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Nigeria looks at crude supply reforms for Dangote and other refiners
The local oil refiners association reported that Nigeria was considering changes to its crude allocation rules and pricing to increase 'feedstock' access for its refiners. This includes Dangote Refinery. Dangote said previously that Nigeria's pricing structure added $3 to $4 per bar to feedstock costs because purchases were routed through trading arms of producers. Analysts claim that the pricing of domestic crude oil is more important than availability. This move could boost operations at Africa's largest?refinery of 650,000 barrels per day, Dangote, whose production has been at times constrained by the difficulty in securing enough crude supplies domestically. CORAN, the Crude Oil Refinery Owners Association of Nigeria, said that these proposed changes will be discussed during this week's?regulator led review of Nigeria’s domestic crude supply obligations. This requires producers to?supply local refining facilities before exporting. CORAN spokesperson Eche Idoko said that under a 'proposal, a producer connected to an IOC network could deliver crude to a nearby refining facility, with the volumes being reconciled at the terminal. Second, refiners who lift crude directly from production sites would receive a discount that reflects the freight and handling cost embedded in Brent-linked prices but not actually incurred by them. Idoko said, "This could be win-win situation for both producers and refiners." The Nigerian 'Upstream Regulatory Commission' (NUPRC), released data on Monday that showed producer compliance with the domestic crude oil supply framework increased to more than 90% from less than 40% in the previous quarter. The metric is used to compare actual deliveries with the volumes allotted by regulators, and not refinery demands met. Producers must provide?allocated quantities to local refineries and agree on sales based on a "willing buyer, willing seller" basis. An official at the NUPRC said that the ideas were "on the table", largely due to the requests of refiners in the inland. However, he added that the implementation would require adjustments for crude quality and pricing. (Reporting and editing by Alexander Smith; Isaac Anyaogu)
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Gold returns to 10-week highs as markets prepare for US CPI data
Investors were awaiting key U.S. data on inflation that could change policy expectations. This led to a rise in gold prices?on Wednesday. By 0713 GMT, spot gold had gained 0.9%. U.S. Gold Futures for December Delivery rose by 0.5% to $4464.80. Bullion reached a 10-week-high on Tuesday, before hitting technical resistance around the 100-day moving?average of $4,387. It then closed lower for the second time this month. The primary driver of gold prices is the Fed's reduction in rate hikes, according to Kelvin Wong. He is a senior analyst at OANDA. "In terms of the technical position, we began to?see an upward break last week, above that $4200 level. This?also created positive feedback loops." Bullion's weekly gain was the largest since January after traders reduced their bets about U.S. interest rate hikes due to weaker than expected jobs data. According to CME FedWatch?Tool, traders now price in a 50% probability of a September hike, down from 60% prior to the jobs report. Gold tends to be supported by lower interest rates as it pays no interest. The U.S. Consumer Price Index, due later that day, could reshape interest rate expectations. Fed Bank of Chicago president?Austan G.oolsbee stated that he was more concerned with too high inflation than any weakness in the labour market. Oil prices rose as U.S. and Yemen's Iran aligned Houthis both reported separate attacks against shipping on Tuesday. Meanwhile, prospects for an end to the Iran War appeared dim. Tehran said the Strait of Hormuz would remain closed until Washington accepted?its terms. Spot silver rose 2.1% to $66.04 an ounce. This is below the highest price since Tuesday, June 22, when it was at $66.04. Palladium rose 0.7%, to $1370.52, and platinum gained 0.6%, to $1755.50.
