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Octopus Energy, a British company, spins out Kraken for $8.65 billion.
Octopus energy, a British company, announced on Monday that it would spin off its technology arm Kraken as an independent 'company' valued at $8.65 Billion. This follows a funding round led by U.S.-based investment firm D1 Capital Partners. Kraken provides energy software to major utilities, such as EDF, National Grid U.S., and Tokyo Gas. Kraken will sell equity worth about $1 billion to new and existing investors. Investors led by Octopus will inject $320 million more into Octopus Energy. In a press release, the largest household electricity and gas supplier in Britain, Durable Capital Partners, and Ontario Teachers' Pension Plan are among those who invested in this round. The investment paves the way for Kraken to officially demerge from Octopus Energy. Octopus Energy will retain a 13,7% stake in the company. Kraken's AI-powered operating system is licensed to utilities around the world and has contracts to service more than 70,000,000 accounts. In September, the company reported a contracted revenue of over $500 million. Origin Energy, a company based in Australia, said that it would invest around $140 million into Kraken's fund-raising and retain a 22.7% stake after the transaction. Origin has also agreed to waive the?exclusivity of Kraken's service in Australia for an extra 1.5% equity stake.
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TSX falls as metal prices fall hurt mining shares
Canada's main index of stocks closed lower on Monday, as the precious metals rally?paused. This weighed heavily on the mining stocks and started the final?week?of the year with a somber tone. The S&P/TSX 'index?closed 0.32% down at 31,896.59 point. The benchmark was expected to gain about 2% this December, which would be its eighth consecutive month of gains, a streak that has not been seen since 2014. Materials shares fell by 2.88%, while gold shares dropped 4.02%. Silver prices fell 8.3% and gold prices dropped 4.3%. Both were down on the back of investors booking profits due to perceptions that geopolitical tensions are easing, which led them to reduce safe-haven purchases. The TSX index has seen a strong performance this year. It is up 29%, its highest level since 2009. This year has been phenomenal. This was really due to two factors. Mining stocks had a fantastic year. Gold had a great year, and silver was even better. The Canadian bank stocks also contributed to the TSX, said Alfred Lee. Lee stated that he wouldn't be shocked if there was a short-term pullback next year. Kinross Gold shares fell 3.6%. Agnico Eagle shares fell?5.3%, and Barrick Mining shares fell 2.8%. Endeavour Silver closed down 1.9%, while Silvercorp Metals dropped 3.4%. Energy shares, which are a major component of the energy sector, gained 1.01% as oil prices rose over 2%, and investors began to weigh the potential disruptions in oil supplies due to the Ukrainian peace talks with the possible rise in oil prices. During a quiet week of data, market participants are waiting for the release on Tuesday of minutes from the U.S. Federal Reserve.
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Management reports that the external power line at Zaporizhzhia Nuclear Plant has been restored.
The Zaporizhzhia Nuclear Power Station in Ukraine, which is owned by Russia, has a restored external power connection after repairs were completed. This was announced on Monday by the Russian management of the plant. The statement stated that the line had been taken out of service by "fire from Ukrainian armed forces". The International Atomic Energy Agency, the U.N.'s nuclear watchdog was present to monitor the repairs. The International Atomic Energy Agency said that the situation was under control at the plant, and radiation levels were normal. Two lines connect the station to the grid. The second line was still in operation during the repairs. The plant relied on diesel generators for 30 days in September and October. This was until a damaged line could be reconnected during a local ceasefire that was arranged with IAEA help. In the first weeks after Moscow invaded Ukraine, Russian forces took control of Europe's biggest nuclear power plant. Both sides accuse the other of actions that endanger safety in Ukraine. The plant does not produce electricity, but it relies on outside power to maintain nuclear fuel at a cool temperature and prevent a meltdown. In the talks to end the four-year conflict between Moscow and Kyiv, the future of the plant operations has been a sticking point. The plant is run by a unit owned by Russia's Rosatom nuclear corporation. Volodymyr Zelenskiy, the Ukrainian president, said that the U.S. proposed a joint trilateral operation with an American manager in December. Reporting by Chizu nomiyama; editing by Chizu Nomiyama
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Silver falls from its $80 peak, while gold mellows due to profit-taking
