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Oil prices stable despite OPEC+ plans for a pause in production increases
Oil prices held steady Monday as the market weighed the latest OPEC+ production increase against the group's plan to pause increases in the first three quarters of 2026, along with fears of a glut of oil and weak factory data from Asia. Brent crude futures dropped 24 cents or 0.4% to $64.53 per barrel at 10:37 am EST (1537 GMT). U.S. West Texas Intermediate crude (WTI), which is a blend of U.S. West Texas Intermediate and Brent, fell by 31 cents or 0.5% to $60.67. OPEC+ (Organisation of Petroleum Exporting Countries, OPEC, and allied producers) agreed on Sunday to increase output in December by a modest 137,000 barrels per daily (bpd). OPEC+ agreed to halt increases during the first quarter of 2019. Analysts at European financial services firm SEB stated in a report that this does not impact the projected surplus. It shows that OPEC+ isn't forgetting about price. The price is still important. "It tells us 2026 will not be a bloodbath for oil," the authors added. Morgan Stanley increased its Brent crude forecast on Monday to $60 a barrel from $57.5. The reason given was the OPEC+ decision to pause quota increases in the first quarter next year, and the recent U.S. EU sanctions against Russian oil assets. The International Energy Agency stated last month that the global oil market will have a surplus of up to 4 million barrels per day next year. OPEC believes that global oil demand and supply will balance out next year. At a conference held in Abu Dhabi, European oil CEOs warned against being overly pessimistic about oil. RBC analysts, a Canadian financial institution, say that Russia is still a wild card in the oil supply after U.S. sanctioned Russian producers Rosneft, Lukoil, and attacks on energy infrastructure. On Sunday, a Ukrainian drone attacked Tuapse, one of Russia’s major Black Sea oil port, causing at least one ship to be damaged and a fire. Business surveys released on Monday showed that the headwinds facing Asia's major manufacturing hubs continued in October. Asia is the largest oil-consuming region in the world. According to the CEO of oil major TotalEnergies, Chinese oil demand has been slowing since 2020 due to China's transition towards greener energy. Patrick Pouyanne He said Monday. He stated that he was optimistic about the future due to the increasing demand in India. Strong Dollar The strong dollar made crude oil more expensive to buyers who used other currencies. The dollar was hovering at a three month high against a basket. U.S. Federal Reserve Governor Stephen Miran He feels that the monetary policy is still too restrictive. Risk of a recession. In the coming weeks, the U.S. consumers' durability as an economic prop may be put to test as rising healthcare costs, a possible loss of federal food assistance, and a shaky job market outlook strain family budgets. Donald Trump, the president of the United States, said on Sunday that U.S. troops could be deployed to Nigeria Or carry out airstrikes to stop what he described as the killing of a large number of Christians in this West African nation, an OPEC-member and Africa's largest oil producer. Reporting by Scott DiSavino and Shadia Nasralla, London; additional reporting by Florence Tan, Singapore; editing by David Goodman and David Gregorio
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TSX falls as investors analyze data; gold and tech cushion losses
Canada's main index of stocks fell on Monday, as investors analyzed local economic data. However, an increase in gold and technology shares kept losses under control. 10:08 am The S&P/TSX Composite Index in Toronto was down 0.17% to 30,273.68 at 10:08 a.m. ET. The manufacturing sector's downturn in Canada eased slightly in October, as new orders and output, which had been hampered by trade uncertainty declined at a lower pace, according to Manufacturing PMI data. Later this week, we will receive new data on the employment situation. In the U.S. manufacturing shrank for an eighth consecutive month in October, as new orders were subdued. This was shown by PMI data. The data is released as the markets try to navigate without their usual economic benchmarks due to a government shut down. In an interview with Yahoo Finance, Austan Goolsbee of the Federal Reserve said that he is "uneasy" with rate cuts being made in advance. Gold miners topped the list of sectors in their home country. Tech stocks rose 0.6% as well, led by Bitfarms, which jumped nearly 12%. This was boosted by Wall Street's gains in tech shares. The overall gains in the market were however offset by a decline in copper mining companies. Canadian stocks ended October