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Gold prices drop as Trump delays EU tariff deadline
Gold prices fell on Monday, after U.S. president Donald Trump announced a deadline of July 9 for a deal with the European Union. He also revoked his June 1 threat to impose a tariff of 50%. As of 0312 GMT, spot gold was down by 0.3%, at $3,346.59 per ounce. U.S. Gold Futures dropped 0.6% to $3345.70. Kyle Rodda is Capital.com's Financial Market Analyst. He said, "There's a relief element in the market after the pause of tariffs against the EU. We're also seeing gold weaken." He said that the United States actions are still impacting the gold market, and could have a negative impact on the dollar. Trump has backed down from his threat of accelerating 50% tariffs on imported goods from the European Union. He agreed to extend the deadline for his trade negotiations until July 9, after the head the EU executive said that the bloc needed additional time to "reach an agreement." Gold prices rose by more than 2% on Friday to reach a new two-week high, boosted by inflows into safe-haven assets after Trump suggested 50% tariffs on European Union Imports starting June 1, and said he would consider a 25% tax on any Apple iPhones manufactured outside of the United States. In the meantime, the dollar index fell to its lowest level in nearly a month against its competitors. Gold priced in greenbacks becomes cheaper for holders of other currencies when the dollar is weaker. Officials said that on the geopolitical side, Russian forces launched 367 drones or missiles overnight at Ukrainian cities, the largest aerial assault of the war to date. At least 12 people were killed and dozens injured, they added. SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings dropped 0.15% on Friday to 922.46 tonnes from 923.89 on Thursday. Spot silver remained unchanged at $33.46 per ounce. Platinum fell 0.2% to $1093, while palladium rose 0.7% to $99.90.
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Dalian iron ore falls to a two-week low due to weak China steel demand and property woes
Iron ore futures prices fell on Monday due to a decline in steel consumption by China, the world's largest consumer. Meanwhile, persistent weakness in China's real estate market also dampened sentiment. As of 0316 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 2.15% lower. It was 707 yuan (US$98.56) per metric ton. Early in the session the contract had reached 704 Yuan, its lowest level since May 12. On the Singapore Exchange, benchmark June iron ore traded at $97.2 per ton, down 0.94%. Mysteel, a consultancy, reported that "Chinese iron ore prices fell on both the spot and futures market during May 19-23. Hot metal production by steelmakers also decreased amid an approaching low season in steel demand." Everbright Futures, a broker, said that hot metal production, which is typically used to gauge demand for iron ore, fell 0.48% on a month-to-month basis to 2.4 millions tons in May. They added that, while output may have declined, the level of production has remained high. Galaxy Futures, a broker, stated that the continued challenges in the construction and real estate sectors have significantly impacted domestic steel demand. A poll found that the property market in China is likely to remain weak this year. Home prices are expected to drop by nearly 5% in 2019 and then stay flat in 2026. The stronger dollar also affected prices, after U.S. president Donald Trump rescinded the threat of imposing a 50% tariff on European Union products from June 1. Dollar-denominated investments are less affordable for holders of currencies other than the greenback. Coking coal and coke, which are both steelmaking ingredients, were down by 1.16% and 1.25 %, respectively. The benchmark steel prices on the Shanghai Futures Exchange have fallen. Rebar fell 1.51%, while hot-rolled coil dropped 1.94%. Stainless steel eased by 0.08%, and wire rod plummeted 3.2%.
