Reserve assets (foreign assets) of the Saudi Arabian Monetary Agency increased by SR47 billion to jump further to SR2.104 trillion in February, Al Rajhi Capital said in its March Economic Report released Saturday, as high oil prices and export led into high trade surplus. This is the highest absolute monthly jump since September 2011 when reserves had increased by SR63 billion during the month. Remarkably, almost all increase (SR47 billion) in the reserves have been kept as liquid foreign deposits and currencies abroad. The total investment in foreign securities remained at SR1436.3 billion in February almost similar to its level in January. However, foreign currency and deposits abroad increased to SR609 billion in February from SR561 billion in the preceding month. Stronger demand condition in the oil market has resulted into elevated level of oil production in Saudi Arabia. According to OPEC, the crude production has been hovering around 9.7 million barrel per day (mbpd) for the last four months. However, Joint Organization Data Initiative (JODI) puts average crude production in the Kingdom at 9.9mbpd for the period November 2011 to January 2012. Average oil price has gone up further in February, highest since April 2011. These factors have sustained the growth in the oil sector. Moreover, country has production capacity of 12.5 mbpd which is almost 25 percent more than the current level of production. "Therefore, in tighter global oil supply, the country can ramp up production by 25 percent," Al Rajhi Capital said in the report. Oil prices edged up slightly Friday after diving more than two dollars a barrel the previous day on signs that the US and other countries could soon release some emergency reserves to keep prices from rising. Benchmark oil for May delivery rose 24 cents to finish at $103.02 per barrel on the New York Mercantile Exchange. That's about 4 percent lower than the beginning of this month, when it was close to $109 a barrel. The US benchmark has risen about 38 percent from about $75 per barrel in October and is up 4 percent since the start of the year. In London, Brent crude for May delivery rose 49 cents to settle at $122.88 per barrel on the ICE Futures exchange. However, the report said the slowdown in oil sector is expected as higher level of production and prices will have impact on the incremental growth in the sector. The Central Department of Statistics and Information data showed that nominal GDP growth slowed down in the last quarter of 2011 mainly on account of slowdown in oil sector and government consumption expenditure. Price is likely to be slower in coming quarters as well, the report stressed. There was a sharp slowdown in growth in nominal GDP to 15.4 percent year-on-year in Q4-2011 as against an average of 32.6 percent in the previous three quarters. The oil sector's growth retreated to 17.7 percent year-on-year in the last quarter as compared to an average growth of 50.6 percent in the previous three quarters of the year. Production in the sector has been estimated to have increased from SR229 billion in Q4-2010 to SR269 billion in Q4-2011 which peaked at SR300 billion in Q3. Nonetheless, the non-oil sector growth remained steady with slight acceleration in Q4 compared to Q3 of 2011. The sector grew by 13.5 percent year-on-year in Q4-2011 as against 10.1 percent year-on-year growth in Q3-2011. Non-oil private sector has been showing robust growth as the sector grew by 15.2 percent in Q4-2011, higher than average growth of 13.9 percent in the previous three quarters. Growth in fourth quarter in construction, and trade sectors remained close to their first three quarters averages at around 19 percent, 13.5 percent and 13 percent respectively. Growth in finance, insurance, real estate and business services sector also remained steady at around 7.2 percent through the four quarters of the year. Non-petroleum manufacturing sector also accelerated sharply to 26.5 percent year-on-year in Q4-2011 compared to an average of 21 percent in the first three quarters.