with modest gains. This is the longest monthly streak since 2021. Kate Leaman is the chief market analyst for AvaTrade. She said, "October was a strong month in terms of market performance. It does indicate a certain level of calm. But you have to be cautious of complacency." Mark Carney, Canadian Prime Minister, said on Saturday that he had apologized to Donald Trump, President of the United States, for a political ad against tariffs. He also urged Ontario Premier Doug Ford to not run it amid tensions between Canada and the U.S. The ad led Trump to increase tariffs on Canadian products and to stop trade negotiations with Ottawa. Teck Resources fell 1.1% as activist fund Palliser Capital increased pressure on Rio Tinto, according to an email seen by. Air Canada's quarterly results were 1.6% higher than the previous quarter. (Reporting and editing by Vijay Kishore in Bengaluru, with Pranav Kashyap reporting from Bengaluru)
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Gold prices rise as attention shifts to US payroll data
Gold prices rose on Monday and held above $4,000 an ounce as investors waited for the U.S. payroll data that is due this week in order to gauge the likelihood of another Federal Reserve rate cut. Gold spot rose 0.2%, to $4.009.87 per ounce at 09:29 am. ET (1429 GMT). U.S. Gold futures for delivery in December rose by 0.6% to $4.021.40. Edward Meir, Marex analyst, said: "Gold is carving out a range of trading. It could be in the mid-3000s up to the high-4000s. This is expected consolidation following such a large move." Metal, which gained 53% in this year, is down over 8% since the record high reached on October 20, 2008. Investors will be watching the Federal Reserve policy direction closely as they await the release of ADP U.S. Employment data on Wednesday, and the ISM PMIs later this week. The U.S. shutdown of the government has prevented the release of important economic data. This includes the Bureau of Labor Statistics. Last week, the Federal Reserve cut interest rates again this year. But Chair Jerome Powell stated that another rate cut in this year is "not a certainty". The odds of a December rate cut have dropped from last week, when it was almost certain. Gold that does not yield a return is more popular when interest rates are low or in economic times of uncertainty. "Gold's pause looks like a breather and not a collapse." The short-term decline can be explained by seasonal softness, temporary Chinese policies, and a stronger dollar, but this does not change the long-term story, according to Ole Hansen of Saxo Bank's head of commodity strategies. China has ended its long-standing policy of tax exemption for certain gold retailers, which could set back the buying spree in the world's largest consumer market. Other metals rose in price as well. Spot silver increased by 0.2%, to $48.77 per ounce. Platinum rose 1.1%, to $1.585.20, and palladium gained 1.8 percent, to $1.459.42.
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India's Titan exceeds its quarterly profit forecast due to high gold prices
Indian jewellers and watchmakers Titan announced a second-quarter profit that was above expectations on Monday. The firm's bottomline was boosted by a sharp rise in the price of gold. Titan, which owns the Tanishq and CaratLane brands of jewellery, reported a 59% increase in profit to 11,20 billion rupees (US$127.4 millions) for the quarter ending September 30. According to data compiled and analyzed by LSEG, the average profit estimate of analysts was 10.28 billion rupees. Gold spot prices increased 16.4% during the second quarter as investors sought refuge in gold's status as a safe-haven at a period when President Donald Trump's changing trade policies were affecting sentiment. In a business report, Titan said that as a result of this, its price per transaction increased, despite a slight decline in the number of buyers in India for Tanishq, Mia, and Zoya. Updated on September 29, 2009 Titan's jewellery division accounts for almost 88% of the company's revenue. Revenues rose by nearly 30% in the third quarter to 165.22 billion rupies. Indian consumers who value gold as an asset have turned to lighter and lower-carat jewellery despite rising prices. Indians also invested more in gold coin over the last few quarters. This has boosted Titan's sales, but pushed its margins down, since coins have a lower margin. Titan's core margins increased by 211 basis point to 10.8% compared with a year earlier. However, the increase was limited by higher sales of gold coins, and lower margins for studded jewellery. Titan's second largest watch business saw a 13.3% increase in revenue, thanks to the sustained demand for high-end timepieces from wealthy consumers.
