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WTI-Brent Spread at its Narrowest in Nearly Two Years as US Prices Rise
Analysts and traders reported that the spread between U.S. West Texas Intermediate crude and Brent crude futures was at its tightest since September 2023 as U.S. oil prices increased on a declining rig count, and Canadian wildfires cut supply. Brent futures were up 2.75% as OPEC+ increased output, limiting gains. Why it's important A narrower spread can indicate a closed window of arbitrage for traders, and weaker shipping economies to Europe and Asia. If Brent crude premium remains low, the tighter spread could be an early indication that U.S. crude imports are likely to fall in the coming weeks. Since the Dated Brent price is determined by WTI Midland most trading days, the spread between them is more closely correlated with freight rates. By the numbers, the spread between two crude benchmarks was as low as $2.78 per barrel on Friday. A discount of $4 a barrel is usually considered to be the level which encourages U.S. imports into Europe as traders view it as an arbitrage opportunity. According to Phil Flynn of Price Futures Group, the spread has remained below $4 a barrel on average since May 1. This is partly due to concern about U.S. oil production. Since April, OPEC+ members including Saudi Arabia, Russia, and others have increased their production by 1.37 million barrels a day or 62%, of the 2.2 millions bpd that they intend to bring back onto the market. Baker Hughes, the energy services company, said that the U.S. oil rig count fell four times to 559 during the week ending June 6. This is the lowest level since November 2021. It has sparked some concern about future U.S. output. Traders and analysts say that this has created a price which encourages U.S. crude oil to stay on the domestic market. Analysts said that the wildfires in Canada's oil producing province of Alberta, have further boosted U.S. crude prices, as Canadian crude production has decreased by approximately 7%. Sparta Commodities analysts said that the Canadian wildfire season is underway and further disruptions could push WTI/Brent below $3 in the summer. KEY QUOTES Flynn, of Price Futures Group, said: "When you take a look at the WTI/Brent Spread you can see a bit the concern about the leveling off U.S. Production and the tightening up of export barrels."
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Trump approves coal mine expansion for Asia exports
The U.S. The U.S. The Montana-based company can now recover 22.8 millions metric tons federal coal, 34.5 millions metric tons adjacent non-federal coking coal and extend life of the Bull Mountains Mine by nine years. Interior Secretary Doug Burgum is also the co-chairman of Trump's Energy Dominance Council. He said that by unlocking more federally owned coal, it allows the U.S. strengthen ties with its allies overseas. He said that President Trump's declaration of a national emergency in the energy sector allowed us to act quickly, reduce bureaucratic delays, and secure America’s future by ensuring energy independence and strategic trade. Trump declared an emergency on January 20 to accelerate permits, rollback environmental protections and pull the U.S. out of an international climate change pact. Signal Peak sent its initial plan to expand their mining operations to Office of Surface Mining Reclamation and Enforcement (OSMRAE) in 2020. However, it has been subject to federal review and litigation since then. The Interior Department has completed the environmental impact assessment for the mine expansion in accordance with its new policy, which speeds up such reviews by a maximum 28 days. Burgum joined Energy Secretary Chris Wright, Environmental Protection Agency Administrator Lee Zeldin and other energy exports to Asian markets this week in Alaska. Bull Mountains Mine in Montana is located in Musselshell County and Yellowstone County. It employs more than 250 workers, and supplies primarily Japan and South Korea. Environmental groups tried to stop the expansion of this mine due to concerns over its water usage and greenhouse gas emissions. Anne Hedges of the Montana Environmental Information Center said, "It is utter hogwash to think that we must sacrifice our climate, water resources and wildlife to send coal to foreign countries to burn." (Reporting from Valerie Volcovici and Nichola Grroom in Washington; Editing by Barbara Lewis, Matthew Lewis and Matthew Lewis).