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Trump announces US Steel will be controlled by the US as part of Nippon Deal
Donald Trump, President of the United States, said on Sunday that as part the partnership between Nippon Steel and U.S. Steel, the United States would have control over U.S. Steel. Nippon Steel announced Friday that it would invest up to $14 billion in U.S. Steel operations. This includes $4 billion for a new mill. Trump claimed on Friday that the merger will create 70,000 new jobs. When asked for more information about the agreement on Sunday, Trump replied: "It'll be controlled by the United States. Otherwise, I wouldn’t make it." Trump told reporters that he was pushed to sign the agreement by lawmakers as he headed to Washington from his New Jersey club. He said that the deal was a partial ownership and an investment, but would be controlled by USA. According to World Steel Association statistics, the merger would make China's Baowu Steel Group, and Luxembourg's ArcelorMittal the third largest steel producer in terms of volume. Investors have expressed their confidence in terms that are similar to those that were agreed upon in 2023, despite the fact no specifics have been released. Investors believe that U.S. Steel shares will be paid out in cash when the company ceases to be publicly traded. The deal was one of the most anticipated on Wall Street, and then it became a political issue with concerns that foreign ownership could lead to job losses in Pennsylvania where U.S. Steel has its headquarters. (Reporting and editing by Tom Hogue, Muralikumar Aantharaman and Steve Holland)
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Asian stocks, euro gain after Trump delays EU tariffs
Stock markets in Asia rose on Monday. The euro also rallied, after President Donald Trump extended his threat of imposing 50% tariffs on EU products by over a month, signaling another temporary respite as part his erratic policy on trade. Trump extended his trade deadline from Friday's June 1 to July 9 after European Commission President Ursula von der Leyen stated that the EU needed more time to reach a "good deal". The market sentiment was stable after a sharp drop in most assets during the month of November. Trump had paused his tariffs that were affecting growth and investors wanted to make new trade agreements after an agreement with UK and temporary agreement with China. Analysts have pointed out that investors are moving their money from the U.S. into Europe and Asia, as they factor in a potential U.S. economic recession and subsequent global slowdown. "(The tariffs) are well above the original reciprocal 20% tariff on the EU." This escalation is bad news for the world as it affects 60% of the global GDP. Apple was also caught up in the crossfire of trade on Friday after Trump threatened to levy a 25% tax on all iPhones imported by U.S. customers. The broadest MSCI index of Asia-Pacific stocks outside Japan rose 0.12% on Monday. Japan's Nikkei also edged up. Due to the fact that the United States and United Kingdom markets are closed on Monday due to public holidays, trading volumes are expected to be low. Nippon Steel, a Japanese company, jumped by 4.3% on Friday after Trump expressed his support for its $14.9 billion offer to acquire U.S. Steel. He said that their "planned partnership", would create jobs and benefit the American economy. U.S. Steel shares soared by 21% on the Friday. Investors will try to gauge Bank of Japan's outlook for monetary policy by focusing on super-long Japanese bonds. Inflation data is expected later this week. Last week, yields on tenors reached record levels. The ballooning debt levels of developed economies have also been brought to the forefront following Moody's downgrading of the United States' credit rating and the weak auctions for debt in the U.S.A. and Japan held last week. Hong Kong's Hang Seng Index fell 0.4% in the early morning trading of Monday while China's blue chip index dropped 0.2%. The euro gained 0.3%, reaching its highest level since April 30. Meanwhile, the dollar recovered up to 0.3%, to 143.085 Japanese yen after a 1% drop on Friday. Nvidia, the leader in artificial intelligence (AI), will release its earnings report on Wednesday. It is the last member of the "Magnificent 7" group of growth shares that led the U.S. bull run of more than two years. Analysts believe that the quarterly report of the semiconductor giant could be the catalyst for the markets as its forecasts can be seen as a sign of demand for technology infrastructure. Nvidia shares have fallen more than 2% in this year as investors have taken note of cheaper Chinese AI models following the release of DeepSeek. CEO Jensen Huang also warned that U.S. Export curbs would affect sales. Reports on Saturday indicated that Nvidia would launch a new AI chipet in China for a lower price. This is subject to U.S. approval. Gold prices dipped from their two-week high, but crude oil prices rose.
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Nippon Steel shares rise after Trump supportss U.S. steel deal
Nippon Steel's shares rose on Monday after U.S. president Donald Trump expressed his support for the company’s $14.9 billion offer to acquire U.S. Steel. Trump stated in a Truth Social post that the "planned partnership", between the two companies, will create at minimum 70,000 jobs as well as add $14 billion to U.S. economic growth. Trump said that most of the investment will be made in the next fourteen months. He also announced that he would attend a rally on Friday at U.S. Steel, but did not provide any specifics. It's unclear if Trump's use of the term "partnership", refers to Nippon Steel's full acquisition U.S. Steel, which it has been pursuing. The White House didn't respond to any questions regarding the announcement made on Friday. Investors interpreted Trump's comments, which initially opposed the deal and meant Nippon Steel received his approval, as the last major obstacle for the deal. U.S. Steel as well as Nippon Steel have both praised the comments. Nippon Steel is Japan's largest steelmaker. The deal is central to their global expansion strategy. The deal would increase production from 63 to 86 millions metric tons, at a time of declining domestic demand. Nippon shares, the fourth largest steelmaker in the world, rose 5% in Tokyo to 3,025yen after they were untraded earlier in the morning due to a surplus of buy orders. Nippon was the largest percentage gainer in Tokyo's Nikkei 225 benchmark index. According to World Steel Association, a merger would make China's Baowu Steel Group the third largest steel producer in terms of volume after Luxembourg's ArcelorMittal and China's Baowu Steel Group. Mariko Katsumura, Muralikumar Aantharaman, and Neil Fullick edited the story.