Silver fell after reaching a record high of $80 per ounce on Monday, while gold dropped from near-historic levels as investors booked profits. A market perception that geopolitical risk had decreased also curbed the safe haven buying. Gold spot was down 1.7% to $4,455.35 per ounce at 1321 GMT. It had hit a record of $4,549.71 an ounce on Friday. U.S. Gold Futures for February Delivery lost 1.7% and reached $4,474.80. Spot silver fell?5.1%, to $75.15 per ounce. This is a retreat from the record high of $83.62 reached earlier in this session. Spot 'platinum' fell 6.9%, to $2281.15, after reaching a record high of $2478.50, while palladium plummeted 11.9%, to $1,694.75 per ounce. Ricardo Evangelista, an analyst at ActivTrades, said that the decline in gold prices this morning, following record highs, was primarily due to traders reinvesting profits before year-end. "Tentative optimism on the part of the U.S. administration regarding progress in the Ukraine peace talks is also a mild blow." Donald Trump, the U.S. president, said that on Sunday he and Ukrainian leader Volodymyr Zelenskiy are "getting closer, perhaps very close" to a deal to end Ukraine's war. Bullion prices have risen by 72% in the past year. This is due to factors like a softer U.S.?monetary policy, a weaker dollar, geopolitical tensions, and robust central bank purchasing. Silver has outperformed gold this year by 181%, mainly due to its designation as an important mineral in the United States, shortages of supplies and a growing industrial and investor appetite. The release of the Fed minutes from the December meeting, which is due on Tuesday, will provide some clues about the future interest rate outlook. The market is pricing in at least two rate cuts next year. When interest rates are low, non-yielding investments tend to perform well. UBS analysts wrote in a report that "gold prices are trading at an elevated premium and downside risks may emerge if the Federal Reserve makes a surprise pivot to the hawkish side and/or if large ETF withdrawals affect the market." (Reporting and editing by Barbara Lewis, David Goodman and Pablo Sinha from Bengaluru)
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Bahrain implements new fiscal reforms in order to boost public finances
Bahrain announced several fiscal measures on Monday. These included raising fuel prices, increasing tariffs on water and electricity, and increasing dividends from government-owned companies, as well as other fees and tax. Bahrain, one of the Gulf's smaller producers of oil, has increased its efforts to diversify away from hydrocarbons and into other areas, such as tourism and financial services. However, lower?oil price have had a negative impact on public finances and growth. Bahrain plans to?raise natural gas prices and reduce administrative government expenditure by 20%. It will also introduce a new corporate income tax law for local companies. The statement did not provide any further information or details about when the new measures would be implemented. S&P Global Ratings Downgraded Bahrain sovereign credit rating In November, the rating was downgraded to "B" (from "B+") due to an increase in government debt. This increased pressure on government interest costs. The report projected an increased fiscal?deficit in 2025 of 7.6% of the GDP, up from its previous estimate of 7.1%. The government has raised $5 billion from global debt markets This year, investors will be able to take advantage of the healthy appetite for Islamic bonds or sukuk. The parliamentary speaker stated in a separate statement dated 28 December that Bahrain's government, parliament and the Council of Representatives held several meetings to discuss measures to support state finances. He noted some differences regarding the application of electricity and water services. Reporting by Mahal Dahan and Nayera Addallah, Writing by Rachna uppal; Editing and proofreading by Alison Williams & Chizu Nomiyama
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Upgrade of Zimbabwe thermal plant to 400 Megawatts will add to grid
Zimbabwe will upgrade its Hwange coal fired power?plant for $455 mln, adding 400 megawatts, or a 'fifth' of the current country electricity demand. Southern Africa has signed a concession agreement with Jindal Steel's Africa-focused unit for a 15-year period to refurbish some of its older units at the?thermal plant. Cletus Nyachowe, acting ZESA CEO, said that the deal was signed and finalised in December after it was approved by Zimbabwe’s cabinet on September 17. Nyachowe stated that the 15-year contract with Jindal would lead to increased power generation. This will?add 400 MW to our production within 48 months." He added that "Rehabilitation works are set to begin in the first quarter 2026." Zimbabwe is only able to meet half its electricity demand of 2,000 MW and suffers from?prolonged power cuts because its power plants are reducing in capacity. In 2023, two units, adding 600 MW, were commissioned at the Hwange plant. The older units, built in the 1980s, are only operating at a third of their full capacity because of?breakdowns. In 2018, the Kariba hydropower plant, built in 1960, underwent a 300-MW upgrade, boosting its capacity from 750 MW to 1,050MW. Its generation capacity also decreased in recent years due to climate-change-induced droughts.
