Speaking to bloomberg. Riyad turns up the heat in the gulf, adding new names to the list of terror groups. A secondquarter results show rising costs, sales improved but miss the most bullish forecasts. And of course, oil gaining for a second consecutive day. Yousef, did you see anything leading to this . Yeah, just a general sense speeding into sentiment that opec and nonopec look is the course. There were no major surprises, but they did say they will improve their way, listening to the market, what metrics they are looking at. Youre going to take compliance more strictly, and they are not going to take the countries who are not pulling their weight continue to do that. The other key thing is nimbleness, absolutely crucial. They will continue to have a level of agility to react to market conditions. For now, they will continue to stay on course. Got supply coming down that will help rebalance the market and ultimately feed into the broader price. The ceo says they are improving spreads when it comes to the physical crude market, the Worlds Largest oil trader. Shery yeah, the rhetoric seems to be pretty strong. Were seeing the rest of the commodities market have a boost. When it comes to asia markets, the asx 200 leaving the gains. We get cpi numbers out of australia, the consensus is 2. 2 gains, but we could miss the rba inflation target by 2 or 3 . Overall and the markets across asia, clear, and they wouldnt be surprised, given that we get the fomc meeting and the dollar hovering between gains and losses, a little more strength. We are seeing some downside to asian currencies. The korean won, which is now at market, india, 32,000. Missing for the first time on record, passing that 10,000 level. New records for some of these asian markets. Yousef yes. Let me jump into a board with some of the other tsi classes. I want to expand on brent crude, because as much as we are talking about whats happening in st. Peters, we have Government Data out today that will give us an indication about the stockpile drawdown, suggesting it will remain on track with another draw for a fourth straight week. Natural gas stabilizing after we saw the biggest drop to the lowest level. Treasuries,nds over the key metric their relatively unchanged. And a quick note on the russian ruble, which led declines among emergingmarket currencies on the prospect of tougher human sanctions. Lets show you the broader equity pulse in the middle east. Largecapge of companies. A broadly positive picture, volumes not where they usually are, 60 of the threemonth average. Qatari stocks were the standout, saudi stocks the laggard. Great patches in real estate and industrial, telco unchanged. Get the first word headlines with sophie kamaruddin. Sophie thanks. President trumps soninlaw, jared kushner, has denied improper contact with russian officials during the campaign. The senior white house adviser spent 2. 5 hours answering questions on closed doors. After the meeting, he reaffirmed his stance that he did not act of impropriety during the campaign or transition period. I did not collude with russia, nor do i know of anyone else in the campaign who did so. I had no improper contacts. I have not relied on russian funds for my businesses. And i have been fully transparent in providing all requested information. Sophie turkish president rest that tie up her to one end this back dividing them. He finished reading the speech in delhi after visiting saudi arabia and kuwait, urging the parties to end qatars isolation. One of the demands of the saudi led block is the immediate withdrawal of turkish soldiers. Arasa thinks it made accounting errors over losses in the u. S. It doesnt say where it learned the news, but says the arbiter is in talks with relative parties about issuing adverse opinion for the report on fiscal 2016. Toshiba still hopes to submit on august 10. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Im so become a ribbon. This is bloomberg. Shery thank you. Ef forgo back to usyous an update on the meeting between opec and other Oil Producers. Give us some of the highlights. Yousef lets drill down into this conversation on opec and nonopec in a beautiful city. To get to the point of what happens in the meeting an the evolution of how you listen to the market, what they are listing for. Was, inwas decided addition to the agreedupon to look at other parameters. Because of the changing dynamics of the market. Yousef in the past, the key metric would be the production data. Now they are going to take into consideration the export numbers and other metrics to get a better idea. The other key element of the conversation is the saudi position through the energy minister, giving a very passionate speech yesterday after the meeting, pointing out and describing other countries not pulling their weight, doing something that will not work in the longterm. Here is what he had to say. Long ago, we said saudi arabia will not take any unilateral action to stabilize the markets on the run. However, we will exercise leadership by example. We will set the tone by being clearly ahead of our commitment. Yousef i want to get back to this idea of agility for this thing. What happens, then, what is on the table . Extensions . And how do you phaseout a market that is increasingly dependent on the absence . Here is what Alexander Novak had to say. Yes, we are ready to reveal this, but the key question is should the decision be made now or at a later date, where we have more details on how the market is performing. So at this point, here in st. Petersburg, we have discussed and decided to recommend that all the ministers keep this option on the table. Yousef he also added that a phasing out would occur very, very gradually, which i know rings bells of what Central Banks are doing in terms of trying to roll back the quantitative easing as the markets become that the markets have become reliant on. What i found was interesting was Morgan Stanley saying the market are very will supply, Credit Suisse cutting forecasts. For the moment