divide, and the likelihood of civil-military leadership reaching consensus over the appointment of new ISI chief, the KSE-100 index posted two swift back-to-back bull runs, a report by Arif Habib Limited highlighted.

From a sector-specific lens, Commercial Banks emerged as the outperformers during the week amid the increased likelihood of further rate hikes in the upcoming MPS, adding 393 points to the index during the week, followed by Oil & Gas Exploration Companies (136 pts), Cement (98 pts), Fertilizer (90 pts) and Pharmaceuticals (28 pts).

The positive contribution from Cement is attributable likely hike in Cement prices of PKR25-PKR30/bag in the midst of historical high international coal prices.

The sectors that contributed negatively included Technology & Communication (-342 pts), Food & Personal Care Products (-50 pts), Automobile Assembler (-29 pts), and Tobacco (-27 pts).

Scrip-wise major gainers were HBL (153 pts), PPL (87 pts), UBL (67 pts), LUCK (59 pts) and OGDC (42 pts) Whereas major laggards were TRG (-260 pts), SYS (-70 pts) and PAKT (-27 pts).

Meanwhile, the KSE All Share Market Cap increased by a Rs8.66billion or 0.11% over the week, being recorded at Rs7.79trillion as compared to a Market Cap of Rs7.78tr recorded last week.

Flow-wise, foreign investors remained net sellers during the week with an outflow of $13.3mn against an outflow of $3.7mn last week. The major selling was done by Foreign Corporates amounting to a net $35.38mn. Sector-wise, major selling was witnessed in Fertilizer Sectors ($12.1mn), Commercial Banks ($7.8mn) and Cement ($3.11mn)

On the local side, major buying was reported by Insurance Companies ($12.2mn) followed by Mutual Funds ($3.4mn), and Other Organizations ($2.53mn). Other significant transactions included $3.35mn and $3.27mn worth of stocks sold by local Companies and Individuals respectively.

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Weekly News Roundup

October 17, 2021 (MLN): The highlights of the important economic and business events that took place during the last week are in order so as to become acquainted with the recent developments in Pakistan’s economic and public policy.

