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Oil prices set to fall at the fastest rate since 2021
The oil prices dropped on Wednesday, and are set to have their biggest monthly drop in nearly three and a quarter years. Saudi Arabia has signaled that it will increase production and expand its market share. Meanwhile, the global trade conflict is reducing the outlook for fuel consumption. Brent crude futures fell $1.16 or 1.81% to $63.09 per barrel at 1:00 pm EDT (17:00 GMT). U.S. West Texas Intermediate Crude Futures fell $2.38 or 3.94% to $58.04. Brent and WTI are down by about 15% and 18%, respectively, this month. This is the largest percentage drop since November 2021. Both benchmarks fell after Saudi Arabia, the world's largest oil producer, said it would not continue to cut oil supply and that the market could survive a long period of low oil prices. Phil Flynn is a senior analyst at Price Futures Group. He said: "It makes me worry that we may be heading towards another production battle." Are the Saudis sending a message to their customers that they will regain market share? We'll just have to wait and watch." Saudi Arabia pushed earlier this month for a higher-than-planned OPEC+ production increase in May. Sources told us last week that several OPEC+ countries will propose a ramping up of production increases for a 2nd consecutive month in June. The group will discuss plans for output on May 5. Analysts at PVM said: "The very real chance that OPEC+ continues to bring additional barrels to market in its fight to maintain order within their ranks is added to diplomatic efforts in Ukraine and Iran which, if successful, means more international crude oil on the water during a period when a trade conflict will squash any hopes of demand growth." U.S. president Donald Trump announced tariffs on U.S. imported goods on April 2, and China responded by imposing its own duties, sparking a trade conflict between the two world's largest oil consumers. Oil prices continued to be impacted by concerns about the weakening global economy. Data released on Wednesday revealed that the U.S. economic contraction was exacerbated by the influx of goods imported into the country by companies eager to avoid increased costs. A poll suggests that Trump's tariffs make it likely the global economy will slide into recession in 2019. Data showed that the U.S. consumer's confidence fell to its lowest level in almost five years in April, due to growing tariff concerns. Last week, U.S. crude stockpiles dropped unexpectedly due to higher demand from refineries and exports. This helped limit some price declines. The Energy Information Administration reported on Wednesday that crude inventories dropped by 2.7m barrels, to 440.4m barrels for the week ending April 25. This was in contrast with the analysts' expectation in a survey of a 429,000 barrel increase. (Reporting and editing by Peter Graff; Additional reporting and editing by Ahmad Ghaddar and Siyi Liu, both in Singapore and London; Reporting and Editing by Shadia Nazarala)
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Pemex's quarterly losses of $2.12 billion as sales fall
The Mexican state-owned energy company Pemex announced a net loss for the first quarter of $43.3 billion ($2.12 billion), mainly due to falling sales, increasing expenses, currency losses, and financial costs. Pemex reported in a filing to Mexico's stock market that revenue during the period of January to March fell by 2.5%, to 395.59 trillion pesos. This was primarily due to lower crude sales volumes. Pemex, along with its partners, pumped 1,62 million barrels of crude oil per day (bpd), down 11.3% from a year ago. In its local refineries the company processed 936, 000 barrels per day (bpd), down 5% from a year ago. According to the filing, its refinery unit produced 305,000 bpd gasoline and 171,000bpd diesel in the third quarter. Pemex reported that its debt for the quarter totaled $101.1 Billion, an increase of $97.6 Billion from the fourth quarter 2024. Pemex, the most indebted company in the energy sector in terms of debt, has received government assistance in billions pesos. Pemex reported that it received 80 billion pesos in the first quarter from the government, mostly to pay off debt. It added that its goal was to "reduce the financial debt over the course the year, with a balance lower at the end 2025 than the end 2024." The Mexican President Claudia Sheinbaum pledged to increase production to 1.8 millions bpd, despite the fact that older fields are depleting, especially in the Gulf of Mexico. More recent discoveries failed to make up for this. Jorge Alberto Aguilar, Pemex’s chief of corporate planning, said that the company is working hard to achieve the 1.8-million bpd target by the end the year and to maintain it at this level.
