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Oil prices fall on weak China demand and geopolitical uncertainties
The oil prices dropped on Tuesday as a result of uncertainty surrounding the U.S.-Iran nuclear negotiations and Russia-Ukraine talks. Meanwhile, new government data revealed a cautious outlook for China's economy, which is the world's largest crude importer. Brent futures fell 42 cents or 0.6% to $65.12 per barrel at 11:02 am EDT (1502 GMT), whereas U.S. West Texas Intermediate crude (WTI) dropped 26 cents or 0.4% to $62.43. Iran's Ayatollah Khamenei, the Supreme Leader of Iran, said that U.S. demands for Tehran to stop enriching its uranium were "excessive" and "outrageous," and expressed doubts about whether negotiations on a new deal in nuclear energy will be successful. According to U.S. Federal Energy data, Iran will be the third largest crude oil producer in the Organization of the Petroleum Exporting Countries group (OPEC) in 2024 after Saudi Arabia and Iraq. Alex Hodes, StoneX analyst, said that a deal between Iran, the U.S., and other countries would allow Iran's oil exports to increase by 300,000-400,000 barrels a day if sanctions are eased. StoneX analyst Alex Hodes said that the European Union and Britain did not wait for the U.S. before announcing new sanctions against Russia. This was a day after U.S. president Donald Trump met with Russian President Vladimir Putin, but without a ceasefire promise in Ukraine. Ukraine wants to know more Group of Seven The (G7) advanced economies will reduce their price caps on Russian oil shipped by sea to $30 per barrel. The current G7 price cap is imposed over Russia's war on Ukraine The price of a? is $60. It does not appear likely that the Russia/Ukraine conflict will be resolved immediately. While it may lead to more Russian oil on the market in the future, this is uncertain and out of time as Russia still has its obligations to OPEC+, said Bjarne Shieldrop. A peace agreement between the two countries to end their war Russia The Ukraine and Russia could enable Moscow to export even more oil. Russia is a part of the OPEC+ countries. Other producers. The second largest crude oil producer in the world was Russia. According to U.S. Federal Energy Data, in 2024. CHINESE DATA On Tuesday, at least seven Federal Reserve officials will speak. Traders expect that the U.S. Central Bank will deliver at least two 25 basis-point rate cuts in 2025. The first is expected to be in September. Interest rates are used by central banks such as the Fed to control price inflation. By lowering consumer borrowing costs, lower interest rates can boost economic growth and oil demand. Analysts expect a decline in fuel demand in the world's largest oil importer. Data showing a deceleration in industrial output and retail sales has put more pressure on oil. Goldman Sachs, however, pointed to an increase in China trade late Monday. The analysis did not take into account a 90 day pause between the U.S. In Germany, Europe's largest economy, Finance Minister Lars Klingbeil has promised to take swift measures in order to boost investment in the face of global trade uncertainty. OIL INVENTORIES On Tuesday and Wednesday respectively, the American Petroleum Institute (API), a trade group, and the U.S. Energy Information Administration will release data about U.S. crude oil inventories. Analysts predict that energy companies will have removed about 1.4 millions barrels of crude oil from U.S. stocks during the week ending May 16. This would be the third decrease in four weeks. The same week last season, there was an increase in barrels of 1.8 millions barrels. Over the past five-year period (2020-2024), the average decline has been 3.5 million barrels. (Reporting and editing by Scott DiSavino and Trixie Yap; Louise Heavens, Clarence Fernandez and Paul Simao).
