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After price drop, OPEC expects a slower growth in oil supply from competitors by 2025
OPEC cut its forecast on Wednesday for the growth of oil supply this year from the United States, and other producers outside OPEC+. It also said that it expects lower capital expenditures following the decline in oil prices. OPEC reported in a report that the supply from countries outside of the Declaration of Cooperation – the formal name of OPEC+ – will increase by 800,000 barrels a day in 2025. This is down from the forecast of 900,000. Slowing down the growth of supply outside OPEC+ (which includes the Organization of the Petroleum Exporting Countries, Russia, and other allies) would help OPEC+ balance the market. In recent years, the rapid growth of U.S. shale oil and other countries has put pressure on prices. The recent pressure on oil prices has been caused by OPEC+ increasing production in May and early June faster than originally planned and U.S. president Donald Trump's tariffs. In its report, OPEC stated that it expects investment in exploration outside OPEC+ to decrease by around 5% per year in 2025. OPEC reported that in 2024 investment increased by $3 billion on an annual basis to $299 billion. "The decline in upstream E&P investments in oil will pose a challenge to production levels by 2025 and 2026, despite industry efforts to improve efficiency and productivity," OPEC stated in its report. OPEC predicts that the United States will continue to be the main driver of supply growth. However, it expects U.S. oil production to increase by around 300,000 bpd in this year. It forecast a growth of 400,000 barrels per day last month. After a reduction last month, it left unchanged its forecasts of global oil demand growth in 2025-2026. The impact of the first-quarter data on demand and trade tariffs was cited. The group welcomed the trade agreement signed by China and the United States this week. OPEC stated that "the 90-day agreement between the U.S.A. and China indicates the potential for longer-lasting agreements, likely supporting a regularisation of trade flow but at potentially higher tariff levels compared with pre-April escalations." (Reporting by Alex Lawler, Editing by Barbara Lewis.)
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The dollar is softening on the back of tariff truces and muted inflation.
The European stock market was steady on Wednesday, as the markets took a break after a strong rally fueled by easing global tensions. Meanwhile, the dollar continued its losses from the previous day as the Federal Reserve kept the possibility of rate cuts open. Stocks in Asia rose overnight, while U.S. futures stocks were edging higher after the S&P 500 entered positive territory for the entire year on Tuesday. Investors have driven global equity markets higher as a truce appears to be in place in the trade war between China and the United States, even though European shares were on hold on Wednesday. Lars Skovgaard is a senior investment strategist with Danske Bank. He added, "I find it hard to believe that we will return to the extreme political noise." The STOXX 600 index in Europe was little changed yesterday, after a recent rally. It has risen over 17% from its low on April 9th, the day U.S. president Donald Trump announced that he would suspend most reciprocal tariffs against U.S. trading partner. The equity futures market pointed to Wall Street starting the year with a modestly better start. The MSCI broadest Asia-Pacific index outside Japan rose by 1.6%. Japan's Nikkei fell 0.1%. Meanwhile, the Topix, a broader measure, ended a winning streak of 13 days, which was its longest in almost 16 years. Hong Kong's Hang Seng index rose 2.3% after Chinese ecommerce retailer JD.com announced strong results. Tencent, China’s largest tech company, reported a 13% increase in revenue for the first quarter on Wednesday. This week, the focus will be on Alibaba's earnings on Thursday. Investors who were worried about inflationary effects of U.S. Tariff Policies, which severely undermined expectations of Fed rate reductions in the near future, also found some relief from data on Tuesday that showed softer than expected U.S. Consumer inflation. Although traders expect the inflation rate to rise as tariffs increase import costs, there is still uncertainty about the future as Washington continues to negotiate with its trading partners. Wei He is a China economist with Gavekal. He said that the U.S. tariffs against Chinese products are still higher than they used to be a few months ago. There's still a lot of uncertainty in the future. In an interview with CNN on Tuesday, Trump said he would be willing to deal directly with Chinese President Xi Jinping over the details of a new trade agreement. The "potential" deals that Trump has been touting with India, Japan and South Korea have not yet materialized. Assessing Tariff Impact The Fed warned of increasing economic uncertainty and indicated that it was prepared to wait until the U.S. Tariffs are fully assessed before reducing interest rates. Jerome Powell, the Fed chair, is set to make remarks on Thursday. The U.S. Dollar, which has been hammered recently