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Sources say that OPEC+ will consider a further increase in oil production on Sunday
OPEC+ is expected to consider increasing oil production during a Sunday meeting, according to two sources who are familiar with the discussion. The group wants to regain its market share. OPEC+ would also be able to start unwinding a second layer, a cut of around 1.65 million barrels a day or 1.6%, of global demand more than a full year earlier. On Sunday, eight OPEC+ nations will hold a virtual meeting to determine the output for October. OPEC+ is the Organization of the Petroleum Exporting Countries, plus Russia and its allies. Some analysts and a source from OPEC+ said that there is a possibility that OPEC+ may pause its increases in October. The OPEC+ official said that a final decision had not yet been made. OPEC's headquarters in Saudi Arabia and its authorities did not respond immediately to comments. OPEC+'s increased production has not lowered oil prices. The group's actual increases have been less than the pledges, as some members have compensated for overproduction while others struggle to increase output due to capacity limitations. Brent crude traded near $68 per barrel on Wednesday. This was down more than 1% for the day, but it is up from an April 2025 low near $58. OPEC+ has been reducing production to support oil prices for several years. This year, it reversed its course to gain market share. It was prompted in part by President Donald Trump's calls for OPEC production to be increased to control gasoline prices. The eight countries raised their production for September by 547,000 bpd at their last meeting, reversing the largest chunk of cuts in output. They also increased output for the United Arab Emirates, which amounted to around 2.5 million bpd. (Reporting by Alex Lawler and Olesya Astakhova; Additional reporting by Ahmad Ghaddar and Yousef Saba; Editing by Dmitry Zhdannikov and Bernadette Baum) (Reporting and editing by Dmitry Zhdannikov, Bernadettebaum and Dmitry Zhdannikov; Additional reporting by Ahmad Ghaddar; Yousef Sabah; and Bernadettebaum and Dmitry Zhdannikov)
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Venezuelan currency exchanges switch to crypto when dollars are scarce
A dozen sources claim that Venezuela's government has begun to allow the private sector to use dollar-linked cryptocurrencies for currency exchanges, due to the US restrictions on oil exports. The sanctions imposed by the United States on Venezuela, which are described by the Venezuelan government as an "economic war", prevent many transactions. Companies that want to purchase raw materials abroad are forced to exchange their local bolivars into dollars, generated from the oil trade, foreign card transactions, and the central bank injecting them into the exchanges. Oil revenue has dropped in recent months. The United States Treasury Department issued Chevron last month a restricted license allowing the company to export oil again after a three-month hiatus. However, this license prevents any payments to be made to the government and reduces the amount of dollars that can be exchanged. According to sources in the financial and private sector who requested anonymity for fear of repercussions, Venezuelan authorities have allowed more USDT (a digital currency known as Tether), whose value was pegged to U.S. dollars and is designed to maintain stability. Digital currencies are a great way to keep the economy running during sanctions. This includes the production of food and other basic products. Cryptography is used by some businesses to open up new operations when one closes. According to another source, the use of cryptocurrency will increase. Sources told us last year that the state-owned oil company PDVSA gradually increased its digital currency use and moved sales to USDT since last year. Tether has not responded to a comment request, but stated last year that it respects U.S. Treasury’s list of sanctioned organizations. The Ministry of Communications and the Central Bank did not respond to any questions. However, Vice President Delcy Rodriguez stated during a meeting in August with businesspeople that "nontraditional mechanisms of exchange market management" were being implemented. She gave no further details. Sources said that a small number of banks are selling the cryptocurrency, USDT in most cases, to certain businesses for bolivars. Businesses must use a digital wallet that has been approved by authorities to receive the value. The crypto can be used to pay for domestic or international services or sold by businesses. Ecoanalitica, a local analyst firm, estimates that $119,000,000 in cryptocurrency was sold to the private sector during July. According to private and financial sector estimates, the Venezuelan central banks has injected $2 billion in the currency exchange market during the first seven months this year, which is 14% less compared to the same period of last year. Analysts estimate that the restrictions on Chevron's license could further reduce the availability foreign currency. According to data from vessel tracking and company documents, oil exports fell by about 10% in July compared to the previous month. "The exchange rate is always limited," said Orlando Camacho. He is a close friend of the ruling party, and also the head of an association for medium-sized businesses. "The companies' role is to also guarantee foreign exchange by their exports." Rod Nickel is responsible for the reporting and editing.