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The Brazilian indigenous fund wants to take on nature finance
Global expansion of community-managed nature fund In four years, investments in communities have increased by 38% but are still small Community funds are looking for local priorities and a simpler bureaucracy By Andre Cabette Fabio Atelie Derequine Indigenous Fashion Collective, founded in 2020, produces masks against COVID-19. Models are dressed and take part in runways in Brazil's industrial city of Manaus. This fashion collective provides jobs for Indigenous people and is a platform to promote their rights. Vanda Witoto is the person responsible for mobilizing AtelieDerequine. She said, "We bring political awareness to the runways where we have raised banners to demarcate" Indigenous territories. The growth of the collective was made possible by a 50,000 reais (8,600 dollars) grant from the Indigenous Fund of the Brazilian Amazon (Podaali), the first Amazon rainforest trust run entirely by Indigenous people. In Baniwa, Podaali is the Baniwa word for giving without expecting anything back. Witoto says that Atelie Derequine's life would have been difficult without the Podaali Fund. She said that conventional finance institutions want indigenous people to "just plant trees." They don't even care about us. "We go to international events and no one wants to talk to us," she said. The fashion collective uses Indigenous networks that reach deep into the Amazon where local communities provide seeds and fasteners for clothing. Podaali and the organisers claim that its designs attract support far beyond the Indigenous Community. The Podaali Fund, launched by the Coordination of Indigenous Organizations of the Brazilian Amazon in 2019, is one of a growing number of finance institutions that are led by political groups from Indigenous and local communities. Since 2021, the movement has gained momentum. This is when environmental NGO Rainforest Foundation Norway released a report that showed in the decade prior, only 1% global funding had been allocated to climate adaptation and mitigation. The U.N. COP26 Climate talks in Glasgow, that year, wealthy nations and charities pledged an increase of funding for Indigenous peoples and other land owners. Land Rights Data from the Rights and Resources Initiative (a global land rights alliance) shows that $2.22 billion has been disbursed between 2021 and 204 to protect and manage the land of these communities. This is 38% more money than the four previous years, but it's still a relatively small amount compared to global investments. Juan Carlos Jintiach said that there are "entities" who do not want to abandon colonialist attitudes, and therefore, they will continue to ignore investments in Indigenous communities as well as other local communities. He said that a large portion of the climate change and biodiversity investments managed by foreigners is spent on administrative costs before they reach local communities. In a report published last year, the Forest Tenure Funders Group - a coalition of wealthy nations and philanthropic organizations that had pledged to give $1.7 billion in grants to communities by 2025 - concluded that only 10.6% was managed directly by communities. According to a report published by Shandia in 2023, an initiative launched by GATC, by creating its own fund, the Indigenous Movement aims to have more control over money and to distribute it to local priorities. This will also simplify bureaucracy. Podaali belongs to a network of nine funds that are part of the Amazonian communities of Brazil. This includes "quilombola", descendants of enslaved Africans, and other groups who depend on the forest. Aurelio Vianna is a programme officer at international NGO Tenure Facility. This organization helps to structure community funds, and is one of Podaali’s funders. Vianna stated that the funds were being directed by Indigenous leadership "despite enormous global backlash" towards nature-focused policies, such as U.S. Government's cuts to global climate projects. SIMPLIFIED BUREAUCRACY Podaali is located in a downtown office building, far from tourist areas. The building's inner doors and windows are reinforced with metal grids to ensure security. Rose Meire Apurina is Podaali’s deputy director. She said that funding decisions were based on simple questions to reduce bureaucratic hurdles and snarls. She said that instead of prescribing top-down what types of initiatives should be prioritized by communities, the fund aims to "intensify" the work already done. Podaali awarded between 20,000 reais (3,500 dollars) and 50,000 reais (8,800 dollars) in 2023 and 2024 to 77 initiatives. The money was spent in part to purchase drones to monitor forests and to finance protests in Brasilia against anti-environmental laws. Last year, Podaali raised $9 million ($1.6 million), mainly with international partners, such as the U.S. based Wellspring Philanthropic Fund Christensen Fund Nia Tero Foundation. Brazil's Indigenous Movement is looking to expand these funds beyond the Amazon with Podaali. Last year, at the Climate Week in New York Apib (Brazil's largest indigenous umbrella organization) launched a fund named Jaguata with Podaali’s support. Dinamam Tuxa, Apib Coordinator, said that financiers are prioritizing the Amazon over less-known natural areas like the Cerrado Savannah. The National Institute for Space Research has listed the Cerrado savannah as Brazil's deforested Biome by 2024. Jaguata is determined to close this gap.
