2020-05-12 • Updated
Since its IPO in December 2019, Saudi Aramco’s stock price has been consistently declining. Before the New Year, it traded at $35. But in the second week of March, it was down to $27. After plunging to those levels, it gradually got back to the previously marked descending trajectory. That is how it got to $31 per share and seems well balanced at this level. What’s the status now?
While competitors such as Exxon freeze their dividends payout, some for the first time in decades, Saudi Aramco cannot afford to do the same. It stays committed to keeping the dividends coming as these have been the main attraction for investors to hold stock in this company – and investors, 98% of whom are Saudi nationals, are now going through one of the toughest financial periods in decades for the Kingdom. People need these dividends; the company needs these dividends. Therefore, Saudi Aramco will fight fiercely to ensure oil prices are high enough to generate them. That may explain the recent decision the company made announcing it would cut the output to 7.5mln of barrels in June – that’s after it was so adamant to keep pumping up to 13mln when the price war with Russia was on a month ago. Partly, that’s exactly what putting bottom to oil prices means in OPEC+ discussions: Saudi Arabia is bound to back it up because it depends on it.
Excluding the single drop into the negative zone in the middle of April, the base for the WTI price movement in April was $10: that’s when the price was already over, but the oil glut has become more and more apparent. Since the beginning of May, when the first reports about the glut diminishing started appearing in the media, the price started climbing back. Eventually, it established itself a new base at $25 per barrel (for Brent it is at $30). At this level, it went into consolidation, which very likely will keep going during the month until the glut is finally dissolved. We know for a fact that Saudi Aramco wants to make sure there is no going below the current price level, and the support of $20 will be checking that commitment. When we see the price crossing $29, that would mean Saudi Aramco is getting back to financial capacity.
Saudi Aramco stock price depends on the dividends. If they keep coming, the price per share may stay at $30. If not, the downtrend is likely to continue.
The most interesting question is whether and when the stock price will start climbing. That will be largely defined by the global oil demand when the glut it over, by Saudi Aramco’s financial reports, which will definitely reflect the stronger hit in Q2 2020, and by the strategic perspective for Saudi Arabia.
Brent crude futures is maintaining stability this Friday, with traders awaiting an OPEC+ meeting that might lead to further supply cuts. Brent crude was down 8 cents at $81.34 a barrel, following a 0.7% drop in the previous session.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Bitcoin's price remains stagnant despite the Fed's slightly less hawkish tone. In contrast, Bitcoin has outperformed other assets, doubling in price from $16K to nearly $38K this year. Improved fundamentals, including the resolution of Binance concerns...
Hey folks, it’s a wrap to yet another month in the 2023 calendar, and I’m guessing you know what that means - time for another episode in the “What To Trade” series. For December, I will be mapping out trade more cautiously as the market volatility often drops
Gold prices, reaching the highest since May 5, are consolidating as traders await the US PCE Price Index, a key inflation indicator. The upcoming data could impact the Fed's policy, influencing the demand for the US Dollar and providing direction for gold. The Greenback sees some repositioning, recovering modestly ahead of the data risk.
FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.
Your request is accepted.
A manager will call you shortly.
Next callback request for this phone number
will be available in
If you have an urgent issue please contact us via
Live chat
Internal error. Please try again later
Don’t waste your time – keep track of how NFP affects the US dollar and profit!
|
