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EU unlikely to increase tariffs against India and China on Trump's request
EU sources say that the European Union will not impose tariffs on India and China, which are the two main buyers of Russian crude oil, as the U.S. president Donald Trump has asked the bloc to. This week, an EU delegation including the EU's Russia sanction chief flew to Washington to discuss the ways in which the two sides could coordinate sanctions against Russia for its full-scale invasion into Ukraine. Officials have said that Trump has urged the EU, to hit India and China up to 100% with tariffs to put pressure on Russian president Vladimir Putin who depends on energy revenues for his country's conflict in Ukraine. The European Commission has not responded to a comment request. The European Union has placed extensive sanctions against Russia In its last package, published in July, it also included two Chinese banks and a major Indian refinery. Sources said that the EU does not treat tariffs the same as sanctions, and only imposes these after a lengthy investigation to establish a legal basis. So far, the bloc has only imposed tariffs on Russian and Belarusian farm products and fertilizers in response to the Ukraine War. It was argued that the tariffs were necessary to avoid creating a dependency which could be exploited, and to protect EU fertiliser producers. An EU diplomat stated that there has been no discussion about possible tariffs with India or China. The EU is also in the process of finalizing a trade agreement with India that the bloc will not want to compromise. Trump's position towards India appeared to soften by Wednesday when he stated that he wanted to reset the trade relations with New Delhi. A second EU source stated that such tariffs are risky, and they could be too broad. It is easier to sanction certain entities and to open the door for them to be delisted if they stop doing business with Russia. Until now, the EU has only listed small, unknown entities that are often shell companies, used by Russia to funnel military goods or dual-use products to its military. The EU plans to list Chinese refineries and banks from two countries in central Asia in its 19th set of sanctions, which could come as early as Friday. (Reporting and editing by Ros Russell, Philip Blenkinsop and Julia Payne)
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US oil stocks rise as crude exports drop and fuel demand falls, EIA reports
The Energy Information Administration reported on Wednesday that U.S. crude oil and fuel stocks rose during the past week, despite a drop in demand and exports. The EIA reported that crude stockpiles increased by 3.9 millions barrels, to 424.6million barrels for the week ending September 5. This was compared to analysts' expectations of a drawdown of 1 million barrels. The EIA reported that crude stocks at Cushing, Oklahoma's delivery hub, fell by 365,000 barges in the past week. U.S. crude oil exports dropped by 1.1m barrels per day, to 2.8m bpd. Meanwhile, net crude imports increased by 668,000 barrels a day. "A substantial drop in crude exports, coupled with a slight drop in refining activities, has encouraged a good build in crude inventories." The implied demand for gasoline and distillates has been weaker, said Matt Smith of ship tracking firm Kpler. The surprise increase in oil inventories has slowed the gains made by oil futures. Brent crude futures, the global benchmark, were trading at $67.02 per barrel at 11:02 am EDT (1502 GMT), up 62 cents. U.S. crude was up 63 cents to $63.25. Refinery crude rundowns fell by 51,000 barrels per day, but utilization rates increased by 0.6 percentage points to 94.9%. Total product supply, which is a proxy of demand, decreased by 871,000 Bpd, to 19.8 Mbpd. Gasoline consumption fell by 609,000 bpd and reached 8.5 million bpd. Distillate product supply was down by 391,000 bpd at 3.4 million. John Kilduff is a partner at Again Capital. He said, "We're waiting to see just how much the gasoline demand will drop after summer driving in the U.S., and it appears that it will be significant." He added that given the recent economic data, which showed a marked slowdown in the labor markets, the weak gasoline demand could also be an indicator of a slowing U.S. economy and global potential. The EIA reported that gasoline stocks increased by 1.5 million barrels during the week, to 220 millions barrels. This was in contrast with the expectation of a 243,000 barrel draw. ? The data revealed that distillate stocks, which includes diesel and heating oil rose by 4.7 millions barrels last week, versus the expectation of a 35,000 barrel increase. (Reporting from Liz Hampton in Denver, and Georgina Mccartney in Houston. Editing by Marguerita Choy)
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Sources say that Russia has increased September oil exports to western ports by 11%.
