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Demand for crude oil is strong as the drawdown of US crude stocks signals a rise in prices
Oil prices edged higher on Thursday, continuing gains made the day before. A larger-than expected drawdown in U.S. crude inventories signaled a strong demand for oil, but investors were cautious over the Iran-Israel truce and the stability of the Middle East. Brent crude futures were up 12 cents or 0.2% to $67.80 per barrel at 0030 GMT. U.S. West Texas Intermediate crude (WTI), which is a blend of U.S. West Texas Intermediate and Brent crude, gained 20 cents or 0.3% to $65.12. The benchmarks both rose by nearly 1% Wednesday after recovering from losses in the first part of the week. This was due to data showing a resilient U.S. market. Yuki Takashima is an economist at Nomura Securities. He said that some buyers favor the solid demand shown by the falling inventory in U.S. Weekly statistics. He said that investors are still nervous and want to know the status of the ceasefire between Iran and Israel. The market's attention has now shifted to the OPEC+ levels. Takashima predicted WTI would return to its pre-conflict range of $60-$65. Energy Information Administration (EIA), on Wednesday, reported that U.S. crude and fuel inventories decreased last week due to increased refining and demand. The EIA reported that crude inventories dropped by 5.8 millions barrels during the week ended June 20. This was more than analysts expected in a poll, which predicted a draw of 797,000 barrels. The gasoline stocks fell unexpectedly by 2.1m barrels, as compared to forecasts of a 381,000-barrel increase. This was despite the fact that gasoline supply, which is a proxy for consumer demand, reached its highest level since December 2021. Igor Sechin said on Saturday that OPEC+ - which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia - could accelerate the production increases by a year. In the meantime, U.S. president Donald Trump has hailed a swift end to the war between Iran and Israel. He said Washington will likely ask Tehran to commit to ending its nuclear ambitions during talks with Iranian officials in Tehran next week. Trump said that on Wednesday the U.S. had not ceased its maximum pressure against Iran, including restrictions on the sale of Iranian oil. However, he indicated a possible easing in enforcement for the sake of the rebuilding process. (Reporting and editing by SonaliPaul; Yuka Obayashi)
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US foreign investment slump: anomaly or warning? McGeever
The 'dedollarization' debate focuses a lot on foreign exposures to U.S. stocks and bonds. Investors shouldn't ignore the foreign direct investment flows. This is the traditional sticky capital which may be sending out warning signs. Foreign direct investment (FDI), is when an overseas entity purchases the assets or increases its holdings of a foreign company. This can be done by purchasing machinery, plants, or a controlling interest. FDI, therefore, is a more stable investment than portfolio flows. Donald Trump, the U.S. president, says that he has brought record-breaking foreign investment to his country. The White House website has a "non comprehensive running list" of new U.S. investments since Trump began his second term. The total running is in the trillions and includes pledges made by several foreign countries. The United Arab Emirates (UAE), Qatar, Japan, and Saudi Arabia have all pledged more than $4 trillion of investments in the United States. Trump said during his trip to the Middle East in the last month that the U.S. was on track to receive $12-13 trillion in investments from around the world. This includes "projects mainly announced... and some which will be announced very soon." In time, these flows will be revealed in their entirety. Official figures released on Tuesday revealed that FDI fell to $52.8 Billion in the first three months, the lowest level since the fourth quarter 2022. This is well below the average quarterly figures of the last 10 and 20 year. Commerce Department figures showed that U.S. current-account deficit widened in the third quarter to a record $450,2 billion, or 6%, of U.S. Gross Domestic Product. FDI inflows only covered 10% of this shortfall. Should the Trump Administration be concerned? Tariff Distortions The short answer to this question is most likely not, or at least not just yet. FDI flows tend to be smaller than portfolio investments in equity and fixed-income securities. Therefore, from the perspective of funding a current account deficit, FDI declines are not a major concern. If foreign investors also buy fewer U.S. Securities, then capital will need to be raised from somewhere else to cover the deficit. Additionally, the balance of payments in America in the first quarter were distorted because domestic consumers and business leaders rushed to import goods before Trump's tariffs kicked in later in the year. Trump is betting that the deficit will shrink in this year and beyond, as his "America First" policies encourage more "onshoring", as domestic firms bring production home. The weaker dollar also helps U.S. Manufacturing by making exports competitive. The boom that follows will bring in investment from both companies and governments abroad. Theoretically. These dynamics are not only one-sided. Citi estimates that the European Union will account for 45% in 2023 of all U.S. FDI. Combining the European continent's German fiscal splurge with U.S. Tariffs and concerns about 'dedollarization' could easily reduce that flow. Section 899, a possible tax of 20% or more on foreigners' U.S. earnings that could be included in Trump's budget plan, is another potential risk for U.S. bound FDI. Tax Foundation reported in May that Section 899 "would hit inbound investment that makes up more than 80% of U.S. FDI inbound stock." Section 899 may be diluted by industry pushback, but it still remains a cloud over U.S. investments. Citi reports that the U.S. will be the largest recipient of FDI in the world by 2023. This is up from 15% just before the pandemic. Its economy is one of the biggest in the world. It's a hub for innovation, cutting-edge technology, artificial intelligence, and money making potential. This will always attract FDI. It remains to be determined whether it will attract as much FDI in the new environment. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