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US sanctions against Iran ahead of nuclear talks
Washington is seeking to increase pressure on Tehran by imposing sanctions on Wednesday on entities that it believes are involved in the illegal trade of Iranian petrochemicals and petroleum. In a press release, the U.S. State Department announced that sanctions would be imposed on seven entities in the United Arab Emirates (UAE), Turkey and Iran. The Department accused these entities of trading Iranian petroleum products and petrochemicals. Two vessels were targeted. In a separate press release, U.S. Secretary Marco Rubio stated that the action was taken against four sellers and one purchaser of Iranian petrochemicals valued at hundreds of millions dollars. The action on Wednesday is the latest step taken against Tehran since Trump re-established his "maximum press" campaign, which included efforts to reduce Iran's oil exports and prevent Tehran from developing nuclear weapons. Rubio stated that the President was committed to reducing Iran's illicit oil exports, including those to China, to zero as part of his campaign to exert maximum pressure. The Iranian mission at the United Nations, New York, did not respond immediately to a comment request. This action is taken as the United States has resumed discussions with Iran about its nuclear program. The U.S.-Iran negotiators are scheduled to meet again in Rome this Saturday. Trump, in his first term from 2017-2021, rescinded the U.S.'s participation in a 2015 agreement between Iran and major world powers which placed strict limitations on Tehran’s uranium-enrichment activities as a trade for relief of sanctions. Trump also reimposed U.S. sanctions. Since then, Iran's uranium enrichment has exceeded the limits set by that agreement. Western powers accuse Iran a secret agenda of developing nuclear weapons capability through enriching uranium above the level they claim is acceptable for a civil atomic energy program. Tehran claims its nuclear program is solely for civilian energy purposes.
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Saudi Arabia is able to live with lower oil price, according to sources
Five sources familiar with the discussions said that Saudi Arabian officials were briefing industry experts and allies to explain the kingdom's unwillingness to support the oil market through further cuts in supply and its ability to handle a long period of low oil prices. Saudi Arabia's possible policy shift could indicate a move to produce more and expand its market share. This would be a major change, after spending five years balancing the oil market by producing a large amount of oil as a member of the OPEC+. These cuts helped to support prices and, as a result, the revenue from oil exports that many oil producers depend on. The Saudi government’s communications office has not responded to a comment request on this matter. Sources said that Riyadh was angry because Kazakhstan and Iraq produced above their OPEC+ target. These targets are set by the group to maintain a balance between supply and demand in oil markets. OPEC+ source said that after pushing its members to meet these targets and compensate for the oversupply of recent months, a frustrated Riyadh has changed tact. Saudi Arabia pushed OPEC+ to increase output more than planned in May. This decision helped push oil prices down below $60 a barrel, a four-year low. Prices are down, which is bad for oil producers who rely on exports to finance their economies. Saudi Arabia, for example, has a low cost of production but they still need a higher price of oil to fund government expenditures. Many large oil producing countries are forced to reduce their budgets when oil prices drop. Saudi Arabia appears to be telling allies and experts they are prepared to do this. Five sources claim that Saudi officials have in recent weeks told their allies and participants in the market they can cope with the price drop by increasing borrowing and reducing costs. One source said, "The Saudis may have to scale back some of their major projects if they want lower prices." Due to the sensitive nature of the subject, all sources declined to provide their names. According to the International Monetary Fund, Saudi Arabia requires oil prices to be above $90 in order to balance its budget. This is higher than the other major OPEC producers, such as the United Arab Emirates. Analysts have stated that Saudi Arabia could be forced to cut back or delay some projects as a result of the drop in price. Not a price war yet OPEC+ could decide to increase output again in June. This includes the Organization of Petroleum Exporting Countries (OPEC) and its allies, such as Russia. Saudi Arabia contributes two fifths of the 5% global supply cut by OPEC+. Two of the five Russian sources familiar with Russian thinking and conversations have confirmed that