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Silver falls from its $80 peak, while gold's price softens due to profit-taking
Silver fell after reaching a record high of $80 per ounce on Monday, while gold dropped from near-historic levels as investors booked profits. A market perception that geopolitical risk had decreased also curbed the safe haven buying. Gold spot was down 1.9% to $4,448.23 per ounce at 1148 GMT. It had hit a record of $4,549.71 an ounce on Friday. U.S. Gold Futures for February Delivery lost 1.9% at $4,467.90. Spot silver fell?5.4%, to $74.90 per ounce. This is a retreat from the record high of $83.62 reached earlier in this session. Spot 'platinum' fell 6.5%, to $2,291 per ounce, after reaching a record high of $2,478.50, while palladium dropped 13%, to $1,674.25 per ounce. Ricardo Evangelista, an analyst at ActivTrades, said that the decline in gold prices this morning, following record highs, was primarily due to traders reinvesting profits before year-end. "Tentative optimism on the part of the U.S. administration regarding progress in?Ukraine's peace talks is also a mild blow." Donald Trump, the U.S. president, said that on Sunday he and Ukrainian leader Volodymyr Zelenskiy are "getting closer, perhaps very close" to a deal to end Ukraine's war. Bullion prices have risen by 72% in the last year. This is due to factors like a softer U.S.?monetary policy, a weaker dollar, geopolitical tensions, and robust central bank purchasing. Silver has outperformed gold this year by 181%, mainly due to its designation as an important mineral in the United States, shortages of supplies and a growing industrial and investor appetite. The release of the Fed minutes from the December meeting, which is due on Tuesday, will provide some clues about the future interest rate outlook. The market is pricing in at least two rate cuts next year. When interest rates are low, non-yielding investments tend to perform well. UBS analysts stated in a report that "gold prices are trading at an elevated premium and downside risks may emerge if the Federal Reserve makes a surprise pivot to the hawkish side and/or if large ETF withdrawals affect the market." Reporting by Pablo Sinha, Bengaluru Editing Barbara Lewis and David Goodman
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Axis International wants $28,9 billion from Guinea for revocation of bauxite permits
Axis International Ltd, based in the United Arab Emirates, is seeking $28.9billion from Guinea through a World Bank Tribunal after Guinea revoked its permit to operate a mine of bauxite there earlier this summer. Guinea, which has the world's largest reserves bauxite and is seeking to increase revenues and local processing, has tightened state control of the mining sector over the last year, revoking some permits and reallocating others. These moves by the government led by coup leader 'Mamady Doombouya' have led to several arbitration challenges. One was filed by Nomad Bauxite Corporation in November and another by Nimba Investment LLC this month. Axis International stated in a Monday statement that "if Guinea fails to pay compensation or refuses participation, it risks losing donor support multilaterally and access to the financial markets." The dispute was brought before the?International Centre for?Settlement of Investment Disputes of the World Bank. The government of Guinea did not respond immediately to a comment request. Axis International is the owner of 85% Axis Minerals Resources SA. This Guinean company has rights to a Boffa region bauxite mining. In a statement, the company stated that this permit along with others was terminated on May 1. Axis International stated that, while the government claimed that the mine wasn't operational or underutilised it was "operating at a scale and supporting thousands and their families." "We will prove to the World Bank Tribunal that Guinea is responsible for all damages caused by its intentionally unlawful acts. Gunjan Sharma, counsel for Axis International said that the amount was USD 28,9 billion at minimum. The company stated that damages were calculated based on "proven reserves", which they put at over 800 million metric tonnes. The company stated that the mine would produce 18 million metric tonnes of bauxite by 2024. This will make it Guinea's largest source of bauxite exports. (Reporting and writing by Robbie Corey Boulet; Editing and proofreading by Jan Harvey).
OPEC+ most likely to extend production cuts in June: Kemp
Saudi Arabia and its allies in OPEC+ are most likely to keep oil production unchanged for a further three months when ministers examine output allotments on June 1.
The tightening up of petroleum materials and deficiency of stocks widely prepared for at the start of the year has failed to materialise up until now.
If OPEC+ (Organization of the Petroleum Exporting Countries and allies) authorities had hoped to increase production into a. tightening market characterised by rising oil prices they are. likely to be irritated.
Crude stocks, futures costs and calendar spreads are all at. comparable levels to a year ago, making a significant boost in. output unlikely.
The group might nevertheless choose it needs to rescind a few of. in 2015's output cuts to pre-empt an additional increase in production. from the United States, Canada, Brazil and Guyana and prevent. yielding more market share.
However current market conditions suggest any increase is likely to. be symbolic, in the lack of a wholesale shift in method to. boost volumes and accept lower prices.