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Brazil's Lower House approves an extra pre-salt auction to increase revenue
The lower house of Congress in Brazil approved on Wednesday an executive order that allows the government to sell its share of offshore oil pre-salt fields, which are not under contract. This could boost revenues as Brazil struggles to balance its fiscal budget. Jose Priante, a lawmaker from the Philippines, incorporated its content into an executive order on how oil and gas revenue can be used for certain programs. The executive order amended, which is now going to be approved by the Senate, will expand the use of these resources. In April, it was reported that the government planned to hold an additional oil auction to increase revenue. The goal is to raise 20 billion reais (3.60 billion dollars) by selling small parts of the Tupi Mero and Atapu Pre-salt Fields. The oil reserves in these blocks are not covered by the previous sales. These remaining areas, also known as non-contracted zones, already produce oil in accordance with existing agreements. These surplus zones are now being put up for auction. Hugo Motta, Speaker of the Lower House, confirmed via social media that this measure could generate up to 20 billion reais. According to a person with knowledge of the situation, the approval for the executive order eliminates the need for the separate bill that the government submitted for authorization of the auction. The sale will only be able to proceed once the National Energy Policy Council has published a resolution, and after the auction notice has been released. According to a second government source, the auction will set minimum prices in each area. The highest bidder will secure extraction rights. Source: "Whoever wins gets all the oil from that area," source says. The approval of the executive order came after a major setback that the government suffered earlier in the day. Congress reversed A presidential decree had increased the Financial Transaction Tax (IOF) for certain operations. ($1 = 5,5577 reais). (Reporting and editing by Kyry Madry; Marcela Ayres)
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Tropical depression strikes southern China two months after Typhoon Wutip
The National Meteorological Centre of China reported that a tropical depression hit the island province Hainan in China early Thursday morning, bringing additional rain to an area still recovering from Typhoon Wutip, which struck two weeks earlier. State broadcaster CCTV reported that the tropical depression will move from Wenchang to the northeast tip of the island, then head back out into South China Sea, making a second landing in China's south Guangdong Province. It is expected to gradually weaken along the way. Meteorologists have linked extreme storms and flooding to climate change. This poses a major challenge to Chinese officials as it threatens to overwhelm the ageing flood defences. It could also cause millions of people to be displaced and billions of dollars of economic losses. The flood defences in the densely-populated Guangdong Province, as well as Guangxi, and Hunan farther inland will be tested by the storm. Wutip, which ravaged the region between June 13 and 15, dropped record rainfall and damaged roads and crops. (Reporting and editing by Jamie Freed; Reporting by Joe Cash)
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Troops kill three Palestinians in Israeli raid on West Bank town
Israeli authorities and the Israeli army said that dozens of Israeli settlers attacked an unnamed Palestinian West Bank settlement on Wednesday. The attack sparked a confrontation which ended in three Palestinians being killed by Israeli forces. The Palestinian Health Ministry reported that three Palestinians died and seven were injured in violence at Kafr Mahlik, northeast Ramallah. A military statement from Israel said that dozens of Israelis had set fire to their property. Military and police forces were sent to the scene following a report about violence, which included an exchange of stones. In a military statement, it was stated that several Palestinians fired and hurled stones at the forces who responded with fire. Five Israeli suspects have been arrested. A lightly wounded Israeli army officer. At least two cars were seen on video footage being set ablaze. The video could not be independently verified. Hussein al Sheikh, the Palestinian deputy president Mahmoud Abubas, wrote on X that "the government of Israel is driving the region into explosion with its behavior and decisions." He said: "We urge the international community intervene urgently in order to protect our Palestinians." The Palestinian Red Crescent reported that earlier on Wednesday, an Israeli soldier shot and killed a Palestinian child during a raid in Al-Yamun, which is a West Bank settlement west of Jenin. (Reporting and editing by Daniel Wallis; Ali Sawafta, Howard Goller)
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Trump may relax Iran oil sanctions to aid rebuilding country
Donald Trump stated on Wednesday that the U.S. had not abandoned its maximum pressure against Iran, including restrictions on the sale of Iranian oil. However, he indicated a possible easing of enforcement in order to help rebuild the country. They'll need money to get that country in shape. When asked at a NATO Summit press conference if he would ease oil sanctions against Iran, Trump replied: "We want to see it happen." Trump had said the day before that China could continue to buy Iranian oil after Israel agreed to a ceasefire with Iran, but later clarified his remarks did not indicate an easing of U.S. sanction. Trump imposed a wave of Iran-related restrictions on China's independent "teapot refineries" and port terminal operators who purchased Iranian oil. Steve Witkoff told CNBC, Trump's Middle East Envoy, that Trump's comment about China's ability buy Iranian oil was "a signal to Chinese that we wanted to work with them, that we weren't interested in hurting their economy." China has been the largest buyer of Iranian oil and has opposed Trump's restrictions on the oil for years. Witkoff stated, "We are interested in working with you together in unity and hopefully that will become a message to the Iranians." (Reporting by Jeff Mason and Jarrett Renshaw, with additional reporting by Nandita BOSE and Timothy Gardner. Editing by Chizu Nomia and Sandra Maler.
