WTI Crude futures prices ranged $56-58 ahead of the Saudi Arabian oil giant Aramco IPO, which starts on Sunday Nov, 17th. The WTI futures rose almost 10% from the beginning of 2019.
The oil market has witnessed a lot of pressure from Saudi official for the last couple of months to push crude price up, including further production cuts by OPEC member states according to Wall Street Journal. Nigerian minister of state for petroleum resources Timipre Sylva speculated late October Saudi Arabia could apply further production cuts above agreed with OPEC+.
United States is also interested in higher oil prices while oil producers including shale oil producer have a huge leverage to US banks. According to Financial Times equity and bond investors are now shunning the smaller, independent shale explorers. Slowdown in shale oil production and OPEC+ production cuts are upside factors for crude prices. Crude prices below $50 a barrel could spur verbal intervention by Saudi Aribia, OPEC and US officials.
The good news usually followed by the bad ones. The OPEC and Saudi Arabia as its leader will face a tough challenge from competitors in 2020 already in 2020, International Energy Agency says on Friday. The non-OOPEC countries supply estimated to surge to 2.3 million barrels per day (bpd) a year to come, a 0,5 million bpd above 2019 level. The demand for OPEC oil production will slow down by 1 mln bpd to 28.9 mln bpd. Slowing demand from China could underpin Aramco’s efforts to increase exports in Asia.
So, in a few weeks to come we expect crude prices to be steady with a still little upside pressure.
Coming Sunday a price range for Aramco’s shares is to be announced. Nevertheless, a book-building period for institutional investors will last through Dec, 4th. Retail subscription will be suspended Nov 28th. Retail investors have limited shares allocation up to 0.5% of shares total. The size of the stake offered to institutional investors is still unclear. The estimates of a “most profitable company in the world” are between $1.1-2.5 trillion. Saudi Arabian Crown Prince Mohammed bin Salman would be satisfied with a valuation of between $1.6 trillion and $1.8 trillion, people familiar with the deal have told Bloomberg.
The price range for the shares will be announced this Sunday. The final pricing expected on Dec 5th.
The likely hunters for the stake in Saudi Aramco is China and Saudi billionaires who are being pressed to participate in IPO.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2022 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.