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Valero Energy Q4 profit beats estimates; shares surge
U.S. refining company Valero Energy kicked off earnings season in the U.S. on Thursday with strong profits for the?fourth quarter,? thanks to a rebound of margins and a higher volume. Fuel manufacturers have made unexpected profits in the third quarter. Product margins, largely driven by the ongoing Russia-Ukraine conflict, recovered from multi-year lows that were seen in 2024, when earnings dipped from their post-pandemic peak. The San Antonio-based company reported that its refining margin increased by over?61% compared to a quarter ago, reaching $13.61 per barrel. Its average throughput volume also rose, from 2.9 million barrels per days a few years earlier, to 3.1 million. Valero shares were up by?over 3 percent shortly after Thursday's conference call. LSEG data shows that the adjusted net profit for the quarter came in at $3.82 per share. This compares to analysts' expectations of $3.27 per shares. The company returned $1.4 Billion to its shareholders in the fourth quarter. VENEZUELA DEALS: BENICIA Refinery Closure Investors wanted more information about Venezuela on Thursday's conference call. The U.S. Energy sector is preparing to increase output in the Latin American nation after the Trump Administration outlined a plan that urged companies to invest $100 billion to revitalize the country's petroleum industry. Randy Hawkins, vice president of crude and raw materials supply and trading, said that it was great to have Venezuelan crude back in our system. The crude is expected make up approximately 10% of the total crude oil supply. Valero's "heavy crude" diet accounts for a significant portion As early as February. Manav Gupta, UBS analyst, said that Valero was the refiner best positioned to profit from the influx of Venezuelan barrels into the U.S. The Venezuelan regime could change, resulting in a wider differential in crude oil prices. Gupta said that a $3 increase per barrel in the heavy-light differential would lead to an earnings boost of at least $600,000,000 for Valero. The refiner provided an update on its refinery located in Benicia, California. It is expected to cease operations by the end April. Rich Walsh, executive vice-president of the refinery, said that it will start idling all its process units by February. He added, "We will continue to provide the California market from Wilmington."
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Consumer group files complaint after infant milk recalls
Foodwatch, a consumer rights group that advocates for consumers' rights, filed a criminal complaint on behalf of 8?families on Thursday. The group claims the babies fell ill from consuming contaminated infant formula. Nestle, Danone, and Lactalis have all withdrawn batches from the market in the last month due to concerns over possible contamination. The toxin, cereulide, can cause nausea and vomiting. Foodwatch, a non-profit organization based in Berlin that works?against the food corporations and regulatory agencies of Europe,' said that babies developed vomiting, diarrhea, fever, and abdominal pain. Some required hospitalisation prior to the recall. The complaint asks for a criminal investigation of possible offenses committed by manufacturers, and alleges that authorities failed to act quickly. Foodwatch noted "silent withdraws" and delayed consumer warnings in certain countries. Nestle said it had acted'responsibly and transparently, proactively in taking actions. Nestle's spokesperson stated that "when we confirmed the oil used in our products was the cause, we acted quickly to alert authorities, to proactively alert industry and to inform consumers, customers, partners, and most importantly, to adhere to?our values of prioritizing the safety and well-being of babies worldwide." Danone, Lactalis Hochdorf Granarolo, and Vitagermine were named in the complaint following the recall of products. However, they did not respond to comments made immediately. Last week, the local food safety authorities confirmed that a baby from Flanders in Belgium was sickened by contaminated Nestle infant formula. They said the 'baby recovered fully. Nestle has said that it has received no medical reports to date confirming any link between its products and illnesses. French investigators are investigating whether there is any link between two infant deaths and the recall of formula products.