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China's copper production set to fall by a rare amount in September as tax changes hit scrap supply
Analysts predict that China's refined production of copper in September will experience a rare decline, the first since 2016. This is due to newly implemented tax regulations which are limiting the supply. According to research agencies Shanghai Metals Market, Mysteel and Benchmark Minerals Intelligence, September's output of the world's biggest producer and consumer refined copper will drop by 4 to 5% compared to August's levels. Analysts said that this, along with the expectation of a U.S. Federal Reserve rate cut, may support copper prices. Analysts noted that the decline in copper scrap anodes occurred during a typical seasonal demand peak, because new tax rules made smelting it into anodes less lucrative. Anodes are an important input for the processors who produce refined copper. This is used widely in construction, manufacturing, and power infrastructure. SMM data revealed that the number of anode-producing smelters will increase to five from three in September, a month ago, adding to the drop in production. In the past, when refiners needed to maintain production, they could obtain some anode-copper from smelters. Right now, anode supply is tight and limiting refined output," said Yongcheng Zhao. According to SMM, the operating rate of smelters that are fed scrap copper or anode-copper is expected to drop by 8.3 percentage point month-on-month in September to 59.9%. According to two analysts, who spoke under condition of anonymity because they were not authorized to speak to the media, equipment maintenance could reduce consumption of copper concentrat, which is a key input to smelters. This would help to prevent spot processing fees from falling more dramatically, said these analysts. They added that this could give Chinese smelters a bit of leverage when they negotiate with miners to determine the contract price for the next year in November. A shortage of mining material has caused processing fees to fall into negative territory. A persistent and acute concentrate shortage has forced some smelters to stop operations outside of China due to the arrival of new smelting capacities worldwide. Analysts expect the dip in output to continue through October. This will not stop annual production from reaching a record level this year.
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French electricity production is reduced due to a strike over wages and pensions
Data from EDF showed that the electricity output of the French utility was cut by 2.6 gigawatts on early Wednesday morning. This was due to workers cutting power production as part of an industrial action aimed at pensions and wages in the gas and power sector. The industrial action is expected to expand in the next few weeks due to the low approval rating of the government. It faces a vote of confidence on Monday. The data revealed that nuclear power production fell by 2.1 GW, with three reactors being affected. Hydropower production also decreased by 510 megawatts. France's total nuclear capacity is 57 GW, and it produces 70% of its annual electricity. Data from grid operator RTE indicated that France will remain a net exporter of power throughout the day. The affected supply at 0900 GMT was 4,2% of the total production. A spokesperson for Belgian Gas Terminal Operator Fluxys stated that the industrial action in the gas sector has only had a small impact on certain work currently being done. The spokesperson stated that there was no impact on output flow rates, nor on the ship unloading or truck loading operations. Dunkirk LNG is the second-largest terminal in continental Europe. It's the only one that connects directly to two markets, Belgium and France. This terminal accounts for around 20% of the annual gas consumption of both countries. (Reporting and editing by Barbara Lewis, Philippa Fletcher and Forrest Crellin)
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Pope Leo opens a Vatican-run eco-training centre in response to climate change