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US and China to hold trade talks on June 9 in London
Three of Donald Trump's closest aides are scheduled to meet their Chinese counterparts on Monday in London for talks on resolving a trade conflict between the two world's largest economies, which has been causing global markets to be on edge. U.S. Treasury Sec. Scott Bessent will be represented by the U.S. Trade Representative Jamieson Grer, Commerce Sec. Howard Lutnick, and the U.S. Trade Rep Jamieson Greer in the talks. Trump announced the talks on his Truth Social platform, but did not provide any further details. The identity of the China representative was not immediately known. The Chinese Embassy in Washington didn't immediately respond to an inquiry for comment. Trump wrote that "the meeting should go well." The meeting is scheduled a day after Trump called Chinese President Xi Jinping, in a rare call between leaders amid weeks of brewing tensions over trade and a fight over vital minerals. Trump and Xi have agreed to meet and their staffs will hold discussions in the interim. Both countries face pressure to ease tensions. The global economy is under pressure due to China's control of rare earth minerals, for which it is the leading producer. Investors are also concerned about Trump’s efforts to impose tariffs across the board on products from the majority of U.S. trading partner nations. China has also seen the supply of important U.S. products like chip-designing software cut off. On May 12, the countries reached a 90-day agreement in Geneva, to reverse some of their triple-digit, tit for tat tariffs that they had imposed on each other after Trump's inauguration. The preliminary agreement sparked an international relief rally on stock markets. U.S. indices that were in or near bear-market levels have recovered the majority of their losses. Although stocks rose, the temporary agreement did not address the broader concerns straining the bilateral relationship. These range from the illicit fentanyl traffic to the democratically-governed Taiwan, and U.S. complaints against China's export-driven, state-dominated economic model. Trump, since returning to the White House, has threatened a variety of punitive actions against trading partners. However, he has retracted some of these measures at the last moment. This on-again-off-again strategy has confused world leaders and scared business executives. Beijing views mineral exports in the United States as a way to exert political pressure. If economic growth slows down because companies are unable to produce mineral-powered products, this could lead to domestic political pressure being placed on President Donald Trump. The United States has identified China in recent years as its most important geopolitical competitor and the only nation capable of challenging the U.S. militarily and economically. (Reporting and editing by Costas Pittas, Anna Driver and Trevor Hunnicutt)
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India and central Asian countries express joint interest in rare earths exploration
In a statement released after the India-Central Asia Dialogue's fourth meeting in New Delhi, India and five countries from central Asia expressed an interest in exploring rare earths together. The announcement coincides with global alarm about China's decision not to export rare earth alloys and mixtures. This has affected industries from automotives to clean energy and defence. India and central Asian countries, including Kazakhstan, Kyrgyzstan and Turkmenistan as well as Uzbekistan, also asked "relevant authorities" to convene the India-Central Asia Rare Earth Forum sooner than the September meeting. The statement added that the sides agreed to meet again in 2026. Rare earths is a grouping of 17 elements, whose main uses include the creation of magnets for motion in cars, cellphones and missiles. China produces 90% of the rare earth magnets in the world and mines 60% of it. However, as part of a sweeping response to U.S. tariffs on imports by President Donald Trump, China announced export restrictions for these rare earth magnets. India has been in talks with companies about establishing long-term stocks of rare earth magnets, offering tax incentives to domestic producers, to reduce its dependence on Chinese shipments, according to a report on Thursday. South Asia also plans to offer incentives to recycle 24 essential minerals. The plan is currently being approved as the nation looks to secure minerals for the green energy transition. (Reporting and writing by Shivam Patel; editing by Alex Richardson, David Evans, and Sakshi Dayal)
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US declares Biden fuel efficiency rules exceed legal authority
The Transportation Department has paved the road for looser fuel economy standards in the United States by declaring on Friday that former President Joe Biden’s administration overstepped its authority when it assumed a high uptake of electrical vehicles to calculate rules. The Department made this declaration when it published its final "Resetting of the Corporate Average Fuel Efficiency Program" (CAFE). Fuel economy requirements will be revised by a separate rule issued by the Trump administration. "We make vehicles more affordable in the United States and we are making it easier to manufacture them." In a statement, Transportation Secretary Sean Duffy said that the previous administration used CAFE standards to mandate electric vehicles. In writing the rule under Biden last year, the National Highway Traffic Safety Administration of the Department of Transportation (NHTSA) "assumed that significant numbers of EVs will continue to be manufactured regardless of the standards established by the agency," the department said on Friday. Duffy signed in January an order that directed NHTSA to cancel fuel economy standards set under Biden, for model years 2022-2031. These standards were intended to reduce the fuel consumption of cars and trucks. Late Thursday Senate Republicans have proposed to eliminate fines for failing to meet CAFE standards as part of an extensive tax bill. This is the latest step to make it easier for automakers build gas-powered cars. In 2018, Chrysler's parent company Stellantis, which is owned by Chrysler, paid nearly $400 million in penalties between 2016 and 2019. GM paid $128.2 millions in penalties between 2016 and 2017. Stellantis stated that it backed the Senate Republican proposal, "to provide relief until DOT develops their proposal to reset CAFE standards." The current standards are not in line with the market realities and immediate relief is needed to preserve affordability and freedom. GM has declined to comment. NHTSA, under Biden in June 2024, said that it would increase CAFE requirements for light-duty vehicle to approximately 50.4 miles per liter (4.67 litres per 100 km), from 39.1 mpg at present. Last year, the agency estimated that the rule for cars and trucks could reduce gasoline consumption and emissions by 659 millions metric tons. This would result in a reduction of fuel costs and a net benefit of $35.2 billion. (Reporting and editing by Aidan Lewis, Peter Graff, and David Shepardson)
