Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook despite the spread of the omicron variant of the coronavirus.
Futures in New York advanced 2.4 per cent to trade near US$68 a barrel. The kingdom increased its oil prices for customers in Asia and the U.S. for January, just days after the OPEC+ alliance agreed to boost output for the same month. Prices for its high-sulfur barrels in Asia were the highest since at least 2000.
Meanwhile, initial data on omicron from South Africa — the epicenter of the outbreak — doesn’t show a resulting surge of hospitalizations. Markets across the globe have been roiled since the variant emerged in recent weeks, prompting concerns about a potential hit to the economic rebound.
The U.S. said over the weekend that chances of Iran rejoining the nuclear deal may be slipping away. The briefing was one of the most pessimistic American assessments of the negotiations yet, dampening any expectations of a quick return of Iranian oil to the market.
While oil dropped for a sixth consecutive week of declines — the longest stretch since 2018 — it has begun to recover from the stark drop at the beginning of last week, when omicron led to renewed restrictions on travel. OPEC+ decided to keep adding extra barrels to the market in January, essentially putting a floor under prices by giving itself the option to change the plan at short notice.
Oil is seeing “a continuation of last week’s recovery” and “a bit of extra spice by Saudi OSPs,” said Ole Hansen, head of commodities strategy at Saxo Bank.
- West Texas Intermediate for January delivery gained 2.9 per cent to US$68.15 a barrel by 9:09 a.m. in New York.
- Brent for February settlement rose 2.8 per cent to US$71.80 a barrel.
Saudi Aramco raised its key Arab Light grade for customers in Asia by 60 cents from December to US$3.30 a barrel above a benchmark, according to a statement from the state producer. That followed comments last week from Aramco Chief Executive Officer Amin Nasser that he was “very optimistic” about demand and that the market had overreacted to omicron.
White House medical adviser Anthony Fauci said Sunday that there doesn’t look to be a great degree of severity to the new strain, while cautioning it’s too early to be certain. Omicron has so far spread to at least 17 U.S. states.
Other oil-market news:
- ConocoPhillips raised its capital budget for 2022 just months after a pair of major acquisitions that made it the second-biggest oil driller in the Permian Basin.
- Iran said world powers can’t expect it to stop expanding its nuclear work until they reach an agreement with Tehran on how U.S. sanctions will be lifted from the Islamic Republic’s economy, according to a statement by the country’s foreign ministry.
- President Joe Biden said U.S. drivers are beginning to see lower prices at gasoline pumps, but that China has not yet participated in a global release of oil reserves.
Ackman’s Pershing Square takes new position in Netflix
Billionaire investor William Ackman has built a new stake in streaming service Netflix Inc worth more than $1 billion since its stock price tumbled starting last Thursday.
Ackman told investors that his hedge fund, Pershing Square Capital Management, started buying on Friday and now owns more than 3.1 million shares in Netflix, making Pershing Square a top 20 shareholder.
In a letter to his clients, Ackman praised the company’s “best-in-class management team” and on Twitter the manager said he has long admired Netflix CEO Reed Hastings and the “remarkable company he and his team have built.”
Netflix shares climbed as much as 5% in after-hours trading. They had tumbled more than 30% in the last five days, a much steeper swoom than the broader market. After the market closed last Thursday, Netflix forecast weak subscriber growth.
Ackman, whose firm invests $22.5 billion, wrote that he had been analyzing Netflix at the same time he was investing in Universal Music Group and was ready to buy when Netflix’ “stock price declined sharply last Friday.”
“Now with both UMG and Netflix, we are all-in on streaming as we love the business models, the industry contexts, and the management teams leading these remarkable organizations.”
To raise the cash to make the Netflix purchase, Ackman said the firm unwound a big piece of its interest rate hedge which generated profits of $1.25 billion.
He said that if he had not sold the hedge, his performance would have been better. His Pershing Square Holdings lost 13.8% in the first three weeks January, the worst start to a year for the manager in years.
Last year Ackman posted a gain of 26.9% after the fund surged 70.2% in 2020.
Ackman said Netflix benefits from highly recurring revenues, adding the company has pricing power and delivers industry-leading content.
Pershing Square traditionally holds only a small number of investments which currently include Lowe’s, Chipotle Mexican Grill, and Dominos Pizza Inc.