due to economic and political uncertainty, fell 1% against yen, reaching 146.05 and dropped 0.3% against euro. The dollar index fell 0.4%. This follows a previous 0.8% decline. Bank of America’s Global Fund Manager Survey (FMS) revealed on Tuesday that global asset managers had their largest underweight position against the dollar in nearly 19 years as Trump’s trade policy reduced investor appetite for U.S. investments. Retail sales figures for April, due Thursday, will be the next big indicator of the health of the U.S. economy. On the same day, Russia and Ukraine will hold talks in Istanbul in hopes of reaching a ceasefire after three years in Europe's deadliest conflict since World War Two. U.S. crude oil fell 1.3%, to $62.84 per barrel, after hitting a record high of two weeks in the previous session. Gold spot fell 0.3% per ounce to $3,237 as trade tensions eased and its appeal as a safe haven was weakened.
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EU proposals to curb more green rules for farming subsidies
As part of its plans to reduce regulations and paperwork, the European Commission on Wednesday proposed a further easing of environmental conditions that are tied to EU's massive farming subsidy program. Last year, farmers in Europe used their political power to protest against issues such as strict EU regulations and cheap imported goods. The EU responded by reducing some of the green conditions that were attached to farm subsidies. The Commission announced on Wednesday that it would go further in its plans to change the green conditions, other rules, and to limit on-site inspections to just once a year. It said this could save farmers as much as 1.58 billion Euros per annum. Around 387 billion euro is the value of EU Common Agricultural Policy's (CAP) farming subsidies, which makes up around a third (2021-2027) of the total budget of the EU. The EU will also double the maximum annual lump sum payment they can receive, from 2,500 Euros to 2,500 Euros. The EU Agriculture Commissioner Christophe Hansen stated that "the Commission is on the side of farmers and we do our best to reduce bureaucracy, so they can concentrate on what they are best at: producing food for us all while protecting our resources." The EU encouraged farmers to conserve permanent grasslands to store CO2 and other changes allow farms to remove 10% of them, instead of 5%. Farmers will be able receive more subsidies to meet their existing obligations to protect peatlands and wetland. This proposal will also allow countries to respond more quickly to natural disasters such as droughts and heatwaves that many European farmers face more often due climate change. These proposals are part of the "simplification-omnibus" series from the EU, which aims to reduce paperwork and policies for European companies that struggle to compete against China and America, where President Donald Trump has aggressively cut regulations. The EU would be able, as well, to make more significant changes to its national plans to distribute EU-faming subsidies without having to seek EU approval first. Now, the EU and its legislators must negotiate and approve these proposals. (Reporting and editing by Ed Osmond, Kate Abnett)
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The EU must reserve over 10 billion Euros for key minerals, according to the agency's head
The European Union must create funds worth more than 11 billion euros to encourage investment in exploration, mining, and recycling of key raw materials. This is what the head of a EU-funded agency on key minerals told me on Wednesday. The bloc has set 2030 goals for 34 minerals, such as copper and lithium, that are required for its green transformation - to mine 10% and recycle 25% of its needs and process 40% in Europe. The directive also stipulated that no single country could supply more than 65 percent of any given mineral. The EU is more dependent on China than this for many minerals. Bernd Schaefer of EIT RawMaterials said that the bloc should set aside money for mining and recycling in its budget for the next seven years, starting 2028. In an interview, he said that the project should start off with at least 2 or 3 billion euros. It has the potential to grow significantly. Schaefer said that the EU needed a fund for exploration of about 10 billion euro to find out what minerals it could mine. Combining private funds with public investment, the total amount of money invested could reach around 100 billion euro. Schaefer stated that the bloc must assess future demand and supply of each mineral, and translate general alliances with partners internationally into tangible volumes in a time when geopolitical tensions are increasing. Schaefer stated that "the Americans are very hands-on in getting things on the road." It should be a warning to Europe that it must act immediately. He said that the EU's raw material targets were not taken into account when EU countries planned to increase their defence spending. This meant Europe needed more minerals like vanadium and titanium. The volumes aren't huge but the sourcing is more sensitive and there is an increased sense of urgency compared to raw materials for energy or mobility.