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Heatwaves and drought to be discussed by UK PM at emergency meeting
The British Prime Minister Andy Burnham will chair a meeting on Wednesday of the government’s 'emergency response' committee to discuss measures to combat extreme heat, wildfires, and draught, according his office. Britain is currently experiencing its fifth heatwave in a row. The Met Office in England warned that temperatures will likely reach around 37 degrees Celsius on Thursday, especially in southern and eastern England as well as parts of the Midlands. Fire chiefs have responded to 966 fires in England and Wales, including 185 within the first 10 days alone of August. The farming industry has also warned that production will be affected. A spokesperson for Downing Street said: "We will continue to take the action necessary to keep communities safe and secure, protect water sources, support farming communities, and safeguard the environment." A combination of low rainfall and high temperatures has caused a flash-drought in most of Britain. The Met Office reported that England and Wales had their driest month in 190-years. According to government statistics, around 45 million people live in an area that is 'drought-affected' and 27 millions are restricted in their use of water. Last month, UK health authorities reported that a total of?2,877 deaths in Britain this year were due to heat-related causes. Scientists say that climate change is a major factor in the prolonged dry weather. This has affected agriculture, water supplies for public use and wildlife. (Reporting and editing by Jacqueline Wong, Andrew Heavens, and Akanksha Khaushi in Bengaluru)
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Oil prices rise as supply concerns over the US-Iran agreement increase
Prices of oil rose on Wednesday, as concerns over a Middle East supply disruption were fueled by doubts regarding a U.S. Iran peace deal. Industry data also showed that U.S. crude inventories had risen. Brent futures rose 75 cents or 0.84% to $89.66 per barrel at 0553 GMT. Meanwhile, U.S. West Texas Intermediate crude (WTI), climbed 72 cents or 0.87% to $83.92. Both contracts rose more than $1 in the previous session. The highest closing prices of both contracts were recorded on Tuesday, with an increase of over $1. Prices rose by 5% Monday, as hope for a peace deal between the United States, and Iran began to fade. This was after President Trump demanded that Iran pay compensation for those who died in wars, terrorist attacks, or protests. "The Middle East has become a seesaw, alternating between a 'deal' or a 'war,' keeping oil prices fluctuating between $70 to $90 a barrel," said Priyanka Sachdeva in Singapore, who is the head of Phillip Nova's market insights. Separate attacks by the United States and Yemeni Houthis, who are Iran-aligned, were reported on Tuesday on the shipping in the Strait of Hormuz as well as the Bab el Mandeb?Strait. Mohsenrezaei said that the Strait of Hormuz, which is vital to Iran, would remain closed until the United States reopened it. Accepted Iran's terms to end the war, including releasing its frozen assets and ending other regional conflicts. Trump told a reporter on Tuesday that the United States could "let Iran boop along" or hit them "really, really hard". He has alternated throughout the conflict between threats of an escalation, and claims that peace is imminent. Sachdeva said that some people could benefit from the uncertainty. She said that markets may simply adapt to the weekly narrative change. This creates an environment that is highly volatile but also rich in opportunities for intraday traders and short-term investors. The number of vessels that transited the Strait of Hormuz on Tuesday fell to an all-time low of 8. Before the war, between 125 and 140 vessels passed through this vital waterway every day. A poll on Tuesday showed that U.S. crude oil and fuel inventories were expected to be down last week. According to market sources, American Petroleum Institute data showed that U.S. crude stocks rose dramatically in the week ending August 7, while gasoline inventories and distillate stocks declined. Sources said that crude stocks increased by 9.1 million barrels while gasoline and distillate stockpiles fell by 1.5 million barrels each and respectively 596,000 barrels from the previous weeks. In a note, Haitong Futures stated that the crude build exceeded expectations. If confirmed in the EIA report on Wednesday, it could ease concerns about tight supply. The official numbers of the U.S. Department of Energy's statistical arm, the?EIA are expected at 10:30 am ET. ET (1430 GMT). The EIA predicted that Middle East crude oil supply disruptions would continue through 2027. (Reporting and editing by Sonali Fernandez and Clarence Fernandez; Colleen Waye and Sam Li)
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India's Tata Group shares continue to fall after Chandrasekaran resigns as chairman
Tata Group stocks fell 4% on Wednesday after Tata Sons Chairman N. Chandrasekaran's resignation triggered a stock market sell-off in all of the listed companies. Tata Consultancy Services, India's largest IT exporter, was the worst hit, falling 4.2%. Tata Motors PV, Jaguar?Land Rover parent, fell 2.5%. Other group stocks, including Titan and Tata Steel, each fell about 2%. Chandrasekaran said in a press release that he had resigned from his position as chairman of Tata Sons, but would continue to serve the remainder of 'his current term which ends in February. Chandrasekaran, who joined the Tata Group as a member in 1987, was appointed CEO of TCS in 2009 and then took over as Tata Sons' chair in 2017. In the last year, the conglomerate had to deal with a number of issues, including regulatory scrutiny, price pressures at TCS, and a cyberattack on Jaguar Land Rover, which disrupted production, and affected Britain's economy. Tata Trusts is 66% owned by Tata Sons and controls more than 30 companies within the conglomerate including TCS, Tata Motors, and Air India.