Pope Leo is opening a new Vatican-run eco-training centre in the Italian countryside this Friday. Catholic officials claim that it's an initiative to encourage leaders around the world to tackle global climate change. The center, which is spread over 55 hectares of land (136 acres), on the expansive grounds of a papal villa from the Renaissance era in Castel Gandolfo includes gardens, vocational-training facilities, and education opportunities for local kids. Rev. Manuel Dorantes, the U.S. priest who directs the centre, stated that the Vatican wants set an example of how countries should pursue initiatives to protect the environment. If we, the smallest state in the world can do it, what potential is there for states larger than us? He said. "Our world could be different if you and I work together." The "Borgo Laudato Si" ecological project was announced by late Pope Francis in 2023, a strong advocate of environmental protection. According to officials, the large area of the centre represents approximately 55 percent (or more) of all land owned by Vatican. The centre was named after Francis's major document from 2015, the first papal document to endorse the scientific consensus on climate change. It also urged nations that they reduce their carbon emission. Leo, as the first U.S. Pope, has also stressed the environmental teachings of the Church. The new pontiff approved in July a unique rite that allows priests to offer Masses urging Catholics to care for the Earth. Castel Gandolfo, on the shores Lake Albano, is located about an hour south of Rome. The new centre, which is located in the same building as where Leo spent his summer holidays this year, has been a place where popes spend their vacations since centuries. The greenhouse at the center of the institute was built to mimic the colonnade on St. Peter's Square in the Vatican. Officials have announced that visiting groups can learn about organic agriculture in the greenhouse or attend classes in a 10-room facility adjacent. Tourists who book a tour will be able to purchase local agricultural products including organic olive oil and cheese produced by 60 cows that live on site. (Reporting Joshua McElwee, additional reporting by Claudia Chieppa, editing by William Maclean).
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Demand for gold increases as rate-cut betting and trade tensions lift demand
Gold surged up to a new record high on Tuesday, consolidating gains over the $3,500 key level. This was due to growing expectations that a Federal Reserve rate reduction will be made this month, and the lingering risks of political and economic uncertainty. As of 0821 GMT spot gold was up by 0.1% to $3,537.29 an ounce after reaching a session high of $3.546.99. U.S. Gold Futures for December Delivery gained 0.4%, to $3604.99. The U.S. administration of President Donald Trump said that it would ask the Supreme Court to issue a ruling quickly on tariffs which a U.S. appellate court found illegal last week. The Supreme Court's roadblock and tariff issues will be a test for Trump. Regardless of the outcome, investors can find comfort in gold, according to independent analyst Ross Norman. Rate cuts have become a given, but now questions are being raised about whether they will continue. He added that lower rates would boost economic activity and further weakening the dollar in the U.S., as well as provide a tailwind for gold. Trump has publicly discussed the firing of Fed chair Jerome Powell and has pressed the Fed to reduce interest rates. Last month, Trump attempted to fire Fed governor Lisa Cook. This triggered a legal test that would determine the Fed's capacity to operate without political interference. The U.S. Dollar has been weakened by expectations of rate cuts and concerns over the Fed’s independence. It is now down more than 9 percent since the beginning of the year. This makes gold cheaper for foreign buyers. According to CME Group’s FedWatch tool, investors are pricing in 92% of a Fed rate reduction of 25 basis points at the conclusion of its policy meeting on 17 September. Gold that does not yield is usually a good investment in an environment with low interest rates. The Fed will be looking at the non-farm payrolls figures due this Friday to determine the size of any possible cut. Silver spot fell 0.2%, to $40.83 an ounce. It had reached its highest level since September 2011, in the previous session. Palladium fell 0.4% to 1,138.78 and platinum dropped 0.8% to $1391.80.