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US stocks fall, Treasury yields increase; Trump tax-cut plan in sight
The major stock indexes showed mixed results on Tuesday with U.S. shares easing, but U.S. Treasury Yields rising as investors focused their attention on the critical U.S. Presidential vote that took place in Washington. Donald Trump Tax cuts for all. Go to Capitol Hill urged Republican legislators to settle their differences on a bill to extend tax cuts for 2017 from Trump's initial term. Investors worry that the bill could increase the U.S. deficit faster than expected. Moody's Investors Service, a credit rating agency in the United States, downgraded its credit rating on Friday evening. This sparked concerns over the U.S. government's debt. "With the Republican Bill still in the air, it's just enough to make people a bit more cautious, and maybe use this recent rally to trim a bit of their portfolio (of stocks)," said Rick Meckler. S&P 500 registered a six-day streak of gains on Monday. Investors awaited comments from Federal Reserve officials. Traders currently expect at least two rate cuts of 25 basis points from the Fed before the end 2025. The Dow Jones Industrial Average dropped 74.64, or 0.1%, to 42.717.94. The S&P 500 declined 13.78, or 0.2%, to 5,950.01, and the Nasdaq Composite was down 64.75, or 0.3%, at 19,150.81. Home Depot's sales for the first quarter were better than Wall Street expectations, but the retailer was still down 0.1% compared to the overall market. European stocks edged Utilities and telecom companies lead the gains. MSCI's global stock index rose by 0.11 points or 0.01% to 882.50. The pan-European STOXX 600 rose by 0.68% while Europe's FTSEurofirst 300 rose by 14.86 points or 0.68%. Germany's DAX reached a new record high. China's blue chip index rose 0.54%, after the central bank of China cut its benchmark lending rates for first time since October. The yield on the benchmark 10-year U.S. notes increased 1.2 basis points from late Monday to 4,487%. After touching 5.037% Monday, the 30-year bond yield has gained 4 basis points and is now at 4.981%. The yields of Japanese government bonds with a super-long maturity date reached all-time records on Tuesday. A poor auction of securities with a 20-year maturity was the immediate cause of this. The Japanese yield on the 20-year bond JP20YTN=JBTC> has jumped up to 15 basis points, reaching 2.555%. This is its highest level since 2000. And, for the 30-year bond, it reached a new record of 3.14%. Investors waited for more Fed officials to comment before the U.S. Dollar declined. The dollar fell against the yen in late morning trading. It reached a two-week low at 144.095 yen. Last down 0.1%, at 144.64yen. It has fallen in five out of six sessions. The Australian dollar plunged against the U.S. Dollar after the Reserve Bank of Australia lowered benchmark interest rates 25 basis points. The Aussie last fell 0.9% to US$0.6401. Canada's inflation rate slowed to 1.7% annually in April, which was higher than the 1.6% economists had predicted. The Bank of Canada closely monitors two of the three key measures of inflation. They also reached 13-month highs due to underlying price pressures. U.S. crude dropped 0.69%, to $62.26 per barrel. Brent was down to $65.11 a barrel on the same day. Spot gold increased by 0.42%, to $3243.21 per ounce.
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Greek power utilities' first-quarter earnings hit by challenging renewables conditions
Public Power Corporation, Greece's largest electricity power company (PPC), reported on Tuesday a marginal drop in its first-quarter core profit adjusted. The reason given was the adverse weather conditions that affected renewable energy production. This decline was also affected by the lower revenues from distribution activities in Greece, and the seasonal profitability for distribution. PPC expects that this trend will reverse itself in the second half. The adjusted earnings before tax, depreciation and amortization (EBITDA), for the first three months of this year, were 453 millions euros ($510.12), compared to 459 million euro a year ago. In a press release, Chairman and CEO Georgios Stassis stated that "despite adverse hydrological conditions and wind conditions which affected renewables output during the first quarter as well as the seasonality of the distribution activity our performance remains resilient" and on target. Total investments by the utility in the first three months reached 0.48 billion euro, with an important 89% of that amount allocated to projects involving renewable energy sources (RES), flexible production, and distribution of electricity. PPC reported that its installed capacity for RES was 6.2 GW by the end of the third quarter. This is up from 4.7 GW in the same period last year. PPC, the company that operates Greece's main grid, said in its 2025-2027 Plan it planned to spend 10 billion Euros by 2027 to upgrade its distribution network and increase its renewables power to 11.8 GW. The company reiterates its forecast for 2025. It expects an EBITDA adjusted of 2 billion euro, a net profit adjusted after minorities over 0.4 billion euro, and a distribution of dividends of 0.60 euros per share.
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EU: Extreme weather damages EU farmers by 28 billion euro per year
An EU-backed study published on Tuesday found that the agricultural sector of the European Union loses 28.3 billion euro ($31.9 billion) per year due to extreme weather conditions made worse by climate changes. These losses, which equal 6% of EU annual crop and livestock production, are largely uninsured. Only 20-30% farmers' losses due to climate change are covered by public, mutual or private insurance, according to a report by Howden, an insurance broker. The report was backed by both the European Commission and European Investment Bank. Christophe Hansen, EU Agriculture Commissioner, said: "We must do something to cover any remaining losses." He encouraged countries to use EU farm subsidies to reduce climate risks. The farming industry in Europe is not only affected by climate change, such as droughts and extreme rain, but also puts pressure on the environment through methane pollution, fertiliser pollution, and industrial water use. Influential agriculture lobby groups also took aim at Europe's environmental agenda last year, staging protests for months to weaken the policies. Last week, the European Commission announced that it would be easing some of the environmental requirements for EU farm subsidies and also proposing new rules to accelerate emergency funding to farmers affected by natural disasters. The analysis found that farmers' crop losses could increase up to 66% if climate change is not addressed. At present, drought is responsible for more than half of all agricultural losses. The analysis found that in 2050, if the drought in southern Europe is particularly severe, losses could reach 20 billion euros in Spain and Italy. The European Investment Bank (the EU's lending arm) said that the analysis will guide its efforts to help farmers. This includes financing investments such as irrigation and providing loans and guarantee. According to a draft of the European Commission's water strategy that was leaked last week, the EIB plans to also increase its expenditure on water projects. This could be beneficial to farmers. A spokesperson for the EIB did not respond immediately to a question about this funding.
