The continuation of oil prices above $ 65 gives sector companies optimistic in the future

Formed fluctuations in oil prices the main sources of concern for oil companies and gas sector, according to the results of the National Commercial Bank Index and Dun & Bradstreet South African Business Optimism in Saudi Arabia for the second quarter of this year, which showed cautious optimism rates due to oil price fluctuations. According to the statistics of the index, announced by the National Bank during a press conference held in Jeddah - Saudi Arabia West - yesterday, the corporate sector is oil and gas considered the provision of skilled labor and the cost of government regulations and procedures of the major constraints faced.

On the oil price outlook, Dr. Saeed Sheikh, chief economist at the National Bank said in a press conference yesterday «The third quarter outlook will be at level 60 to $ 65», pointing out that those expectations depends on the continuation of the current geopolitical situation without greater development in the near future.

Sheikh explained that affected the oil and gas sector was due to declines in oil market with the beginning of the second quarter and were monitored optimism indicators based on those data, while the rise in prices will enhance the levels of optimism in the coming results.

The price of oil stabilized at the range 45 to $ 55 a barrel, falling from a peak of $ 115 a barrel, recorded in the month of June of 2014 and attributed the collapse of the standard price of oil sharply to a range of factors, including adjusting to the expectations of demand and supply in the short term and the low impact geopolitical unrest. And partly, as a result of the slowdown in global economic growth, the International Energy Agency lowered its forecast for global oil demand for 2014 and 2015. In addition to the impact of the weakness in demand, abundant supply a negative impact on prices, as well as the impact of exchange rates for the currencies. For its part Sherihan Almenzlaoa an economic expert said in Ahli Bank Group «The continued volatility in the oil markets since the beginning of the year has cast a shadow on the negative state of optimism in the oil and non-oil sectors for the second quarter of this year».

She added: «The government financial policy of anti-volatility, backed by large precautions, it is clear that it compensated for the negative effects of the expected result of the sharp decline in oil prices, in addition, affected by a slowdown in the pace of awarding construction contracts this year, the optimism index for the construction industry fell 5 only points to 44 points for the second quarter of this year ».

Also, despite the ongoing war in Yemen and regional unrest, the 50 per cent of companies surveyed in the oil and gas sector, as well as 52 per cent in non-oil sectors, companies do not expect any negative factors affecting their business in the second quarter of 2015, reflecting improvement confidence from the previous quarter in the flexibility of the Saudi economy, the 49 per cent of companies that participated in the survey for the non-oil sectors are still planning to invest in the expansion of its activities, where export finance, and real estate, and business services, this trust by 65 percent of respondents planning to expand in business.

She said that the prospects for oil and gas Saudi sector fell for the second quarter of this year to their lowest level since the second quarter of 2009. The total Business Optimism composite index for the sector 13 points for the second quarter of the same year, thus registering a decline of 16 points for the first quarter of this year and 49 points for the second quarter of last year, and is the main reason for this decline in expectations about the weak selling prices component.