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Gold returns to 10-week highs as markets prepare for US CPI data
Investors were awaiting key U.S. data on inflation that could change policy expectations. This led to a rise in gold prices?on Wednesday. By 0535 GMT, spot gold had gained 0.6% and was trading at $4,391.82 an ounce. U.S. Gold Futures for December Delivery rose 0.2% to $4451.90. Bullion reached a 10-week-high on Tuesday, before hitting technical resistance around the 100-day moving average of $4,387. It then closed lower for the second time this month. The primary driver of gold prices is the Fed's reduction in rate hikes, according to Kelvin Wong. He is a senior analyst at OANDA. "In terms of the technical position, we began to?see an upward break last week, above that $4200 level. This?also created positive feedback loops." Bullion's weekly gain was the largest since January after traders reduced their bets about U.S. interest rate hikes due to weaker than expected jobs data. According to CME FedWatch?Tool, traders now price in a 50% probability of a September hike, down from 60% prior to the jobs report. Gold tends to be supported by lower interest rates as it pays no interest. The U.S. Consumer Price Index, due later that day, could reshape interest rate expectations. Fed Bank of Chicago president?Austan G.oolsbee stated that he was more concerned with too high inflation than any weakness in the labour market. Oil prices rose as U.S. and Yemen's Iran aligned Houthis both reported separate attacks against shipping on Tuesday. Meanwhile, prospects for an end to the Iran War appeared dim. Tehran said the Strait of Hormuz would remain closed until Washington accepted?its terms. Spot silver rose 0.8% to $65.20 an ounce. This is below the highest price since Tuesday, June 22. Palladium rose 0.8%, to $1370.75, and platinum gained 0.2%, to $1748.03.
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Indian shares fall as crude prices rise
Indian?shares dropped in the morning trade of Wednesday as rising 'oil prices' and caution before local and U.S.?inflation?data hit sentiment. As of 10:05 a.m. IST, the Nifty '50 fell 0.43% to?24366.40, and the BSE Sensex fell 0.42%, dropping to 77827.31. 13 of 16 major sectors posted losses. Small-caps and midcaps both fell by 0.3%. Sunny Agrawal is the head of fundamental research for SBI Securities. She said, "Market sentiment remains subdued due to elevated crude prices which keep investors cautious." Oil was hovering around $90 per barrel as the hopes of a possible deal that would bring stability to the Middle East, and reopen the Strait of Hormuz, faded. India is the world's third largest oil importer. The Nifty Metal Index rose by 0.5% as global aluminium prices reached a seven-week peak?on supply concerns in the Gulf and reduced inventories. Aluminum producers Hindalco & National Aluminium led the way, with a rise of?2.5% & 7.3% respectively. State-owned banks increased by 1.8% following a flat closing in the previous session, and a decline of 1.7% on Monday. Godrej Consumer Products fell nearly 9.4% following the abrupt departure of Sudhir Sitapati as its chief executive just a few months after he was reappointed. The consumer index fell 0.8% as a result. After the close of the market, domestic?inflation figures could provide clues about how higher crude oil prices and a weaker monsoon will affect?the economy. The Federal Reserve may make future rate decisions based on the consumer inflation data that will be released later today and the producer price data this week. Individual stocks like footwear maker Bata India rose?3.5% following a 23% increase in profit year-over-year for the June quarter. Zydus Lifesciences, a drug?maker, lost 2.6% during the market hours of?Tuesday after it reported a drop in profit for the quarter ending June. The stock gained?6.4% the previous session. Jefferies flagged U.S. Drug regulator's observations made at a facility as a potential risk to FY2028 earning. (Reporting and editing by Subhranshu Sahu, Harikrishnan Nair and Vivek Kumar M)
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MORNING BID EUROPE - Hot spots sizzle and CPI looms
Rocky Swift gives us a look at what the future holds for European and global markets. Global flash 'points' tried to steal the limelight from an U.S. inflation report, which could set the tone of the September Fed meeting. Houthis launched a deadly attack on an Egyptian ship in the Red Sea, with no end to the war in Iran in sight. North Korea launched another ballistic missile in the ocean and Taiwan protested China’s planned naval exercises off the east coast of the island. Brent crude prices have risen for six straight sessions, the longest run since late April. This shows that central banks are under increasing pressure to control energy-driven inflation. Reserve Bank of Australia held policy rates at a 'hawkish level' on Tuesday. Traders are betting that the Bank of Japan will tighten up again as early as next month. Money?markets are showing a 50/50 chance of an increase. According to a survey, U.S. consumer price index is expected to have risen 0.1% in July after dropping 0.4% in June. The annual CPI inflation rate is expected to drop to 3.4%, down from 3.5% one month ago. The data comes after a poor miss on U.S. Payrolls last Friday. It highlights the?narrow way for Fed officials to balance support for the economy with keeping inflation under control. The Fed rate outlook will have a significant impact on currencies. The yen has given up a lot of its gains. The yen fell?to 159.45 a dollar in Asian trade. This is the lowest since Japan and the U.S. coordinated their intervention to boost the currency up to 155.2 last week. Futures indicate a slight lower opening in European markets. The Euro Stoxx 50 contracts for the entire region are down by 0.06%. German DAX Futures were 0.08% down, while FTSE Futures fell 0.25%. ?U.S. Stock futures and the S&P500 e-minis were up by 0.11%. The following are key developments that may influence the markets on Wednesday: --July CPI for the U.S. and Germany --Q2 results from Bechtle AG Sampo Oyj ABN Amro Bank N.V. The United Kingdom RICS housing survey for July (Reporting and editing by Shri Navaratnam in Tokyo)
As geopolitical tensions increase, oil and gold prices are rising before CPI
As geopolitical tensions increased ahead of the?important U.S. Inflation data, oil and gold prices rose on Wednesday. The yen fell against the dollar after Japan and the United States intervened in the currency market. South Korean stocks led the regional benchmark to rise. The U.S. Yemen's Houthis, who are aligned with Iran, and the U.S. reported separate attacks on shipping. Meanwhile, Asia was shaken by a missile launch early in the morning from North Korea. The markets remained focused later in the day on U.S. Consumer Price Index data for any indications of timing for an upcoming Federal Reserve rate increase.