PRICES AND SPREADS
Front-month Brent futures have averaged $84 per barrel so. far in May putting them precisely in line with the average since. the start of the century after changing for inflation.
Costs have increased by just $6 per barrel, or 7%, compared. with a year ago when the group was preparing production cuts to. increase them.
Brent's six-month calendar spread has actually sold an average. backwardation of $3.54 (86th percentile for all months since. 2000) so far in May compared with $1.81 (60th percentile) this. month in 2023.
The increased backwardation indicates traders see the marketplace. somewhat tighter than in 2023 with a greater likelihood. inventories will diminish over the rest of 2024.
But the backwardation has been breaking down in current weeks. and has actually already narrowed from approximately $4.86 (95th. percentile) in April.
Chartbook: Oil costs and stocks
Despite a boost in stress across the Middle East,. causing a temporary rise in the war risk price premium, there. has been no real effect on oil products, and the premium has. mostly faded.
Diplomatic efforts have consisted of dispute in between Iran and. Israel, with no impact on either oil production or tanker. exports from the Persian Gulf.
Tanker traffic has been re-routed from the Red Sea and the. Gulf of Aden around the Cape of Good Want to prevent drone and. rocket attacks from Houthi fighters based in Yemen.
US OIL INVENTORIES
In the United States, business crude stocks are at. nearly the very same level as this time last year and near to the. prior 10-year seasonal average.
Commercial crude stocks amounted to 461 million barrels in. April 26 compared with 460 million barrels a year earlier.
Unrefined stocks were simply 5 million barrels (-1% or -0.11. standard variances) listed below the prior 10-year seasonal average.
There have been no indications of a substantial and sustained draw. down of inventories that would suggest the marketplace has been. under-supplied.
The majority of U.S. crude stocks are held at coastal refineries. and tank farms along the Gulf of Mexico, which is also the. area most closely incorporated with the international sea-borne market.
Gulf of Mexico stocks totaled up to 262 million barrels on. April 26, just 6 million barrels above the same time last year. and 15 million barrels (+6% or +0.57 standard deviations) above. the 10-year seasonal average.
The United States is not the whole international market however given. the effectiveness with which traders move barrels to make use of regional. disparities in between production and usage, it is a great. marker for the global balance.
U.S. crude inventories, global futures costs and to some. level softening calendar spreads all indicate a market relatively. near balance.
Portfolio financiers definitely appear to think so, with approximately. equal advantage and disadvantage dangers to costs.
On April 23, hedge funds and other money supervisors held a net. long position in futures and alternatives connected to crude rates. equivalent to 453 million barrels (46th percentile for all weeks. since 2013).
The position was an increase from 388 million barrels (29th. percentile) at the exact same point in 2023 however was essentially neutral.
Neither fund supervisors nor physical traders are signalling. the need for a boost in production from Saudi Arabia and its. OPEC+ allies in the third quarter.
PRODUCTION POLICY
Senior OPEC ministers and authorities worry the group's. policy is to be proactive and positive.
That may be true when it comes to lowering production to. avert an increase in excess stocks and stabilise prices.
When it comes to increasing production, nevertheless, the group. has actually usually waited till stocks have actually fallen and rates have. already increased considerably.
In this circumstances, stocks and costs close to the. long-lasting average suggest ministers are most likely to decide to keep. output unchanged, based on their behaviour in the past.
In the last years, OPEC+ production cuts have actually propped up. costs and supported continued growth in output from outside the. group specifically in the western hemisphere.
Some members of the organisation have expressed issues. about the loss of market share and pushed to increase. production.
Up until now, Saudi Arabia has led OPEC+ in cutting production to. reduce stocks and boost prices at the cost of volumes.
There are concerns about the long-lasting sustainability of. this method, but so far there's no indication of a fundamental. reconsider.
If ministers ultimately choose the loss of market share has. gone too far, they might cite more powerful projection demand and a. forecasted future decrease in inventories to validate improving. production.
That would expose a major modification in strategy to prioritise. volume over rates and there is no sign of it yet. If OPEC+. nonetheless chooses to reveal an output boost, it is most likely. to be little and symbolic.
Related columns:
- U.S. oil and gas production rebounds after winter season storm. ( May 1, 2024)
- Record U.S. oil and gas production keeps prices under. pressure (March 1, 2024)
- Western Hemisphere oil output rises, with a helping hand. from OPEC (February 21, 2024)
John Kemp is a market analyst. The views expressed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)