  • The government on Saturday decided to increase the price of petroleum products by up to Rs10.95 per litre owing to the strong surge in global energy prices.
  • Chairman Businessmen Group (BMG) & Former President Karachi Chamber of Commerce & Industry (KCCI) Zubair Motiwala, while expressing sheer dismay over exorbitant hike in petroleum prices appealed to the Government to subsidize the impact of international oil prices.
  • Lucky Cement Limited has notified recently that the company is up to increase the price of cement by Rs30 per bag.
  • Mian Nasser Hyatt, President FPCCI has urged Pakistani & Iranian governments to come up with a payment mechanism based on barter trade.
  • Meanwhile, the government has allowed NEPRA to increase the electricity tariff by Rs1.39 per unit from the next month.
  • Finance Minister Shaukat Tarin encouraged U.S. corporate sector representatives to invest in Pakistan.
  • On Friday, Federal Minister for Industries and Production said that a comprehensive steel policy would be rolled out soon.
  • Chairman Sindh Revenue Board (SRB) said that SRB has been making cautious efforts all the time to ensure that the business community do not faces a situation in which they receive notices from FBR.
  • Fauji Fertilizer Company (FFC) Limited has been awarded as “Largest Tax Payer from Manufacturing Sector” in First Taxpayer Recognition Awards.
  • On the same day, President Dr. Arif Alvi stressed the need for promoting technical education and information technology so as to fulfil the requirements of industrial sector.
  • Towards digitization of payments and receipts in the corporate sector, SBP has now made it mandatory for its regulated entities (REs) to provide digital means of payments to their corporate clients.
  • Pakistan Water and Power Development Authority (WAPDA) has been constructing 10 projects in water and hydropower sectors under ‘Decade of Dams’ to be completed in a phased manner from 2023 to 2029.
  • The government had decided to impose a complete ban on energy projects based on imported coal in the future.
  • The Prime Minister said both RUDA and CBD are flagship real estate projects of the Government to promote smart, self-sustaining, clean and green housing and business activities in the country.
  • Foreign Minister Shah Mahmood Qureshi Thursday said that Pakistan's shift of focus from geopolitics to geo-economics, improved security environment, and enhanced ranking of Pakistan in the Ease of Doing Business index, offered attractive opportunities for German investors.
  • During the week, the Special Technology Zones Authority (STZA) signed three Memorandum of Understanding (MoUs) with international companies to attract foreign direct investment.
  • According to industry sources, in order to absorb the impact of Rupee depreciation and rise in international coal prices, Cement manufacturers are expected to increase cement prices by Rs25 to Rs30 per bag of 50kg.
  • Petroleum Division signed Petroleum Concession Agreements (PCAs) and Exploration Licenses (ELs) for two Blocks on Wednesday.
  • All Pakistan Textile Mills Association (APTMA) leadership and representatives of the US Cotton have resolved to enhance mutual cooperation in cotton and textile trade and investment opportunities.
  • The Securities and Exchange Commission of Pakistan (SECP) under the Second Cohort of Regulatory Sandbox granted approval to various innovative solutions including parametric insurance, real estate asset tokenization, unified digital distribution of mutual fund application, digital identity/AML/KYC (AI-based) and centralized KYC.
  • On Tuesday, the International Monetary Fund (IMF) projected Pakistan’s real Gross Domestic Product (GDP) to grow by 4.0% in the current fiscal year (2021-22).
  • Oil and Gas Regulatory Authority (OGRA) notified the revised price of Re-gasified Liquefied Natural Gas (RLNG) on networks of the SSGC and SNGPL for the current month with a slight upward adjustment.
  • Pakistan’s IT sector has made measurable and quantifiable progress. The number of IT companies have increased to 4641 as of June 30, 2021.
  • National Electric Power Regulatory Authority (NEPRA) disposed of 9,984 complaints of consumers received against power distribution companies (DISCOs) during last fiscal year 2020-21.
  • The first National Logistics Cell (NLC) truck reached Turkey through Iran under the Transports Internationaux Routiers (TIR) convention.
  • Pakistan and Saudi Arabia on Monday agreed to further strengthen economic and business ties between the two brotherly countries.
  • The Economic Coordination Committee (ECC) approved a summary for the provision of the maximum quantity of gas to the Pak-Arab Fertilizer Plant and Fauji Fertilizer Bin Qasim Limited (FFBQL).
  • To promote investment in renewable energy solutions by companies, the State Bank of Pakistan (SBP) eased the conditions for renewable energy solution providers under its Refinance Scheme for Renewable Energy.
  • In continuation of its efforts to promote financial inclusion through digitalization, increase investor base and micro-savings, the Securities and Exchange Commission of Pakistan has specified a swift and simplified onboarding framework for customers of AMCs and PFM.
  • Small and Medium Enterprise Development Authority (SMEDA) invited applications for small business grants for “Early Stage Start-Ups”.

Announcements:

  • Interloop Limited announced a profit for 1QFY22 at Rs2.69 billion depicting a whopping year-on-year increase of 95%.
  • Habib Bank Limited (HBL) posted its consolidated profit after tax (PAT) of Rs26.99 billion for 9MCY21, registering a nominal increase of 6% YoY.
  • Lotte Chemical Pakistan Limited (LOTCHEM) reported 3.7x YoY jump in net profit to Rs3.23billion in the nine months ended on September 30, 2021.
  • Meezan Bank Limited (MEBL) witnessed an up of 8.17% in its net profit, standing at Rs19.97 billion which translated into an EPS of Rs12.14 during 9MCY21.
  • Engro Fertilizers Limited reported a 30% YoY increase in profit to Rs14.9bn during 9MCY21.
  • Sazgar Engineering Works Limited (SAZEW) informed that the company sold 1,172 units of three-wheelers during the month of September 2021, i.e., down by 5.64% MoM.
  • The Board of Directors of Summit Bank Limited approved the increase in the Authorized Capital of the Bank from Rs28 billion to Rs 90 billion.
  • The Board of Sui Southern Gas Company Limited (SSGC) authorized to explore the possibility of the restructuring of the Meter Manufacturing Plant (MMP) owned and operated the company.
  • The holding company of National Foods Limited, ATC Holdings made an equity investment of around Rs128 million by way of acquiring ordinary shares of National Foods Limited.

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