Kyle Rodda is a senior financial analyst at Capital.com. He wrote that "market sentiment is lukewarm amid lingering geopolitical risks and as market players head to U.S. CPI figures."
He added that the lack of substantive news and progress in the talks, coupled with Iran's reaffirmation of its commitment to control the Strait of Hormuz is keeping oil prices on the rise, while U.S. indexes are on hold.
U.S. crude climbed 0.61%, to $83.71 per barrel. Brent was up 0.62% for the day at $89.46 a barrel. This is the sixth consecutive daily gain. Both benchmarks closed more than $1 higher Tuesday, their highest closing since July 31, and continuing gains after a 5% jump on Monday.
Spot gold increased 0.77%, to $4,400.44 per ounce. Spot silver rose?1%, to $65.30 per ounce. MSCI's broadest Asia-Pacific share index outside Japan rose by 0.8%. Japan's Nikkei stock gauge also rose 0.8% after the market reopened following a holiday. South Korea's Kospi soared 4% on the back of gains in "tech" shares.
The Yemeni transport ministry reported that four crew members from an Egyptian ship were killed by Houthis in an attack on Tuesday. Meanwhile, the U.S. Military said it 'hit a container vessel attempting to sail towards an Iranian port. This is the first time that a Houthi attack on shipping has resulted in fatalities since the Iran War began on February 28, according to Yemen's transport ministry. The U.S. military said it?hit a container ship attempting to sail?toward an Iranian port.
The war is not ending, despite the repeated claims of U.S. president Donald Trump that a deal was imminent. Pyongyang has long condemned major military exercises between Seoul and Washington. A ballistic missile from North Korea was fired days before the joint exercises. Taiwan has condemned the planned naval exercises between a Chinese warship and an Indonesian ship off its east coast.
Money markets indicate that there is a 50-50 chance of an interest rate hike. Financial Times reported that Susan Collins, president of the Fed Bank of Boston, would support an interest rate increase in September if inflation remains high. A poll predicts that consumer prices will rise 0.1% in July, after dropping 0.4% in June. A poll predicts that the annual CPI inflation rate will slow down to 3.4%, from a previous?3.5%.
Skye Masters said in a podcast that "everyone is watching the CPI report." Skye Masters is head of markets at National Australia Bank. If the CPI report comes in at zero I believe you will see a reasonable rise in Treasuries, as the market adjusts to the expectations of the Fed tightening. The markets are increasingly pricing in a 'early rate increase in Japan, which puts pressure on Japan's short-dated bonds. The yield of the 5-year Japanese Government Bond rose to a record-high 2.12%. Meanwhile, the yield for the 2-year Japanese Government Bond reached a high of 1.645%, which is a new 31-year high. The dollar index (which measures the greenback versus a basket currencies) rose?0.07% at 99.88. The euro fell 0.05% to $1.1534 while sterling was flat at $1.3504.
The yen fell 0.08%, to 159.38 dollars per yen. This is still below the highs of last week of 155.20.
Early European trades saw the Euro Stoxx 50 futures flat at 6,573, German DAX Futures slid 0.04% to 26,468, and FTSE Futures slid 0.19% to 10,831. The S&P 500 E-minis were up by 0.13% to 7,757.3. (Reporting and editing by Edwina gibbs, Stephen Coates and Rocky Swift from Tokyo)
(source: Reuters)