Two industry sources and calculations show that Russia revised its September crude export plans from western ports up to 2.1 millions barrels per day, an 11% increase over the initial schedule. This is due to drone attacks on domestic refining plants reducing local demand for crude. The preliminary plan had estimated 1.9 million barrels per day (bpd) and the August exports were 2.0 million bpd. It is anticipated that the increase in Urals crude production will meet an extra demand for spot in India. Purchases of this grade fell in August but are still strong despite Western sanction. Nirmala Sitharaman, the Indian Finance Minister, said last week that Indian oil companies will continue to buy Russian oil. Indian Oil Corp's head of finance, who is the top refiner in the country, stated earlier this week that the spot supply of Russian crude oil has not changed since earlier. Since late August, a number of Russian facilities have suffered damage, including Rosneft’s Ryazan refinery in early September, and Kuibyshevsk, which stopped operations on 28 August. Recently, fires broke out in the Afipsky refinery and Krasnodar after drone attacks by Ukraine. Reporting by Kirsten Doovan; Editing by Kirsten Doane
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Italy's Meloni talks to Modi in India, but skirts the U.S. Tariff Request
In a telephone call with her Indian counterpart Narendra Modi on Wednesday, Giorgia Mello praised the "excellent" relations between her country and India. She did not mention U.S. demands that the EU impose tariffs up to 100 percent on Indian imports. Officials claim that Donald Trump, the U.S. president, asked the European Union to impose new import duties on China and India this week as part of an effort to pressure Russia, the main oil supplier for both nations. The Italian Premier's Office said that Meloni, Modi, and their respective offices reaffirmed the commitment to deepening cooperation in trade, investment, and connectivity. The statement did not mention Trump's demands. The statement said that the two leaders discussed Ukraine and expressed their support for "all international efforts" to promote a truce and resume negotiations in order to achieve a just peace. India, which is the world's largest purchaser of Russian crude oil, has benefited from discounts on Russian production as Europe and the U.S. shunned Russian petroleum over Moscow’s invasion of Ukraine in 2022. India has stated that it will continue to buy Russian oil if it is economical, despite Trump's decision imposing heavy import tariffs against Indian goods. (Reporting and editing by Frances Kerry.)
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Chevron wins tender for offshore gas exploration in Greece - Source
Stavros papastavrou, Greece's Energy minister announced on Wednesday that U.S. Oil Major Chevron had submitted a bid for exploration of natural gas in four offshore blocks in a consortium along with Hellenic Energy. The tender was launched this year, after Chevron Oil Refinery and Hellenic Energy showed interest in four deep sea blocks near the Peloponnese Peninsula and Crete. The bid deadline was Wednesday at 1400 GMT (1700). Greece, a country that produces very little oil, has increased its renewable energy production in recent years, but it still heavily relies on gas to generate electricity. The country wants to tap into its own resources to help the European Union move away from Russian energy following Moscow's invasion of Ukraine. The discovery of significant reserves of gas off Egypt (which is located south-east of Crete) has sparked hope that Greek waters may also hold gas. ExxonMobil's consortium is evaluating seismic data in the area near Crete, which borders two licensed blocks. This will be done before any decision is made on whether to test drill. (Reporting and editing by Angeliki Kooutantou, Lefteris Pamidimas; Kirsten Donovan, Edward McAllister)
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Lazy investors, unite! Vanguard takes on the challenge of 'rational indifference': Ross Kerber