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Uniper's executive believes that a gas price of 25 euros/Mwh would boost investment.
A senior executive from Germany's Uniper utility said that gas prices of around 25 euros ($28.13), compared with 34 euros at present, may be required to stimulate future investment in the European Economy. Gas prices reached a peak of nearly 350 euros per Megawatt Hour (MWh) in 2022. Since then, dozens of companies across Europe have shut down factories and reduced activity and job opportunities as high gas costs undermined their ability to compete. Carsten Poppinga said, "I am optimistic that gas prices of around 25 (euros/MWH), might stimulate some investments in the European Economy going forward if you can show that this price level can be stable", at the Flame Gas Conference in Amsterdam. Many businesses continue to maintain their lower demand and manufacturing activity. This has negative implications for Europe’s sluggish economic growth. Poppinga stated that Europe would continue to require liquefied gas (LNG), even if the demand decreased. He added that, while the continent was trying to diversify its supply, it is expected that a large part of the supplies will come from the United States. He said that U.S. LNG is the most cost-effective way to get gas into the European Union. ($1 = 0.8889 euro) (Reporting and editing by Louise Heavens, Elaine Hardcastle and Marwa Rashed)
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Congo may impose more cobalt curbs after four-month export ban
On Wednesday, the head of an agency of government said that when its current four-month ban on cobalt exports ends, it may be necessary to impose strict limits on exports. Congo, world's largest producer of cobalt imposed an export ban on the metal in February, to try and revive the prices. The metal is used to make batteries for electric cars and mobile phones. Patrick Luabeya said at a conference held in Singapore, that the Congo will implement more restrictions due to the high stock levels in the country and elsewhere. He claimed that the stocks which have pushed down prices "haven't yet been exhausted, although they have been reduced significantly". Luabeya stated that the next government decision "will invariably imply a strict restriction of exports, in whole or part, until market equilibrium is achieved with respect to supply and demand for cobalt." He added that the agency will consult with industry participants in June about the ban. Kizito pakabomba, the Mines Minister, said earlier in a speech that he was reviewing the ban on exports of cobalt. He did not provide any further details. He said that the country was in discussions with key stakeholders, such as miners Glencore and ERG, about its next steps. Congo banned cobalt exports for four months in February to combat the oversupply on the international battery metal market. The country's premier announced in March that it would impose export quotas for cobalt after the ban on exports. He also plans to partner up with Indonesia, a major producer, to manage the global supply and price. Hongmei Li reported from Singapore, Felix Njini from Johannesburg and Tony Munroe edited the story.
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HitecVision acquires a 50% stake in TotalEnergies' Polish biogas company
TotalEnergies announced on Wednesday that it has signed an agreement with Norwegian investment company HitecVision to sell 50% of Polish producer Polska Grupa Biogazowa. The French energy company stated that the agreement represents a value of 213.6 million euros (190 million Euros). Stephane Michel, TotalEnergies' President of Gas, Renewables & Power, said that the deal would help Polska Grupa Biogazowa continue its growth in Poland, where biogas development is booming. Erlend Elliottsen, CEO of HitecVision and Managing Director, said that the companies have complementary skills which they will use to "scale" PGB in the coming years, through greenfield projects, as well as M&A. The European Union allows countries and companies, including transport sectors, to use biogas in conjunction with wind and solar energy and to mandate its usage via quotas. Crystal Union, a sugar producer, bought a 10% stake from Total in its BioNorrois unit last year. The French company plans to produce 100 Terawatt Hours (TWh), up from 1.2 in 2024. Biogas has a similar chemical composition to the natural gas that is drilled from the ground, but it is produced by animal wastes and crop residues. The HitecVision agreement is subject to government and regulatory approvals.