Riyadh is planning to increase output faster. Two sources stated that Russia prefers the group to stick with slower production increases. The office of Alexander Novak, Russian Deputy Premier Minister, did not respond to a comment request. Saudi Arabia and Russia - the de facto leaders in OPEC+ - make up the largest contributions to OPEC+'s cuts. The Russian budget is about $70 per barrel, and spending by the Kremlin has increased due to the Russian conflict in Ukraine. One of the sources stated that Russia could see a further drop in revenues as the prices of its sanctioned, discounted oil could fall under $50 a barrel due to OPEC+'s increased output. Reasons for Change Theories about the apparent shift in Saudi strategy include punishing OPEC+ member countries that exceed their quotas, or a fight for market shares after ceding the ground to non OPEC+ producers like the United States and Guyana. A higher output could also give President Donald Trump a boost, as he has asked OPEC for a production increase to keep U.S. gas prices low. Trump will visit Saudi Arabia next month and may offer Riyadh a package of arms and a nuke agreement. OPEC+ has decided to triple the planned increase in output to 411,000 bpd. OPEC+ still holds back over 5 million bpd. The group aims at reducing these restrictions by the end 2026. Giovanni Staunovo, UBS analyst, said: "We still would call this a managed' unwinding of cuts. This is not a battle for market share."
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European steelmakers warn of trade and pricing risks despite strong quarterly earnings
The top European steelmakers' first-quarter earnings were better than expected, but they warned that trade tensions around the world, low European prices, and market volatility will cloud the outlook for the remainder of the year. ArcelorMittal, which reported on Wednesday a smaller-than-expected drop in its quarterly core profit, flagged trade disruptions as a risk to its 2025 steel demand forecasts, particularly in the U.S. and China, sending its shares down more than 5%. Aditya Mittal, CEO of world's second largest steelmaker Aditya Mittal, said that increased uncertainty over global trade terms is damaging business confidence. If not resolved quickly, it could cause further economic disruption. SSAB, which also reported a smaller-than-expected drop in earnings on Tuesday, said the proximity of its facilities to customers, and specialised products helped cushion the immediate impact of new U.S. tariffs, but warned of a "more uncertain than usual" second-quarter outlook in its steel division. Aperam, a steel company based in Luxembourg, also reported results slightly above expectations Wednesday. It attributed this to the higher volumes it saw in Europe as well as the consolidation of the U.S. business. Aperam is a manufacturer of stainless steels and specialty alloys. It operates mostly in Brazil and the EU, with limited exposure to the U.S. The group warned of further pricing pressures on earnings for the second quarter. However, it is expected to improve in comparison with the performance from the previous three-month period. Its shares fell in the early trading after it admitted that it is difficult to give a forecast for future quarters. Timoteo Di Maulo, group CEO, said that it was difficult to make reliable projections in this volatile environment. Maxime Kogge is an Oddo-BHF Analyst. He believes that the second quarter will bring relief, as trade restrictions are expected to increase prices. European players may also reduce their exposure to China and restructure efforts could pay off. The European steel industry is facing a combination of high energy prices, cheap Chinese producers, and higher tariffs for exports to the United States at a time where the global market is already struggling with excess capacity. The Organisation for Economic Co-operation and Development (OECD) said earlier this month that "the global steel excess capacity will continue to rise, (...) fueled by cross-border investment by Chinese steel firms." ArcelorMittal's assessment of the Asian market was mixed. It expects that the strong demand in India will continue, supported by the new Indian safeguard duty of 12% on steel imports from China. The group believes that in China, overcapacity will continue to result in low steel spreads, which is the difference between the price of steel and the cost to produce it. ArcelorMittal, despite its cautious tone in its statement, reaffirmed their 2025 investment plans and noted that European steel spreads were rebounding, supported by the European Commission’s Steel and Metals Action Plan. They also noted trade barriers against imported goods and an anticipated rise in Germany’s infrastructure spending. On May 8, Outokumpu Oyj, a Finnish steel company, and Acerinox, a Spanish steel company will report their first quarter results.