The problem that would-be reformers of corporate voting continue to face is the same: It's so complicated for an individual investor. Reformers might want to be careful about what they wish for. Shareholders in Vanguard 500 index funds, for example, could be faced with 4,500 decisions each year regarding how to vote proxy ballots during corporate annual meetings. Who could sort all that out, anyway? In a forthcoming paper, a group of professors of law and business from Duke University, University of Florida and Columbia University refers to the "rational apathy" problem. They say that shareholders will not waste time trying to figure out how to vote in a complicated way with little effect. Fund companies are now handling the voting themselves. Until recently, only environmentalists and social reformers cared. Then conservatives in the United States realized that they could exert pressure on companies and asset managers to change how they cast their ballots. The top managers could avoid the fire by using "pass through" voting programs that allow fund investors to influence the proxy votes funds cast at annual corporate meetings. John Galloway, Vanguard's chief of stewardship, told journalists in a press briefing this week that 82,000 investors had used the Voting Choice program over the 12-month period ending June 30. This is about twice as many as the previous year. They voted $9 billion worth of shares, which is triple what they did last year. This is still a small amount compared to Vanguard, which has 50 million investors with $11 trillion of assets under management. Get ready to see things take off. Galloway stated that Vanguard is working with corporate sponsors in order to provide voting options to participants of 401(k), or similar retirement plans. He released new statistics showing that investors are dispersing their vote across a wider variety of voting policies, including a new Egan Jones policy with anti ESG criteria. Galloway stated, "We have seen investors demonstrate the 'choices' of Investor Choice in this year's Investor Choice. PUMPING UP BOSSES Reformers who want to rein in CEO compensation have high hopes that the change will take power away from the fund managers, who, among other things, earn fees by managing corporate retirement funds. In the draft paper the academics state that a surprising result of increased pass-through voting would be an increase in the power of the boards. This is because individual investors are more likely to support policies that benefit management. Two close votes at Tesla took place last year. Shareholders approved narrowly measures that called on Tesla to reduce its director term from three to one year and require only simple majorities for certain governance changes, rather than the two-thirds standard currently in place. Both measures were supported by Vanguard's main stewardship group. In the pilot voting program last year, 36% of shares either abstained from voting or supported management. If that 36% had applied to all Vanguard index equity funds, then both proposals would have been just below the 50% threshold required by both items. The authors note that as proxy voting programs increase, "the reality of a changing ecosystem becomes more and more probable." Dorothy Lund of Columbia University Law School, one author, stated in an interview that pass-through voting is a great way to empower investors who don't agree with the voting decisions made by their managers. Most mutual fund investors aren't interested in their holdings, much less how to vote. The new voting policies will empower proxy advisers. This could eventually include financial online influencers (FinFluencers) who would post their voting recommendations to TikTok. Lund stated that in theory, more competition should lead to better options. She said that if proxy voting is so open, companies may not know who to listen to. Lund stated that "implementation of an open proxy system could lead to fragmentation where issuers do not know with whom to speak because no one is really directing votes."