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Trump approves coal mine expansion for Asia exports
The U.S. The U.S. The Montana-based company can now recover 22.8 million metric tonnes of federal coal, 34.5 millions of adjacent nonfederal coal as well as extend the life of its Bull Mountains mine for nine years. Interior Secretary Doug Burgum is also the co-chairman of Trump's Energy Dominance Council. He said that by unlocking more federally owned coal, it allows the U.S. a chance to strengthen ties with U.S. ally abroad. He said that President Trump's declaration of a national emergency in the energy sector allowed us to act quickly, reduce bureaucratic delays, and secure America’s future by ensuring energy independence and strategic trade. Signal Peak sent its initial plan to expand their mining operations to Office of Surface Mining Reclamation and Enforcement (OSMRAE) in 2020, but it is currently under federal review and subject to litigation. The Interior Department has completed the environmental impact assessment for the mine expansion in accordance with its new policy, which speeds up such reviews by a maximum 28 days. Burgum joined Energy Secretary Chris Wright, Environmental Protection Agency Administrator Lee Zeldin and Japanese and Korean officials in Alaska this week to promote an LNG and other energy exports destined for Asian market. The Bull Mountains Mine, located in Musselshell County and Yellowstone County, employs more than 250 workers, and supplies primarily Japan and South Korea. Environmental groups have attempted to block the expansion due to concerns over water consumption and greenhouse gas emissions. (Reporting and editing by Barbara Lewis; Valerie Volcovici)
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Gold drops as US job data clouds prospects for rate cuts
Gold prices slipped on Friday after a stronger-than-expected U.S. jobs report dampened hopes for imminent Federal Reserve rate cuts this year, while silver soared to its highest level since 2012. As of 10:45 am, spot gold was down 0.6%, at $3,333.69 per ounce. ET (1445 GMT), and has risen 1.2% in the past week. U.S. Gold Futures fell 0.6% to $3356.50. According to a report by the Labor Department, non-farm payrolls rose 139,000 in may, as opposed to estimates of a 130,000 increase, according economists polled. The unemployment rate was 4.2% in line with expectations. The data came in line with expectations, which is negative for gold, as it suggests that the Fed will stay on hold for some time, said Marex analyst Edward Meir. Based on the trading of short-term interest rate futures, traders are hesitant to make bets on a Fed third rate reduction by year's-end. Gold is a hedge for inflation and geopolitical unrest. Gold is less attractive as a result of higher interest rates, since it does not yield any return. There was little clarity on trade policy after the call between U.S. president Donald Trump and Chinese leaders Xi Jinping, which took place on Thursday. These are difficult negotiations that won't be resolved over the phone. Meir said that if the headlines on tariffs turn negative, it's good for gold. After hitting a record high of more than 13 years, spot silver dropped 0.3% to 36.04. Silver's gains "appear to have been driven by speculative flow, who saw it as way too cheap in comparison with gold. The break above the 35/oz mark amplify the move," Giovanni Staunovo said, an analyst at UBS. Palladium, meanwhile, rose 3.4%, to $1,039.78, the highest level since March 20, 22. Platinum also rose 3.4%, to $1168.72. Both metals are expected to see weekly gains.
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Copper prices rise in the near future due to falling LME stocks
Due to concerns about the near-term supply of copper at the London Metal Exchange, due to the falling stock levels in LME registered warehouses, contracts with shorter maturities have been priced higher than those with longer maturity. A month ago, the discounts on nearby LME copper against forwards with longer dates were converted into premiums as COMEX prices continued to be higher than those of the LME. The premium of cash LME copper over benchmark 3-month futures The price of a ton was $75 on Thursday, but it jumped to $93 at the close. This is the highest level in over two years. The discount was $63 back in early April. The backwardation is a sign of some sort of shortage. "Normally, it's in contango," explained Dan Smith of Commodity Market Analytics. The total copper stock in the LME's warehouse system has been reduced by half since mid-February, to 132.400 tons. This is the lowest level in nearly a year. The 54,600 tonnes of available stocks (those not marked for shipment) are the lowest level since July 2023. Alastair Muuro, Senior Base Metals Strategist EMEA at Marex, explained that the sharp movement in the spread was due to new cancellations of LME stocks. He said that the premium was lower on Friday because there were no new major cancellations of title documents, such as warrants. Stocks continued to leave LME registered warehouses. Recent mine supply disruptions, traders diverting metals to the U.S. and Washington's investigation into the possibility of tariffs on imports of copper are fueling fears. Despite the fact that there is not a dominant holder of LME copper warrants (0#LMEWHL>) ahead of expiration of contracts on Wednesday the third of each month, one party had more than 90% of cash copper contracts as of June 4, helping to maintain the premium. 0#LMEWHC> (Reporting and editing by David Evans; Polina Devitt)
Governor of Engels says that a drone attack caused a fire at an industrial site in Russia.
The regional governor reported that drones caused a fire at an industrial facility in the southern Russian city of Engels.
A video posted on social media, and confirmed by, showed a fierce fire emitting massive clouds of black smoke.
The Governor Roman Busargin didn't specify which industrial site was the target. In January, the state of emergency in Engels was declared after a Ukrainian drone struck an oil depot serving a nearby Russian base for nuclear bomber aircraft, causing an fire that took several days to extinguish.
Busargin confirmed that a high-rise building was also struck, but no one was injured.
The Ukrainian general staff stated that it had struck Russian airfields and fuel reservoirs in the Saratov region, as well as in the Ryazan region, during an attack overnight on Friday. Saratov includes Engels.
Since the middle of March the United States negotiated a one-month pause on attacks against energy facilities.
A drone strike on March 14 caused an oil refinery in Russia, Black Sea Tuapse, to catch fire. The fire was extinguished after three days.
(source: Reuters)