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As the dollar continues to fall, geopolitical uncertainties persist.
Tuesday, gold prices increased by more than 1% as the U.S. Dollar continued to weaken. Meanwhile, uncertainty remained over U.S. Tariff Policy and the Russia-Ukraine truce. Gold futures in the U.S. were up 1.5% at $3283.10 an ounce at 1049 ET (1449 GMT) while spot gold rose 1.6% to $3280.32. The dollar fell again on Tuesday due to the Federal Reserve's cautious stance on the economy. It had already fallen on Monday, after the ratings agency Moody's had downgraded U.S. sovereign credit rating last week. The dollar is weaker, making bullion more affordable for buyers of other currencies. There's still some uncertainty on the market. David Meger is director of metals at High Ridge Futures. He said that the Moody's rating downgrade and the weakening dollar has supported the precious-metals complex in general. Moody's has downgraded America from "Aaa to "Aa1", citing concerns over the growing national debt. Fed officials spoke on Monday, taking into account the implications of the downgrade and the unsettling market conditions. They continued to navigate a uncertain economic climate. Bullion is a good investment during times of geopolitical or economic uncertainty. "Gold will trade between $3,000 to $3,500 throughout the rest of the year." According to Edward Meir, Marex analyst, there is a short-term chart resistance at the $3.270 mark. Meger stated that the ongoing tensions between Russia, Ukraine and other countries are more important for platinum and palladium. This is because no deal would mean a lesser supply of these metals on the market. Russia is the second largest platinum and palladium producer in the world. The EU and Britain announced sanctions against Russia without waiting for the U.S. To join them on Tuesday, a day following President Donald Trump's meeting with Vladimir Putin in which he was unable extract a promise of a ceasefire for Ukraine. Platinum rose 3.8% to $1 035,53, its highest level since October 2024. Palladium climbed 2.7% to $1,001.25 and reached its highest level since February 14, a 3.8% increase. Spot silver increased 1.3% to 32.78 dollars. (Reporting by Sarah Qureshi in Bengaluru; Editing by Jan Harvey)
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Norway's Norges will vote for three Elliott nominations in Phillips 66 Board fight
Norway's sovereign fund has said that it will vote for three out of Elliott Investment Management’s four directors in a bitter fight over board seats at Phillips 66. Norges Bank Investment Management - one of Phillips 66’s 10 largest shareholders - detailed its plans in a table posted on its website. It said it would support former ConocoPhillips executives Brian Coffman, Sigmund Cornwallelius, and former Targa Resources executive Michael Heim. Phillips 66 shareholders will decide on the winner of Wednesday's annual meeting. Elliott wants to see shareholders elect four new directors who will help to overhaul corporate strategy. Elliott is pushing for the company to sell off assets, improve its performance in its refining operations and enhance its corporate governance. Phillips 66 tells investors that its strategy works and that none the activist hedge fund director candidates is needed. Three prominent U.S. advisory firms, Institutional Shareholder Services (ISS), Glass Lewis and Egan-Jones, who often make voting recommendations that influence shareholder decisions on controversial issues such as board elections, have thrown their support behind Elliott. They urged investors elect three, if not four, of the hedge funds candidates. (Reporting and editing by Mark Porter, Paul Simao, and Svea Herbst Bayliss)
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Kazakhstan's oil production rises 2% this May, defying OPEC+
A source in the industry said that Kazakhstan's oil output increased by 2% during May. This is a significant increase, which defies the pressure of OPEC+ to reduce Kazakhstan's production. Kazakhstan has consistently breached the OPEC+ production quotas. The country cites its difficulty in telling Western oil giants such as Chevron or ExxonMobil to reduce their plans. OPEC+ has confirmed that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a collective known as OPEC+ decided to increase production in order to punish those members who did not adhere to the curbs. This was done to add downward pressure on the international oil price. Kazakhstan's oil output fell 3% in the month of April, but it still exceeded its OPEC+ quota. The energy ministry of the country did not reply to a question about production figures for May. Separately, it said in an e-mail that the production of the largest Tengiz oil field had reached the planned level. This meant the production for the country would not be increasing this