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Pinnacle West's quarterly profit increases on robust electricity demand
Pinnacle West Capital announced a higher third-quarter profit Monday. This was boosted by a rising demand for electricity due to the scorching summer heat. Lower operations and maintenance costs and new customers also contributed. Phoenix, Arizona's electric utility reported that its service areas saw record temperatures in the summer months. This led to increased electricity consumption. The third quarter financial results were boosted by an increase in retail sales, driven by the fastest growing service territory in the nation and the third hottest Arizona summer in history. Arizona Public Service, a unit of the company that provides electricity to 1.4 million customers, plans to invest over $2.5 billion per year through 2028 in infrastructure upgrades and additions. Utilities have added billions to their budgets in the U.S. as they respond to massive requests from Big Tech companies for more power. They are also looking for suitable locations for data centres that could support complex AI tasks. In October, the U.S. Energy Information Administration predicted that power demand would reach record levels in 2025 and in 2026. In the third quarter ending September 30, the S&P utility index rose 6.8%. Utility said that net income attributable common shareholders increased to $413.2 millions, or $3.39 a share, from $395 million last year or $3.37 a share. Operating revenue was $1.82 billion for the third-quarter, compared to $1.77 billion in the same period last year. Operation and maintenance costs fell by nearly 3%, to $299.62 millions. The utility projected current-year earnings between $4.90 to $5.10 per share. This is higher than the previous outlook of $4.40 - $4.60 each. Pinnacle anticipates a 2026 earnings per share of $4.55 - $4.75. Reporting by Varun Sahay in Bengaluru and Pooja menon; editing by Sahal Muhammad
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Adani Power, an Indian company, opts for arbitration in a dispute over payment with Bangladesh
Adani Power, an Indian company, announced on Monday that it had chosen to use international arbitration in order to settle disputes regarding Bangladesh's payments for power. The company headed by Indian billionaire Gautam Adani is at odds with Bangladesh Power Development Board about unpaid electricity bills as part of an agreement that both parties signed in 2017. There are disagreements over the method of calculating and billing certain cost elements. Both partners have therefore agreed to use the dispute resolution procedure and are confident that a swift, smooth, and mutually beneficial solution will be reached," said an Adani Group spokesperson in a press release. Muhammad Fouzul Kabir Khan, Bangladesh's power minister de facto, has said that the negotiations continue. He said that if necessary, international arbitration would be sought after the process was completed. Adani Power provides electricity from its 1,600 megawatt coal-fired Godda power station in eastern India. This plant meets almost a tenth the power needs of Bangladesh. In December, the interim government of Bangladesh accused Adani and Godda Plant of violating the power purchase contract by refusing to pay tax benefits received from India. Adani received a tariff from Bangladesh of 14,87 takas ($0.1220), per unit, during the fiscal period ending June 30, 2024. This was higher than the average 9.57 takas for power supplied by Indian companies. Adani Power said last week that its electricity dues to Bangladesh have decreased significantly, from $900 million at the beginning of May and nearly $2 billion in early this year, to equivalent of fifteen days' tariff. Adani Power reiterated its commitment to the PPA and said it would continue to support Bangladesh with reliable, competitively priced and high-quality electricity. $1 = 121.8600 Taka (Written by Hritam mukherjee, edited by Janane Venkatraman & Arun Koyyur).
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Public Service Enterprise exceeds profit expectations on higher rates and rising power demand
Public Service Enterprise Group reported earnings for the third quarter that exceeded Wall Street expectations, thanks to higher gas and electric rates as well as rising demand in New Jersey. U.S. utilities benefit from a resilient energy demand, and a steady growth in rates as they invest billions of dollars into upgrading grids that are aging and expanding clean energy infrastructure. As extreme weather conditions and the surge in demand for data centers and power systems strains the system, many companies have requested rate increases to fund new transmissions lines and reliability improvement. Public Service Electric and Gas, a division of Public Service Enterprise (PSE&G), increased its earnings to $515 from $379 in the previous year, mainly due to new base rates and a higher transmission margin. PSE&G said that the gains were partially offset by increased maintenance and depreciation expenses. The profit from PSEG Power, and its other divisions, fell to $107 from $141 millions, due to lower nuclear production and higher maintenance costs at the Hope Creek Plant. However, stronger wholesale electricity prices provided some support. Its nuclear fleet produced 7.9 terawatt-hours of carbon-free electricity during the third quarter. Ralph LaRossa, CEO of PSEG, said the company remains committed to cost discipline and reliability despite a "growing imbalance between supply and demand" in the area that has pushed up summer electric bills by nearly 20%. The company has reduced its earnings forecast for the full year to $4.00-$4.06 a share from $3.94-4.06 previously. According to data compiled and analyzed by LSEG, the Newark, New Jersey based company reported an adjusted profit per share of $1.13 for the three-month period ended September 30. This compares with analysts' estimates of $1.02, which was the average. Reporting by Pranav mathur in Bengaluru, Editing by Shailesh kuber
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Investors await US private payroll data to see if gold prices will rise.