they are still in control, but who knows for how long . Shery good analogy, Central Banks and oil. Thank you. We will continue that conversation throughout the program. Still ahead, the game of chicken continues. Qatar remains isolated despite the latest efforts of the turkish president. Plus, oil gains. This is bloomberg. Yousef you are watching Bloomberg Markets middle east. Im yousef gamal eldin, live in st. Petersburg. Shery and im shery ahn, live from hong kong. A quick check of the latest headlines. A middle east lender is considering expanding in egypt and china, growth slowing in the gulf. Says it is looking at opening a Chinese Branch and may apply for a license to operate in asia. They have assets of about 57 billion and says they are looking to overseas markets because the Banking System isnt reaching saturation. Sawi arabias bank secondquarter net income that matched estimates. They posted a profit of 2. 2 billion reals, or 581 million. Revenue fell short of expectations, coming in at just over 1 billion. Before earnings are released, they had recommendations of buy s. The operator of dubais Stock Exchange came in at about 39 million. They also saw a revenue of 239 million, just over 65 million. Is the only Stock Exchange operator in the area. Yousef lets pick up on the oil story and get some additional perspective. In terms of what the key thing is, the Key Takeaways are from the deliberations, perhaps an alternative you we are joined by richard gori. Thanks for coming on the program. I want to dig into this opec, nonopec view, that inventories are going to continue declining into the second half. You are not on the same page. You are saying that inventories might go up. Talk us through that. There is great seasonality in inventory. Opec is create when they say that now it start declining. They are declining sharply because this is the peak summer demand period. This will continuing to august, a little into september. But beyond the middle of september, demand will start to slow again, and at this point we will see inventories build again. Of course we would expect also a drop in inventories as we go into the christmas period, but yeah, there is a huge seasonality to it. I dont think opec is wrong in their assessment of the market right now. I think overall the are also correct that inventories on average will decline in the second half of the year, but right now is the strongest point for the market. Once we go through the summer, we will see seasonal builds again. Yousef there are quite a few voices out there that indicate there is too much bearishness in the current price of oil, that it does not reflect the reality of supply and demand. If you listen to what the ceo at the Worlds Largest oil traders says, it seems you have your physical differentials in the th grades of oil. Is that an accurate representation, then, the current price of oil, when you look at supply and demand fundamentals . I would generally be inclined think so, yes. I would have expected prices to be higher, around the 55 mark, particularly given that we had 58 in the First Quarter of the year. I think what happens is, this summer, we have a little bit of a bearish hangover from the first half of the year. Market participates believe the market would show a very extreme tightening in the first half of the year, which didnt occur, which means that now we have gone into the stronger period and people are hesitant. There is an overall bearish pessimism on the market. I think that statement is correct, i think it should be higher, if we look at how the price has developed, because shery on that point, on the bearishness of the market, this chart does show that, at least in the last week, we did see them markets more sanguine when it came to oil prices, hedge funds adding the most, rising wti prices, shortsellers on a steady retreat. That would be the blue bar. Towould you attribute this just the opec meeting coming up, that this will fade . No, no, no. I believe this is a fairly seasonal adjustment. I think everybody was to bearish into the summer. We had some key benchmarks, particularly the weakening u. S. Inventory report, which had been showing declining u. S. Inventory. These key indicators are now making those who have bearish become more optimistic. It does not surprise me to see this take place, but i believe it will be shortlived. I believe it will only be through august where we have this potential for the upward price. Shery what about the comments from halliburton, saying that the shale boom is slowing . You dont think that will give a boost to prices of that were true . What do you see in the shale market . The shale market is so difficult to read because it is highly reactive to the price. Obviously the shale market has benefited greatly from the high price in the early part of the year. Of course that allows a lot of shale producers to hedge production, allows them to stay in the market even if the price comes down. But if adult hedges are unwinding and they have to come into the market at a lower level, the question is how strong can shale be in a lower price environment . Nevertheless, we dont see shale as being the major contributor factor to the oversupply in the oil market as we go toward the end of the year. What happens at the end of the year is you have a huge, seasonal change in demand. The demand in the first half of next year will be much lower than the second half of this year, which means that it is really a case of demand dropping in supply not dropping fast enough to account for it, the oversupply reemerges. Yousef so richard, you are not convinced, then, that opec and nonopec will be able to push the market back . No, not without doing more. Clearly, just looking at the fundamentals, looking at the outlook for demand, looking at sale by sale analysis, we still see even with the opec deal running to the end of the First Quarter an oversupply in the First Quarter. Opec andt for that, nonopec would have to do more. Obviously yesterday we didnt have any indication