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Danone recalls batches in Germany of Aptamil Baby Formula, letter shows
A letter sent to a wholesaler on Thursday revealed that Danone has recalled three batches of Aptamil infant formula in Germany. The French food manufacturer is scrambling to quell a panic over toxin contamination, which began with Nestle products. Danone Deutschland, in a letter dated 26 January, asked Alliance Healthcare to remove some batches of Aptamil manufactured between May and 2025. The letter was published by online pharmacy Shop Apotheke. It stated that the wholesaler had little or no stock remaining, given that it received new deliveries. Danone announced on Friday it would be recalling certain baby formula batches from targeted markets. It did not mention which brands, countries, or volume of products were affected. But it stressed that its products are safe, and meet all safety regulations. Danone did not immediately respond to Thursday's?request? for a comment. Nestle announced in January that it would be withdrawing certain batches of infant formulas including SMA, BEBA, and NAN due to possible contamination by a toxin called cereulide, which can cause nausea and vomitus. Since then, the recalls have been expanded to include other French producers Lactalis and Vitagermine. The combined loss could exceed $1 billion. Danone shares have fallen almost 13% over the past two weeks. French investigators are investigating whether there is any link between two infant deaths and the recall of formula products. The German Federal Office for Consumer Protection and Food Safety announced on Thursday that certain batches of Danone product were being withdrawn. An official recall could only be issued when it is known the products have been consumed by consumers. The recalls show how an 'ingredient compromised can spread throughout the highly regulated infant food sector, prompting swift action by regulators and causing market jitters. A supplier detected Cereulide in a product. This?toxin is produced by Bacillus cereus. France's Agriculture Ministry has stated that the product was made in China. The Food Safety Authority of Ireland has also confirmed that cereulide had been detected in arachidonic oil manufactured in China.
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Eskom South Africa increases wage offer during ongoing union negotiations
Eskom, the state-owned South African power utility, has increased its offer of a salary increase to trade unions from 3.5% last year. A?document seen showed that this is still 'well below what unions demand. Eskom's electricity cuts and financial problems have been a drag on Africa’s largest economy for a long time. A sharp improvement in its coal-fired electricity stations allowed Eskom to stop the nationwide "blackouts". Last year, it reported its first profit for the full financial year in eight years. In a second round pay talks, the revised wage offer was made to three major unions that it negotiates salaries with. The document showed that Eskom had proposed the 5.5% wage increase to come into effect on July 1, one day after the expiration of its current three-year wage deal. This offer also includes adjustments for other benefits such as housing. A spokesperson for Eskom confirmed that the utility had offered a 5.5% salary increase. Unions want pay increases of up to 15 percent, which is far higher than South Africa's inflation rate. In December, it was 3.6%. The central bank believes that the rate may have peaked. The National Union of Mineworkers' energy sector coordinator,?Khangela Baloyi said that a third round of wage negotiation is planned for February. Eskom's three year agreement, reached in 2023, saw the salaries of non-managerial staff increase by 7% per annum. Former state monopoly generates the majority of South Africa's power and would like to?agree another multi-year salary deal. Previous wage disputes have led to power blackouts as a result of unions going on strike. The impact of a possible strike on Eskom operations this time around is more difficult to assess, as its recent improvements in its generation fleet mean it has excess capacity. (Reporting and editing by Alexander Winning & Kirby Donovan; Additional reporting by Wendell Roelf)
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Copper prices soar to record highs above $14,000, as investors pile in
The copper price spiked up to $14,000 per metric ton, a new record, on Thursday, as speculators continued their buying spree. They were encouraged by the expectation of high demand, and backed by a weaker dollar and geopolitical worries. Copper spiked with 'the biggest one-day increase in over 15 years, then lost most of its gains. Other metals also surged, before sliding into the negative. Benchmark three-month Copper on the London Metal Exchange rose 11%, reaching an all-time record high of $14,527.50 per metric ton. By 1700 GMT it had fallen to $13,612.50, which was a gain of 4%. Bulls, mostly in speculative funds ignored warnings from analysts that high prices could chill physical demand among industrial consumers, and were not supported by current supply/demand principles, creating a quandary for investors. In a note, Neil Welsh of Britannia Global Markets stated that "Copper's biggest one-day increase in years was driven by intense speculative trades by bulls in China." Investors are dumping base metals in anticipation of stronger U.S. economic growth and more global spending on data centers, robotics, and power infrastructure. Copper is used for power and construction, but inventories monitored by the global exchange are high, particularly in the U.S. After setting a new record, the most active copper contract at the Shanghai Futures Exchange ended daytime trading 6.7% lower, at 109.110 yuan (15,708.77 dollars) per ton. The gains were made despite a weak physical demand in China, the largest consumer market. The Yangshan Copper Premium The Chinese demand for copper fell to $20 per ton on Tuesday, the lowest level since July 2024. It was $55 in December. Traders said that copper is also on the rise due to an interest in hard assets. This has led to gold and silver reaching record highs partly because of geopolitical tensions. A weaker dollar index also supported metals. The index was near multi-year lows and made commodities priced in U.S. dollars cheaper for buyers who used other currencies. The erratic trading of other LME metals was also a factor. LME surged to another record high?of $59 040 a ton despite weak fundamentals and then fell 2.5% to $54,540. LME aluminium rose 3% to $3356 per ton, its highest level since April 2022. Then it fell 1.1%, to $3222. Zinc rose 1.4% to $3.412 per ton, after reaching its highest level since August 2022. Lead fell 0.3% to $2,000 and nickel rose 0.5% to $18,355, down from the intraday high of 19150.