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U.S. stocks and global stock prices fall on the back of GDP decline and crude price drop
Wall Street stocks plunged sharply, pulling down their European counterparts as well, due to a waning investor appetite for risk following a disappointing U.S. economic report, a series of disappointing data, and mixed earnings results. The benchmark Treasury yields in the United States are headed to their seventh consecutive session of declines due to no progress being made on tariff negotiations. The dollar grew and crude oil prices fell. The Nasdaq, which is dominated by tech stocks, was the worst performing of the three major U.S. indexes. All three U.S. indexes of stocks were headed for their third consecutive monthly loss on the last day in April. The first three months in 2025 saw a contraction of the U.S. Gross Domestic Product (GDP). U.S. president Donald Trump blamed Joe Biden, his Democratic predecessor and said that his tariffs will eventually lead to a booming economic. Peter Cardillo is the Chief Market Economist of Spartan Capital Securities, based in New York. He blamed Trump. Cardillo stated that Trump's policies were responsible for the numbers. "They have created uncertainty. When you create uncertainty, no one will put their foot down on the accelerator." Cardillo said that they are seeing it as earnings come in. "Guidance is being withdrawn." The ongoing multi-fronted trade war has continued to cloud the U.S. earnings season. Companies are increasingly reducing or pulling back their guidance because of the fog of uncertainty surrounding tariffs. Wall Street pared its losses following the release of positive economic indicators. Personal Consumption Expenditures (PCE) price index unchanged on a monthly basis and stronger-than-expected consumer spending. Meta Platforms, Microsoft and other members of the "Magnificent 7" group of companies that are involved in artificial intelligence, will report their results after the bell. Positive results could reverse Wednesday's decline. Jay Hatfield is the portfolio manager of InfraCap, a New York-based company. He said, "We believe it's irrational that people sell tech stocks so hard, especially when we have big kahunas to report." If we made this call today, we would be explaining why the market is up 2%. The Dow Jones Industrial Average dropped 466.73, or 1.15 %, to 40 061.02, while the S&P 500 declined 83.29, or 1.50% to 5,477.54, and the Nasdaq Composite was down 343.74, or 1.97% to 17,117.58. The U.S. GDP data has caused European stocks to erase their previous gains. The MSCI index of global stocks fell by 8.10 points or 0.97% to 823.21. The pan-European STOXX 600 fell by 0.12% while Europe's FTSEurofirst 300 fell by 3.70 points or 0.18%. Emerging market stocks increased 4.65 points or 0.42% to 1,110.64. MSCI's broadest Asia-Pacific share index outside Japan closed up by 0.78% to 580.07 while Japan's Nikkei gained 205.39, or 0.57% to 36,045.38. The dollar's gains were maintained after a series of mixed economic data from the United States. The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) rose by 0.26%, to 99.42. Meanwhile, the euro fell 0.19%, to $1.1363. The dollar gained 0.3% against the Japanese yen to reach 142.75. The sterling fell 0.5% to $1.339. The Mexican peso fell 0.35% against the dollar to 19.626. The Canadian dollar rose 0.08% against the greenback, to C$1.38. The yield on the benchmark U.S. 10 year notes dropped 1 basis point from late Tuesday to 4,164%. The 30-year bond rate rose by 1.5 basis points, from 4.648% to 4.6626% late Tuesday. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 4.5 basis points, to 3.613% from 3.658% at late Tuesday. Trump's trade conflict has eroded demand prospects, causing oil prices to fall further. This is their biggest drop in almost 3-1/2 years. U.S. crude dropped 1.89%, to $59.30 per barrel. Brent was down to $63.22 a barrel on the same day. The dollar's strength has led to a decline in gold prices. Spot gold dropped 0.39% to $3302.72 per ounce. U.S. Gold Futures dropped 0.66% to an ounce of $3,297.00.