they would do more, so i think it will be a difficult time for them. Shery at least when it comes to prices, richard, we are seeing a significant drop in saudi shipments to the u. S. We know the failure to drain that u. S. Storage tank has been a major factor in driving oil prices down. How much will this help . Saudis, obviously the u. S. Is a very competitive market, so placing your oil in that market is not always so easy. The saudis probably have more interested customers in other parts of the world, particularly here in the asian market. Obviously, the u. S. Oil market has an abundance of oil, conventional oil, shale oil, latin america, that it can pull in. I dont think that necessarily has any huge, overall effect, although it can have regional imbalances. Overall, i dont see saudis reducing shipments reversing the price trend. Yousef richard, hold that thought. The unitednes Arab Emirates secondquarter revenue coming in at re. 6 billion, the estimate was for 3. 1 billion, id on secondquarter revenue. Take a look at the net income, 446. 6 million. 388estimate was for million. It will be interesting to break down these number further and obviously this is a company that has been trying to reinvigorate the business model. Lets get back to you. I want to delve deeper into your confidence, or the lack thereof, of what opec and nonopec are doing. How would you deal with this . Would you take out another million from the market . It is difficult. It goes back to you can take a Million Barrels out, try to reduce it going into 2018. That would go a long way towards bringing us closer to balance. Of course, opec. That u. S. Shale players stand ready to react. I think that is what makes it a poisoned chalice. If you say, ok, lets the aggressive and do this, you still create a longerterm problem that you have to battle. I understand the hesitancy. For me, i think they could be a little bit more aggressive in how they talk to the market, trade a little bit more uncertainty, because obviously for the last few months the market has been pretty confident that no additional action from opec is coming, and that has allowed the bearishness to come into the market. I would probably try to talk the market up a little bit more, but i definitely understand the problem they face when they consider deeper cuts. They know longerterm it causes more problems. Shery yeah, and what happens to compliance . Richard gorri, thank you for joining us. Coming up, Global Investors search for answers after concern grows over costs. A response to secondquarter earnings. This is bloomberg. Yousef you are watching Bloomberg Markets middle east, im yousef gamal eldin in st. Petersburg. Shery im shery ahn in hong kong. Googles Parent Company has beaten expectations with secondquarter revenue and, but the shares took a slide in late trading in the u. S. Cory johnson explains why from san francisco. Cory what a confusing quarter from google. First, wall street liked it, been a stock selloff and they didnt like it. What was there not to like . 20. 9 billioners, in the second quarter, earnings per share at five dollars what looks like a very Strong Quarter. Two trends that have been going on, the google had a lot more ads. The yearoveryear increase was 52 on the number of ads users clicked on. But the price decline far outmatched by the number of ads that were clicked on. That is good news for google. The real problem here was the cost of getting ads. It rose at a record rate. When google goes out to other mobile sites to pay for the track, the right to run an ad on an apple iphone, they paid more money than ever before. We saw a very big rise in that number. That disappointed people on wall street because google has warned the costs would go up. We saw in the second that is why the stocks will sell off, a longterm trend that google has warned about, but that was the most alarming thing for investors in the reason the stock sold off. Otherwise a very Strong Quarter strong in, very earnings per share. Cory johnson, bloomberg, san francisco. Yousef a recap of the earnings announcement. The earnings season is still in full swing in the middle east region, and we had some earnings out just minutes ago. We are also looking for lenders to come out with their numbers, all of this while we have our attention on crude oil, which is currently still trading to the upside by. 5 . Still to come, geopolitics. Critical elements of the conversation of the program with an investor, getting his take on how to play crisis. Trading, we will break down the strategy for the region. This is bloomberg. Yousef its 7 30 in the morning in st. Petersburg. Im yousef gamal eldin. Shery and im shery ahn in hong kong. Lets get the first word news with sophie, rude. Sophie thanks. Chinese inquisitors have disclosed they are controlled by two charities as it seeks to dispel concerns about the structure and financing. York, theed in new other in about 47. 5 ,hold with the rest held by a holding company. Ofkey has withdrawn the list accusations against German Companies in order to ease tensions that flared last week. The Turkish Interior Ministry called the accusations against 700 German Companies a communication problem. Dispute escalated after a human rights lawyer was detained last week in istanbul. President Rodrigo Duterte has used to stay to assure the company he is not planning to impose martial law. They have prompted some to predict a crackdown across the country. He warned drug traffickers that they face the ultimate punishment. In the philippines, it is really an eye for an eye, tooth for a tooth. Eye, you must pay a n eye. That is the only way to do it. If you do it, you will buy it. Ophie reports say the rods will be taken of the fukushima by september. Lumps inound thoughe the number three reactor. It is the first time it has been seen since the 2011 earthquake. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Im sophie kamaruddin, this is bloomberg. Shery thank you. Asias regional benchmark is swinging between gains and losse