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ArcelorMittal claims $2 billion against Italy over steel plant dispute
ArcelorMittal is a multinational steelmaker that was the former owner Acciaierie d'Italia, an Italian steel company. On Thursday, it announced that it filed a 1.8 billion euro claim ($2.2 billion) against the Italian Government over losses?linked with its investment in ADI's factories. This filing is a 'tit-fortat' move after Italy's state appointed administrators of ADI (formerly known as ILVA) sought around 8 billion euros in damages from ArcelorMittal alleging it mismanaged ADI’s steelworks. Early in 2024, the government assumed control of ADI after ArcelorMittal. ADI has struggled to maintain its production due to high energy costs and low demand. In the government's ?case, Luxembourg-headquartered ArcelorMittal said in a statement on Thursday that ADI's government-appointed commissioners had served it ?with a summons to appear before a Milan court. It rejected all accusations, including that it had pursued a'strategic approach of running down the 'plants, destroying ADI’s business, and extracting profit from Italy. ArcelorMittal announced that it had invested around 2 billion euros to "turn around a structurally-challenged business." Much of this money was dedicated to meeting the environmental standards set forth by the government. It claimed that the government had made "omissions" and "illegitimate legislative intervention" which affected the terms?under which it purchased the plants, and caused the company to lose its investment. In December, sources close to the issue said that 'Italy selected U.S. Investment Fund Flacks as the exclusive buyer for ADI. The?government tried before to sell ADI’s steelworks to a consortium of Azeri companies Baku Steel, and Azerbaijan?Business?Development?Fund but could not reach an agreement. ILVA Taranto?steel was once Europe's biggest steel plant, but it has been hampered since 2012 by judicial investigation and asset seizure?related to its environmental impact. The future of ADI has become a key political issue for Italian Prime Minister Giorgia Melons, since a shutdown could have significant effects on the manufacturing sector in Italy.
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Microsoft falls, and oil prices rise on Iran-related fears
Oil prices rose on U.S. - Iran tensions, as global shares fell on Thursday. On Wall 'Street in the U.S. Stocks were down in the opening stages of trading. Microsoft shares fell more than 11%, which put the company on course for its largest daily percentage decline since March 2020. Investors were unnerved after the record expenditure on artificial intelligence in the last quarter. Meta Platforms' quarterly results showed a gain of over 8%, but this was overshadowed by the drop in Microsoft shares. This shows that investors are willingly to overlook massive AI expenditures as long as they are accompanied with strong growth. Tesla, a fellow "Magnificent 7" member, slid nearly 2% following its earnings report. Apple will post its results after the closing bell. Adam Turnquist is the chief technical strategist at?LPL Financial, based in Charlotte, North Carolina. The Dow Jones Industrial Average dropped 69.72, or 0.15 %, to 48.945.88. The S&P 500 fell 53.52, or 0.77 %, to 6,924.51 while the Nasdaq Composite lost 379.35, or 1.59% to 23,478.10. The MSCI index of global stocks fell 5.18 points or 0.49% to 1,046.49. This was its first decline in six sessions. The dollar index (which measures the greenback versus a basket currencies) rose 0.36%, its second daily gain after a recent bout with weakness. Meanwhile, the euro fell 0.22% to $1.1926. The dollar's strength was boosted by the Federal Reserve's decision to keep interest rates unchanged on Wednesday. Chair Jerome Powell cited a strong economy, and lower risks of inflation and unemployment, which indicated that the central bank would have plenty of time to cut rates. The U.S. economy reported on Thursday that initial weekly jobless claims had fallen, which indicated that layoffs were still low. However, soft hiring kept consumers pessimistic regarding the labor market. U.S. crude oil prices rose by 2.67%, to $64.90 per barrel. Brent was up to $70.31 a barrel, up 2.79 percent on the day, after rising more than 5%. Geopolitical tensions kept upward pressure on the gold price, which reached a record $5,594.82 per ounce. This was its ninth consecutive record high. Gold spot prices fell 4.13% to $5,176.45 per ounce, despite the gains.