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Gold prices fall on hopes of rate cuts after weaker US data
Gold prices recovered some of their losses on Wednesday, as the bets that U.S. Federal Reserve would cut rates increased after weaker than expected first quarter U.S. economic growth. At 10:57 am, spot gold fell 0.2% to $3,308.52 per ounce. ET (1457 GMT). Bullion fell over 1% in the morning session but is on track to record its fourth consecutive month of gains, with a 6% increase so far in April. U.S. Gold Futures dropped 0.5% to $3318.50. The data showed that the U.S. Gross Domestic Product contracted by 0.3% on an annualized basis last quarter as businesses imported goods in anticipation of tariffs expected from the Trump Administration. Gold is still in a bullish market, and the data released today suggests that initial Fed rate reductions will be easier, which should benefit gold, said Tai Wong. An independent metals trader added that given gold's recent sharp rise to $3,500, it may continue to trade sideways. The Fed will resume cutting rates if it sees clear signs of an economy in decline by June. This could be by as much as a whole percentage point at the end of the calendar year, traders predicted on Wednesday. Low interest rates are also conducive to the growth of non-yielding gold bullion as a hedge against financial and political turmoil. Last April 22, it reached a record-high of $3,500.05 an ounce. The U.S. Personal Consumption Expenditures (PCE) Price Index was unchanged in march after increasing by 0.4% in the previous month. The quarterly PCE, excluding volatile components such as food and energy, grew at a rate of 3.5%. This is a significant increase from the 2.6% growth in October-December. Wong said that gold has largely shrugged off the lowest reading in core PCE in the past pandemic, due to the sharp rally it experienced earlier, following the unexpected contraction of U.S. Gross Domestic Product. The biggest data on jobs this week is the U.S. monthly employment report, due on Friday. This could provide more insight into the Fed's outlook for interest rates. China's markets are closed for the Labour Day holiday from May 1-5. Silver spot fell 0.9%, to $32.68 per ounce. Platinum dropped 1.1% to $866.74. Palladium slipped 0.1% to $933.50. (Reporting by Anjana Anil in Bengaluru; Editing by Sahal Muhammed)
Trane Tech exceeds its quarterly expectations on the strength of demand for air conditioners
Trane Technologies reported Wednesday better-than expected first-quarter results, and reaffirmed their annual profit forecast. They benefited from the rising demand for heating, ventilation, and air conditioning (HVAC) systems.
The company's shares rose by over 7% during premarket trading.
As temperatures rise as a result climate change, sales of air conditioners in homes and offices have risen.
The Ireland-based firm posted a 14% increase in its Americas segment. This is its largest revenue generator, and was boosted by a robust demand from commercial customers.
The company, who also owns Thermo King Transport Refrigeration, has stuck to its original adjusted profit per share estimate of between $12.70 - $12.90 by 2025.
Trane has, however, increased its revenue growth expectations for the year. It now expects a rise between 7.5% and 8.5% above its previous estimate of 6.5% to 7.5%.
According to LSEG, the company reported net revenues of $4.69 Billion in the first quarter. This is up 11% compared to a year earlier, and beat analysts' expectations, which were about $4.46 Billion.
The company reported a profit per share adjusted of $2.45, which was also higher than the analysts' expectation of $2.20. (Reporting by Utkarsh Shetti in Bengaluru; Editing by Sahal Muhammed)
(source: Reuters)