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Dutch pension fund PFZW terminates partnership with BlackRock due to conflict over sustainability
The Dutch pension fund PFZW announced on Wednesday that it had ended its relationship BlackRock, a wealth manager. This was part of a revamping of its portfolio to prioritise sustainable investments. The Netherlands' second largest pension fund selected 756 companies for investment and sold its stakes of over 2,600 companies in the last few months. Ellen Habermehl, spokesperson for PFZW, said: "In the next five-year period, we will strive to achieve a balance between our desire for good returns and acceptable risks, as well as sustainability." BlackRock was not selected. BlackRock's Dutch Office did not respond immediately to a comment request. Although many U.S. multinationals have moved away from sustainable business model since Donald Trump's re-election, some of the largest Dutch pension funds continue to believe that sustainability is the best approach for the long term. In an interview with the Dutch newspaper NRC PGGM, the fund's Investment Manager said that its decision to terminate its relationship with BlackRock is due to its reluctance in supporting sustainability resolutions during shareholder meetings. The fund does not want to have its votes in these meetings clash with the votes of the wealth management firms it works with. Sander van Steijn, PGGM's investment expert and NRC commentator, said: "If you don't do it right things can get complicated." PFZW's total assets are around 250 billion euro ($293 billion), with approximately 50 billion euros in investments in shares. Last year, the country's largest pension funds ABP, with 544 billion euro in assets, announced that it would reduce investments with large climate impacts, and instead direct more money to projects and companies that improve society and environment.
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EU drafts plans to prevent carbon border tariff circumvention
A spokesperson for the European Commission said that measures will be proposed this year to stop countries from avoiding its border carbon tariff. Some in Brussels are concerned that Chinese companies could restructure their trade to avoid paying the tax. Carbon Border Adjustment Mechanism, the first carbon border tax in the world, will begin to charge fees for CO2 emissions from imported goods, including steel, aluminum, cement, and fertilisers, starting in January. The system is designed to bring foreign producers up to par with European manufacturers who pay for their carbon emissions through the European Carbon Market. Brussels officials are worried that the system can be circumvented by foreign companies who send low-carbon products into Europe while producing high-carbon goods to sell on other markets. They could avoid the EU carbon tax without changing their production. A spokesperson for the European Commission said that the Commission plans to propose measures to address this risk by the end the year and to extend the carbon border tax to other downstream products. How can we ensure that the Chinese, in particular, will not be able to game this system? A senior EU official stated. The Chinese Foreign Ministry did not respond immediately to a comment request. According to the official, The Commission is looking at measures such as a system where goods are assigned a fixed value for CO2 emissions per country or company instead of calculating specific emission per shipment. They added, "You don't want to let anyone off the hook because they sent us green stuff, but used grey stuff back home and didn't change anything." The industries are pushing for anti-circumvention measures. Last month, the industry group European Aluminium called on the EU to simplify its CO2 levies by assigning the same CO2 emissions rating to all aluminum imports regardless of whether they were manufactured in that country. This would make it easier to enforce the EU levy, but foreign companies could resist. They would lose their ability to reduce their carbon border tax bill directly if they reduced their own emissions. (Reporting from Kate Abnett in Brussels, Additional reporting by Liz Lee and Joe Bavier in Beijing)
FX seismograph quietens to pre-Ukraine invasion level: Mike Dolan
If you think the choices market, the world's major currencies are going nowhere fast this year.
A world of quickly re-routed trade, political standoffs, essential elections, sparky inflation and widening growth gaps in between G7 nations - it might fairly be seen as a perfect incubator for volatility in major currencies.
And yet, even as central banks struck inflection points in their swinging rates of interest hiking campaigns of the previous 2 yeas, suggested volatility of the major exchange rates has imploded.
Evaluated by Deutsche Bank's currency VIX index, or CVIX , indicated volatility of the world's most traded currency pairs plunged again this month to its most affordable level considering that just before Russia invaded Ukraine 2 years ago.
It's now less than half the levels seen at the peak of the energy shock that followed - a shock that, in turn, forced financial policymakers all over to rush to contain the inflationary spur of soaring oil and natural gas costs and which put Europe on the frontline.
Other steps tally with that. CME Group's G5 currency volatility index FXVL has actually subsided to its most affordable level considering that 2021 and within a whisker of pre-pandemic levels.