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Dow forecasts weak revenues amid slow demand, and will cut 4,500 jobs
Dow will cut 4,500 jobs or 13% of its total workforce as part of a massive restructuring designed to boost profitability by at least $ 2 billion. However, the company's first-quarter revenues are expected to be below expectations due to persistently low demand. In the morning of Thursday, shares of the company dropped 5.8%. On a call after earnings, executives said that the job cuts would also reduce the roles and resources of third parties. The company is using automation and AI in order to improve efficiency and lower costs. Chemical producers around the world are reevaluating their strategies due to stagnant demand in Europe, rising production costs, and changing regulatory requirements. Dow has also been reevaluating its ownership of non-core assets throughout its global portfolio. This includes power and steam production, pipelines, and other assets. Jim Fitterling, CEO of Fitterling Corporation, said that the company will deliver the remaining $500 million in savings from the $1 billion cost-saving program by the end the year. Dow, which employs 34,600 workers and operates manufacturing sites across?29 countries, anticipates incurring $1.1 to $1.5 billion of one-time costs associated with the restructuring in 2026 and 2027. The company has not specified which sites or business units will be affected by the planned job cuts. DOWNBEAT EXPECTATIONS OF REVENUE According to data compiled and analyzed by LSEG, the company predicted first-quarter sales of $9.4billion, which is below analysts' averaging estimate of $10.33billion. Dow said that modest seasonal improvements in demand and the benefits of cost control during the quarter may be offset by planned maintenance and continued downward pressure on the market, particularly for the construction and building industry. The Michigan-based company reported a smaller-than-expected adjusted loss of 34 cents per share, compared with analysts' average estimate of a loss of 46 cents. (Reporting and editing by Sriraj Kalluvila in Bengaluru)
Fuel oil prices in Asia are higher than those in the West as more Venezuelan oil is diverted to the US
Friday, the premium for high-sulfur fuel oil in Asia over the West reached its highest level in eight months as traders expect more Venezuelan crude oil and fuel oil to be shipped to the United States than to Asia in the coming months.
LSEG data show that the East-West 380cst HSFO swap for the first month of 2026, a measure used to compare HSFO prices in Asia, Europe and America, has risen above $27 a barrel, a price last seen in May 2025. This value has nearly doubled since the beginning of 2026.
It is more profitable for traders to send fuel oil to Asia when the price differential widens.
Last week, Donald Trump, the U.S. president, seized Venezuelan President Nicolas Maduro and declared that the U.S. would control Venezuela's oil industry.
Secretary of State Marco Rubio stated that the U.S. will refine and sell 50 million barrels Venezuelan crude on Wednesday, while continuing to seize Venezuelan linked tankers.
BEARISH US OUTLOOK
Royston Huan is a fuel oil and feedstocks expert at Energy Aspects. He said that the increased availability of Canadian heavy crude for U.S. locations would add to the pressure on the U.S. Gulf Coast's HSFO market.
Analysts at a U.S. refining company said that traders increased the East-West spread as U.S. market sentiment has turned negative due to the possibility of diverting more Venezuelan fuel and crude oil with high sulphur content into U.S. refueling stations, thus reducing the supply for Asia.
VOLATILITY OF ASIAN RESIDENTS
The volatility of HSFO future prices has been caused by the uncertain outlook for Venezuelan crude oil supplies in Asia.
Singapore's balance-January/February spread flipped into backwardation ?on Wednesday, before swinging back into contango on Thursday. Backwardation is a market structure in which the current prices are higher than the future ones. This indicates a tighter supply. Contango is the opposite.
According to LSEG and market sources, the spread flipped backwardation in early trading on?Friday.
Some traders say that for now, the fuel oil price gains in Asia will be tempered by the large inventories in tanks on land and aboard ships.
Due to Western sanctions, Chinese independent refiners are a major outlet for Venezuelan crude oil and fuel oil.
Emril Jamil is a senior oil analyst with LSEG. He said that the loss of Venezuelan feedstock at a low price will affect refiners’ profitability and force them to reduce their refining rates or find alternative residual feedstocks.
(source: Reuters)