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Bain Capital sells China data center business to Chinese consortium at $3.9 billion
The companies announced that U.S. investment company Bain Capital had agreed to sell the China operations of data centre operator WinTriX DC Group to a consortium headed by Guangdong Hec Technology, for 28 billion Yuan ($3.93billion). Hec Technology, its controlling shareholder, and a subsidiary will increase capital by 7.5 billion Yuan in a joint-venture to partially finance the deal. Bain Capital announced in a separate press release that institutional investors and funds from local governments are also included in the consortium. In a filing, Hec Technology said that the acquisition would help it expand its data centre business as well as strengthen its core competitiveness within the digital infrastructure industry chain. In 2019, Bain Capital acquired WinTriX DC Group (formerly known as Chindata Group Holdings) and merged with Southeast Asia Data Centre operator Bridge Data Centres. Bain Capital acquired Nasdaq listed Chindata in a $3.16 Billion deal nearly two years ago. WinTriX's largest customer is social media giant ByteDance, according to Fitch Ratings. ByteDance contributed 86% of WinTriX's revenue in 2022. It also has data centres in India, and Malaysia. Reporting by Yukun Zhi, Kane Wu, and Ryan Woo, Editing by Joe Bavier and Kirby Donovan
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Copper continues to be steady despite data from China and the US
The copper price remained stable on Wednesday, as the market awaited data on loans from China's top consumer and U.S. Inflation numbers that may determine the direction in which U.S. Interest Rates will move. The benchmark copper price on the London Metal Exchange was 0.10% higher, at $9.929 per metric ton of official rings. Traders reported that volumes were low as consumers and producers were absent. The market was dominated by funds, which reacted to macro-factors. China's loan data is due on September 10-15. Analysts will focus on the total social finance numbers, which they use as a gauge for industrial metals demand. They expect that August's figures are higher than July's. Financial markets expect a quarter point cut in interest rates from the Federal Reserve, with a slight chance of a half point cut. The report on U.S. Consumer Inflation on Thursday may influence the possibility of a bigger cut. The U.S. Dollar would fall when the Fed rate falls, making dollar-priced precious metals more affordable for holders of other currencies. This could increase demand. Ed Meir, Marex analyst, said that "the dollar's weakness will likely provide some support, at least in the early part of September." If the Fed catches the markets by surprise, a stronger currency could lead to a downward trend in prices for the rest of the month. A temporary halt in mining at Freeport McMoRan’s Grasberg mine, one of the largest copper mines in the world, was a major factor supporting copper. Zinc stocks are also a focus In LME-registered warehouses, the 50,825 tonnage has dropped by nearly 75% from mid-April. The LME system is expected to lose another 15,375 tonnes of zinc due to cancelled warrants and/or zinc that was earmarked for shipment. Concerns about zinc availability on the LME have led to a premium or backwardation with the forward cash contract for the next three months. The current price of a ton is around $18. Lead was unchanged at $1,977. Tin rose 1% to $35,350. Nickel was slightly lower at $15,090.
Gold nears record highs amid softer inflation data that fuels Fed's cut bets
Gold prices rose on Wednesday as investors hoped that the Federal Reserve would resume rate reductions at its meeting next week, after softer than expected U.S. inflation figures.
As of 9:16 am EDT (1316 GMT), spot gold was up 0.6% to $3,647.79 an ounce after reaching a record high on Tuesday of $3,673.95 per ounce.
U.S. Gold Futures for December Delivery were up 0.2% to $3,687.40.
Labor Department data revealed that U.S. producers prices fell unexpectedly in August. This was due to a decrease in service costs.
Fawad Rasaqzada is a market analyst for City Index and FOREX.com. He said that any further weakness in U.S. economic data would continue to support the gold price, as it could indicate more than two interest rate cuts before the end of the year.
Gold is traditionally viewed as a hedge to political and economic uncertainties and inflation. It also tends do well when interest rates are low. It has increased by more than 38% in the past year.
CME's FedWatch showed that the markets are pricing in 90% of a quarter point cut during the Fed's meeting on September 16-17, and there is a slim chance for a bigger cut.
The market confidence that easing is imminent was reinforced by the soft nonfarm payrolls data released last week, which indicated a cooling of labor market conditions. The Labor Department revised down its estimates of job growth through March. This suggests that job growth had already slowed before President Donald Trump's aggressive import tariffs.
A federal judge temporarily blocked Trump’s Tuesday attempt to remove Federal Reserve governor Lisa Cook. This was a setback for White House in the legal battle that threatens central bank independence.
The Fed will now focus on Thursday's Consumer Price Index reading.
Ricardo Evangelista is a senior analyst with ActivTrades. He said that the $3,750 level was the next major resistance. If the precious metal consolidates above this mark, it could reach $3,900 before the end of the year.
Silver spot increased 0.4%, to $41.06 an ounce. Palladium climbed 2.7% to 1,179.30 and platinum gained 1%. (Reporting by Sherin Elizabeth Varghese and Ishaan Arora in Bengaluru)
(source: Reuters)