year. The emailed comments continued, "Kazakhstan takes all measures to comply OPEC+ obligations as well as compensate for excess production." According to an industry source who spoke under condition of anonymity because of the sensitive nature of the situation in Kazakhstan, the country's crude production, excluding the gas condensate produced, averaged 1,86 million barrels of oil per day from May 1-19. This included 932,000 bpd for Tengiz. The output of Kazakhstan was reduced from 1.88 millions bpd to 1.82 million in March. Kazakhstan's OPEC+ quota rose from 1.473 to 1.486 millions bpd under the latest OPEC+ deal. The energy ministry of the country has stated that it is committed to OPEC+. It said that it would compensate for its overproduction by reducing the cumulative production by 1.3 millions bpd before April 2026. In addition, it stated it would put national interests ahead of those of OPEC+ in deciding on the production levels. Western oil majors such as Shell, TotalEnergies, Eni, ExxonMobil, and Chevron are involved in Kazakhstan oil projects. "We expect Kazakhstan to stabilize its production at around 1.8m bpd. Abu Dhabi Commercial Bank stated in a report that officials have indicated limited flexibility to lower output due to the fact that international firms control the field. (Reporting in Moscow, with additional reporting from Dmitry Zhdannikov. Editing by Guy Faulconbridge & Barbara Lewis).
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Ukraine wants G7 to lower price cap on Russian oil to $30 per barrel
Andriy Sibiha, the Ukrainian Foreign Minister, said that Ukraine wanted the Group of Seven Advanced Economies to lower its price limit on Russian oil shipped by sea to $30 per barrel. The G7's current price cap is $60 per barrel. This was imposed because of Russia's conflict in Ukraine. Sybiha, a journalist from Brussels, told reporters that the reasonable price cap for oil is 30 dollars. The European Union (EU) and Britain (UK) announced new sanctions against Russia on Tuesday. They said that the sanctions would target the "shadow fleet" in Moscow of oil tankers, financial firms and other companies which have allowed it to avoid being affected by the other sanctions imposed due to the conflict. Britain and the EU also said that they would work together to lower the cap on oil prices, which now imposes a much smaller discount on Russian crude oil due to the fall in global oil prices this year. EU officials who were briefed about the discussions have stated that the EU will suggest a price limit of $50 per barrel. Separately, Ukrainian President Volodymyr Zelenskiy stated that he spoke with European Commission President Ursula von der Leyen Tuesday and expressed his gratitude for the recent sanctions. "Russian oil and energy trade infrastructure are the most painful to Russia and, therefore, most useful for peace," wrote he on Telegram. The more pressure on Russia the more motivation Moscow will have to make real peace, he said. This was a day after U.S. president Donald Trump met with Russian President Vladimir Putin, but without a promise for a ceasefire to be made in Ukraine.
Orsted shares benefit from Equinor's US Offshore Wind win
The shares of Orsted, an offshore wind developer in Denmark, rose by 15% on Tuesday following the U.S. Administration's revocation of an order to stop work on a similar project undertaken by Equinor. This eased concerns about the Danish company’s U.S. development projects.
Equinor announced late on Monday that the Trump administration lifted an order to stop work on its Empire Wind project offshore wind farm in New York. This was a relief for both the Norwegian company, and offshore wind energy in the United States in general.
Equinor's share price, which is largely dependent on oil and natural gas, rose 1.5% to 0948 GMT. Orsted shares rose 15.1%. Equinor owns a 10% stake of Orsted.
"We see a positive read-across here for Orsted as the Empire Wind stop-work order significantly raised market concerns about permitting/cancellation risks around Orsted's under-construction portfolio," analysts at Jefferies said in a note.
They added that these concerns played a major role in reducing Orsted's value by 40%, or about $10 billion since the U.S. elections.
Orsted is constructing the Revolution Wind project and Sunrise Wind project off Rhode Island, New York and Connecticut.
Analysts at JPMorgan stated that "the reversal last night of the stop-order came as a huge surprise and will probably result in a very significant outperformance for Orsted today. This is exacerbated by short positions currently on the stock."
Orsted still has many other problems to deal with.
JPMorgan stated that this includes tariffs and cost concerns in the U.S., as well as the recent suspension of the British Hornsea 4 development project. (Reporting and editing by Nora Buli)
(source: Reuters)