The dollar was near its highest level in three months on Monday, and traders were waiting for the U.S. payroll data to provide further clues about the Federal Reserve's outlook on monetary policy. By 1234 GMT, spot gold had risen 0.1% to $4,008.34 per ounce. U.S. Gold Futures for December Delivery rose by 0.7% to $4022.40. Dollar index was near its highest level in three months, making gold expensive for those who paid with other currencies. "We're still in consolidation mode." It's a little more difficult because there are no U.S. data, but weaker U.S. data will support rate cuts by the Fed and should allow gold to reach $4,200 an ounce before the end of this year," said UBS Analyst Giovanni Staunovo. According to CME's FedWatch tool, traders are pricing in a 70 percent chance that the Fed will cut rates in December. Gold that does not yield is more popular when interest rates are low or in economic times of uncertainty. Investors are watching the ADP U.S. Employment Data and ISM PMIs for this week to see if they can change the Fed's hawkish position. China has ended its long-standing policy of tax exemption for certain gold retailers, which could set back the buying spree in the world's largest consumer market. UBS expects the new rule to have only a marginal effect on gold prices globally, citing central bank purchases and strong investment. Analysts at Heraeus wrote in a report that gold prices may continue to fall if the resistance level between $4,000 and $4050 is maintained. The price of gold would have to rise above $4,155/oz for an initial indication to indicate a return to the rally," they said. Last week, U.S. president Donald Trump agreed to reduce tariffs against China in exchange of concessions from Beijing on the illicit fentanyl market, U.S. soya bean purchases and rare earths imports. Silver spot rose by 0.2%, to $48,75 per ounce. Platinum climbed 1.4%, to $1590.61, and palladium rose 0.6%, to $1442.81. (Reporting and editing by David Goodman, Shalesh Kuber and Anmol Chaubey from Bengaluru)
United States oil futures draw renewed interest from hedge funds: Kemp
Portfolio investors purchased petroleum agreements for the very first time in seven weeks as traders squared up short positions ahead of a conference of OPEC? ministers to decide production policy in the second half of 2024.
Hedge funds and other money managers bought the equivalent of 21 million barrels in the 6 crucial futures and choices contracts over the 7 days ending on May 28.
The purchases were the first after 6 weeks of sales amounting to 304 million barrels given that April 9, according to records published by ICE Futures Europe and the U.S. Product Futures Trading Commission.
The majority of the purchases originated from closing out previous bearish brief positions (+16 million barrels) rather than producing brand-new bullish long ones (+6 million).
Even after short covering, the combined position was just 402 million barrels (19th percentile for all weeks since 2013). while bullish longs outnumbered bearish shorts by 2.51:1 (24th. percentile).
Fund managers remained sceptical about the probability of. price boosts, even with costs near the long-lasting average. and OPEC? ministers signalling they would extend production. restraint (agreed 5 days later).
In the most recent week, buying was greatly concentrated in. NYMEX and ICE WTI (+32 million barrels) with little purchases in. Brent (+2 million) and U.S. diesel (+2 million).
There were sales in both U.S. gas (-5 million barrels). and European gas oil (-9 million).
Chartbook: Oil and gas positions
Fund supervisors continued to turn far from the Brent. global unrefined benchmark and towards the WTI U.S. local. marker.
Funds have actually bought 89 million barrels of WTI in the most. recent three weeks while offering 173 million barrels of Brent in. the last 4.
Some of this rotation has shown evaporation of the. previous war-risk premium in Brent, as the conflict in between. Israel, Iran, Hamas, Hezbollah and the Houthis has been. consisted of.
But the increased bullishness around WTI might likewise be an. sign of an approaching squeeze on deliverable supplies. around the contract's delivery place at Cushing in Oklahoma.
Commercial unrefined stocks at Cushing diminished by nearly 2. million barrels over the seven days ending on May 24, the. largest drawdown for 17 weeks.
Cushing stocks were 11 million barrels (-25% or -0.76. standard discrepancies) below the prior 10-year seasonal average.
Even a few weeks of exhaustions could leave deliverable. supplies very low and make the contract vulnerable to. another capture.
U.S. NATURAL GAS
Fund supervisors have actually ended up being gradually more bullish about. the outlook for U.S. gas costs, expecting that strong demand. from gas-fired generators and the restart of LNG export. facilities will remove excess stocks.
Funds bought the equivalent of 316 billion cubic feet. ( bcf) in the 2 significant contracts linked to prices at Henry Center. in Louisiana over the seven days ending on May 28.
Funds have actually been net purchasers in five of the current 6 weeks,. purchasing a total of 1,365 bcf because April 16.
The fund community held a net long position of 881 bcf (53rd. percentile for all weeks given that 2010) up from a net short of. 1,675 bcf (3rd percentile) in mid February and the most bullish. position because the end of October 2023.
U.S. working gas inventories were still 616 bcf (+28% or. +1.43 standard discrepancies) above the previous 10-year average on. May 24.
However the surplus has been broadly stable or even narrowed. a little since the middle of March, indicating production,. intake and exports are now close to balance after large. surpluses in 2023 and early 2024.
If production starts to decline, following drilling cuts. revealed in February, or intake rises much faster, inherited. inventories are likely to deplete over the next 9 months,. which has begun to draw funds back into the market.
Associated columns:
- Oil market torpor sends out investors to other products( May. 30, 2024)
- Investors desert bullish case for United States fuel( May 15,. 2024)
- Formerly bullish investors discard oil as need. disappoints( May 13, 2024)
- Sustainable fuels take bite out of U.S. diesel. intake( May 10, 2024)
John Kemp is a market analyst. The views expressed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)