He said these companies are high quality businesses that can withstand inflationary pressures because they are able price their products to preserve profits.
Netflix’ stock price surged during the pandemic as live performances were shut down and movie theaters were largely off limits.
The company has been a favorite with prominent investors before. Roughly a decade ago Carl Icahn, an activist investor like Ackman, took a 10% position in Netflix and thought the company might need to sell itself to a technology company as its shares were undervalued. Ackman, who has pushed other companies to perform better, appears to be approaching this investment as a friendly investor. “We are delighted that the market has presented us with this opportunity,” he wrote on Twitter.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler, Mark Porter and David Gregorio)
Casual denim trend, higher prices fuel Levi’s upbeat forecast
Levi Strauss & Co forecast annual sales and profit above analysts’ estimates after topping quarterly results on Wednesday, bolstered by higher prices and strong demand for its jeans and jackets, sending its shares up 8% after the bell.
People shopping for casual outdoor clothing as pandemic restrictions eased and a resurgence in retro fashion styles such as high-rise and loose-fitting jeans have buoyed demand for the company’s denims.
The Signature and Levi’s 501 jeans maker said it expects revenue between $6.4 billion and $6.5 billion in fiscal year 2022, compared with analysts’ estimates of $6.37 billion, according to Refinitiv IBES data.
The robust demand has, however, coincided with increased production and shipping costs, forcing companies to raise prices to offset the inflationary pressures.
Levi plans to raise prices further in 2022 and beyond, Chief Executive Officer Chip Bergh said on a call with analysts, adding that demand outstripped supply in the quarter due to supply chain snarls.
Lower promotions, more full-price selling and the reopening of its European and Asian markets also lifted the Denizen brand owner’s sales in the reported quarter.
Compared to pre-pandemic levels, Asia net revenue was flat in the three months ended Nov. 28, recovering from a 23% slump reported in the third quarter.
Net revenue rose 22% to $1.69 billion in the fourth quarter, edging past analysts’ estimate of $1.68 billion.
Excluding items, Levi earned 41 cents per share, a cent above expectations.
Holiday season sales came in above its expectations, the company said, in contrast to downbeat estimates from retailers including Lululemon Athletica Inc and Abercrombie & Fitch Co.
San Francisco-based Levi expects adjusted full-year profit per share between $1.50 and $1.56, compared with estimates of $1.52.
(Reporting by Deborah Sophia in Bengaluru; Editing by Vinay Dwivedi and Sriraj Kalluvila)
A third of airline pilots still not flying as pandemic drags on -survey
More than one-third of airline pilots are still not flying as the pandemic continues to take its toll on aviation globally, according to a new survey, though the situation has improved from a year earlier when the majority were grounded.
A poll of more than 1700 pilots by UK-based GOOSE Recruitment and industry publication FlightGlobal, released on Wednesday, found 62% globally were employed and currently flying, up from 43% a year earlier.
The proportion of unemployed pilots fell from 30% to 20%, while 6% were on furlough, compared with 17% previously as air traffic began to bounce back from 2020 lows.
But in the Asia-Pacific region, the worst-hit globally by a drop in international travel due to tough border restrictions, the proportion of those unemployed rose from 23% to 25%. The region also had the lowest number that were employed flying at 53%.
“We have … seen some expatriates return home from the region due to concerns over quarantine or being stuck for long periods away from friends and family,” the report on the survey said.
Hong Kong’s Cathay Pacific Airways, a large expatriate employer in Asia, has lost hundreds of pilots through the closure of its Cathay Dragon regional arm as well as almost all of its overseas bases during the pandemic.
Pilot attrition at Cathay has also been rising amid strict layover rules that leave crew members locked https://www.reuters.com/world/asia-pacific/locked-hotels-hong-kongs-covid-19-rules-take-mental-toll-cathay-pilots-2021-11-26 in hotels when they are not flying.
Of the pilots still flying globally, 61% told the survey they were concerned about their job security.
“It appears only Northern America is back to post-COVID passenger numbers,” said an unnamed captain flying in the Middle East and Africa. “The rest of the world, especially developing nations, are still struggling to get vaccines, and are still not travelling.”
(Reporting by Jamie Freed in Sydney; Editing by David Gregorio)
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