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SQM, a lithium miner in Chile, has cut 5% of its workforce due to the lackluster price recovery
According to a company spokesperson and a memo sent to employees on Wednesday, the world's second largest lithium miner SQM is laying off up to 5% of their Chilean staff as they struggle with a prolonged slump in global prices. Due to an overproduction of lithium in China, and lower-than-expected demand from electric vehicles the price has fallen nearly 90%. Some miners have been forced to cut jobs and stop expansions due to this. SQM, who missed its first-quarter profit estimate, had previously stated that it expected weak prices throughout the first half of this year. It declined to comment about the layoffs. Sources from the company said that the reductions - in both the lithium unit and the fertilizer unit - will not impact core operations or production guidance. The person said that SQM did not have any immediate plans to lay off more employees. Could not determine exact number of dismissals. SQM employed 8 344 people in Chile, and elsewhere, at the end last year. Three quarters of them worked at its operations in northern Chile, where it extracts lithium and processes it. In a memo dated Tuesday from the Sindicato SQM Salar, the union said that the company had informed the president of the group that 25 to 30 percent of the layoffs were for "general roles" and the remainder was for supervisors. The memo stated that they would occur at SQM offices in Santiago as well as its lithium processing facility in northern Chile and the Atacama Salt Flat. The memo stated, "As a trade union, we regret the decision made by the company that affects our members and we categorically doubt the reasons behind it." It did not provide any further details. The memo also offered to support workers who had lost their jobs. Albemarle U.S., the sole other lithium miner operating in Chile, reduced its workforce last year to cut costs, which it claimed helped offset low lithium prices. (Reporting and writing by Fabian Cambero, Daina Beth Solon; editing by Sarah Morland Brendan O'Boyle Aurora Ellis).
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Goldman increases copper price forecast for 2H25 on the basis of tariff-driven supply risk and China demand
Goldman Sachs predicts that copper prices will rise to $9,890 on average per metric ton in the second half 2025, according to a bank note. The bank cited fears of a global shortage of supply due to U.S. Tariffs and increased Chinese activity. The world's biggest economy has imported copper in excess, approximately 400,000 kilotonnes this year. The bank reports that, while the global market has a surplus at the moment, the excess imports are causing concern about a possible shortage of copper in countries outside the U.S. Goldman expects that the Trump administration will impose a 25 percent tariff on imports of copper once an investigation is completed into foreign copper. Late in February, U.S. president Donald Trump ordered an investigation into possible tariffs on imports of copper to rebuild the domestic production of this critical metal. Copper is used for electric vehicles and semiconductors as well as military hardware, consumer goods, and other products. The bank stated that "copper markets are priced under 60% of the probability of a 25 percent import tariff by May." Goldman predicts that copper prices will reach a peak of $10,050 by August, as the threat of tariffs erodes inventories outside the United States, and Chinese demand is resilient. Prices will then be expected to drop to $9,700 in December as the tariff threat erodes ex-U.S. inventories. The bank stressed that the market does not currently price a high probability of a 25% tariff. As a result, the bank recommends a trading strategy that takes advantage of the price difference between the U.S. copper and UK markets. The bank has revised copper prices upwards because China, one of the biggest destinations for the metal, is experiencing "relatively robust activity" at the moment. Goldman has slightly reduced its forecast for 2026 copper prices to $10,000 per ton, down from the earlier estimate of $10,170. Prices are expected to reach $10350 by December. The company remains bullish about copper prices for 2027. It expects the average price to be $10,750, despite a growing supply deficit due to strong electrification demands and limited mine supply. (Reporting by Ishaan Arora and Sarah Qureshi in Bengaluru; Editing by Chris Reese and Sandra Maler)
El dead and many injured in mass shooting in Mexican state plagued by gangs
Authorities said that at least 11 people, including a teenage girl, were killed and others wounded in an attack on Tuesday night in Irapuato in central Mexico.
According to the attorney general's office of Guanajuato (the state plagued by violence where Irapuato lies), 20 other people were hospitalized for gunshot injuries.
The Mexican president Claudia Sheinbaum claimed earlier that day, Wednesday, that there were children among the victims. However, the Attorney General's Office confirmed later only one victim was a minor. She was 17 years old.
It is a very sad thing that happened. Sheinbaum confirmed that an investigation was underway.
Local media reported that the shooting occurred during a party to celebrate a Catholic holiday called the Nativity of John Baptist.
A video that circulated on social media shows people dancing in a patio of an apartment complex, while a background band plays. Gunfire then breaks out. The video was not verified immediately.
Guanajuato is one of the most violent areas in Mexico. Criminal groups are constantly fighting over the best routes to sell drugs and other crimes. According to the Attorney General's Office, five more people were also killed on Tuesday in other areas of the state. Reporting by Raul Cordes, Aida Pelaez-Fernandez, and Lizbeth Diz; Writing and Editing by Sarah Morland and Nick Zieminski;
(source: Reuters)