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Base metals are firmer on the back of a weaker dollar and easing US-China tensions.
The copper price rose on Wednesday, as investors gained confidence that a global economic recession can be avoided and the demand for metals dependent on growth will continue. The benchmark copper price on the London Metal Exchange was up 0.2% to $9,618 per metric tonne by 0955 GMT, after reaching $9,642 at its highest level since April 3. Tom Price, Panmure Liberum's analyst, said that investors have shifted away from gold and other safe-havens to the industrial sector. "However they do not engage the market vigorously at this stage, but remain very cautious for the time being." "They are curious to see what (U.S. president Donald) Trump will do next," said he. The U.S. Dollar extended its losses after overnight experiencing its largest decline in over three weeks, as weaker than expected U.S. consumer price inflation data strengthened the case for Federal Reserve ease. Other currency holders will find metals priced in dollars more affordable, and the prospect of lower interest rates will support demand for industrial metals. Market attention is still focused on the U.S. investigation into possible new tariffs on imports of copper that has been ongoing since February. The premium of COMEX Copper Futures over the LME Benchmark is high and deliveries have already been made to COMEX Copper Stocks. The premium peaked at 18% in March and is now down to 10%. Copper inventories have risen 77% to 165 112 tons since the end of February. Morgan Stanley stated in a report that "this reflects both tariff timing uncertainty and front-loading." The U.S. imported 180,000 extra tons of copper in the past seven weeks. Only 65,000 of those have been recorded on the COMEX inventories. "With more to come" says the report, "leaving a buffer of tariff-free metal". Other metals include aluminium, which rose by 1.3%, to $2.521.5 per ton. Zinc also increased, adding 1.9%, to $2.754. Lead gained 0.2%, to $1.992.5. Tin climbed 0.4%, to $32,805, and nickel grew 0.9%, to $15,860. Reporting by Ashitha Shivprasad and Polina Devitt in London, Editing by Barbara Lewis
Spot prices fall on increasing renewable supply
The European spot electricity prices for Thursday dropped on Wednesday as the wind supply in Germany is expected to increase sharply while demand is set to decline.
German baseload for the day ahead fell by 2.9%, to 65.90 Euros per megawatt-hour (MWh), at 0948 GMT.
The French baseload for the day ahead has fallen by 63.2%, to 13.25 Euro/MWh.
LSEG analyst Florine Engl stated that the residual load in Germany is decreasing on Thursday as a result of an increase in the wind power supply. Forecasts indicate imports into the country all day long, she said.
LSEG data indicated that German wind power production was expected to increase by 6.3 gigawatts to 17.7 GW. French wind power is projected to rise by 4.5 GW and 6.1 GW.
LSEG data shows that solar power production in Germany has decreased by 2.9 GW and now stands at 16.5 GW.
LSEG data shows that the power demand in Germany is expected to drop 440 MW on Thursday from its level of Wednesday to 53.6 GW. The French consumption will increase 1 GW to reach 42.5 GW.
The German baseload for the year ahead was down 0.6% at 89.60 Euros/MWh. Baseload for French 2026 was 0.5% lower at 59.50 euro/MWh.
Benchmark European carbon permits fell 0.6% to 72.45 Euros per metric tonne.
Sara Aagesen, energy minister, said that the massive grid disruption in Spain and Portugal began on the 28th of April in southern Spain, around Granada and Badajoz, and Seville. This was the first time specific locations were identified. Forrest Crellin, Krishna Chandra Eluri and Krishna Chandra Eluri are responsible for reporting.
(source: Reuters)