Three-month choices costs for the dominant currency exchange rate of euro/dollar, dollar/yen and sterling/dollar - together accounting for three-quarters of CVIX weightings - are all back to where they were at least as far back as the very first quarter of 2022.
Sterling vol is actually pipes levels not seen given that before COVID-19 hit early in 2020.
If you look further out the horizon - 1 year steps are greater - but only just. And these have cratered to about half the peaks of 2022 and nosedived this month too.
There is still some alter embedded in these prices, with euro and sterling puts - alternatives to sell these versus the dollar over the coming year - staying pricier than equivalent calls. But even these premiums, or risk turnarounds, have diminished drastically and are as close to no as they have actually been considering that early 2022.
At its easiest, all this simply shows a lack of need to hedge against or speculate on potentially sharp currency swings over the remainder of the year a minimum of - or at least not via choices. You could, as numerous currency sales desks do, argue this represents a yelling buy. However couple of players are biting.
NONPLUSSED OR NONCHALANT?
If it were simply nonchalance, it would be peculiar.
The year ahead consists of potentially seismic elections in both the U.S. and Britain and a most likely return of Bank of Japan rate of interest to favorable area for the first time in eight years.
It's appealing, offered the historic milestones, to think it may have something to do with geo-economics.
Might a growing home predisposition among financiers prevent the need to worry about currency swings? Or perhaps there's less seriousness amongst business treasurers now frantically re-shoring organization and re-routing supply chains closer to home.
Low currency vol per se may equally suggest the flipside. It ought to lure punters to overseas bring trades that look for greater yielding currencies without worry of being side-swiped by violent exchange rates - or even draw funds from expensive Wall Street stocks to better-valued European or Tokyo bourses without taking an FX hit.
All circular arguments, depending on your take.
But there's a more familiar offender in the dock.
The dollar is still historically misestimated in many people's. eyes - its DXY index stays more than one requirement. discrepancy above 20-year averages. And it will not give up the ghost. till the Federal Reserve starts alleviating rates - something U.S. reserve bank policymakers have actually invested the majority of the year pushing. back and back.
The most unexpected aspect - offered the yawning gulf in. economic efficiency between a still-booming U.S. and. recessionary Europe and Japan - is that the other central banks. appear intent on matching the Fed in lockstep.
A lot so, that markets are now encouraged the Fed, European. Reserve bank and Bank of England will hold off on cutting rates. a minimum of till late July and after that all take the plunge together. in less than 2 weeks of scheduled conferences - even if the BoE's. choice slips to Aug. 1.
The result is little or no fodder in rates of interest. differentials for currency markets to feed off.
George Saravelos, head of FX research at Deutsche, goes one. step even more and states that it's less about timing the first cuts. and more assessing terminal rates of occurring reducing cycles.
And he shows that even on that basis it's tough to see any. wedge in between the Fed and ECB today.
Short-dated interest rate futures out to 2027, for instance,. put the complete extent of the Fed and ECB rate-cut cycles within. just 10 basis points of each other - about 170 and 160 basis. points of relieving, respectively, in overall.
Utilizing real and small 5-year rate spreads as another method to. show that, Saravelos concerns the setup as impractical.
Adding that a pickup in U.S. election threat into November is. Likely, he reckons markets appear to be underestimating the. potential for more dollar strength if anything.
For the dollar to rally more, 2 things require to happen,. the Deutsche strategist informed customers. A more considerable. reassessment of relative terminal rates between the U.S. and the. remainder of the world - which our company believe is required - and a. greater prices of U.S. election risk premium, which stays. near to zero.
With clarity on all that unlikely till the middle of this. year a minimum of - disallowing a seismic shift in relative economic. soundings or unlikely self-confidence on the result of the U.S. election - it appears we're in for months more in the FX doldrums. The viewpoints revealed here are those of the author, a columnist. .
(source: Reuters)