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Origin Energy Australia raises the lower end of its full-year profit estimate
Origin Energy, Australia's largest energy company, raised its underlying profit forecast for fiscal 2025 to the lower end due to operational improvements as well as wholesale portfolio benefits. Energy retailer expects its full-year earnings before interest taxes, depreciation, and amortization to be between A$1.3billion ($844.35m) and A$1.4billion, up from the previous range of A$1.1billion to A$1.4billion. Origin said that it also projects a loss up to A$100m in its share in annual EBITDA underlying from Octopus Energy due to the unseasonably warm weather in March and April across United Kingdom, and other one-off effects. Origin estimated that it could contribute up to A$100m. The shares of the Sydney-based firm dropped up to 4.5%, reaching a low of A$10.55 (nearly three weeks ago). Origin announced earlier this month that it expected to lose its share of Australia Pacific LNG's (APLNG) EBITDA for the six-month period ending June 2025, after APLNG lowered prices on sales made to China Sinopec.
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Oil prices rise after Trump extends EU Trade Talks deadline to July
The oil prices rose in the early Asian trading on Monday, after U.S. president Donald Trump extended the deadline for trade negotiations with the European Union. This eased concerns over U.S. duties on the EU that could harm the global economy and fuel the demand. Brent crude futures were up 37 cents or 0.6% to $65.15 a bar by 0001 GMT, while U.S. West Texas intermediate crude was up 32 cents or 0.6% at $61.87 a bar. Tony Sycamore, IG's market analyst, said: "Crude oil and U.S. stock futures are up this morning following the extension of the deadline by U.S. president Trump." Trump announced that he had agreed to extend the deadline for the trade talks between the United States and the European Union to July 9, after Ursula von der Leyen said that the European Union needed more time to reach a deal. Sycamore stated that the headlines about trade and tariffs along with fiscal concerns will be the major wild card this week for crude oil and risk sentiment. Brent and WTI continued to rise after ending 0.5% higher Friday, as the limited progress made in U.S. - Iran nuclear talks eased fears of Iranian oil returning on global markets. Also, U.S. buyers were covering positions before the three-day Memorial Day Weekend. Baker Hughes, an energy services company, also released data that indicated U.S. companies, under pressure of lower oil prices and a reduction in the number operating oil rigs, had reduced the number to 465, the lowest level since November 2021. At the next meeting, the Organization of the Petroleum Exporting Countries (OPEC+) and its allies could decide to boost output by 411,000 barrels a day for July. This month, the group reported that it could complete the voluntary production cuts of 2.2 million barrels per day by the end October. It had already increased output targets for April, may and June by around 1 million barrels per day. Reporting by Florence Tan, Editing by Muralikumar Anantharaman
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Israeli attacks kill 23 people in Gaza including a rescue official and a journalist
Local health officials reported that Israeli military strikes on Gaza Strip killed 23 Palestinians, including a journalist from the area and a senior official of the rescue services. Medical experts said that the latest deaths in Israel's campaign were caused by separate Israeli strikes at Khan Younis, Jabalia, and Nuseirat, in central Gaza Strip. According to reports, an airstrike on Hassan Majdi Abu Warda's house in Jabalia earlier Sunday killed several members of his family and local journalist Hassan Majdi Abu Warda. A second airstrike on Nuseirat has killed Ashraf Ab Nar, a senior civil emergency service official, and his spouse in their home, according to medics. The Israeli military did not immediately comment. Hamas' Gaza Government Media Office said that Abu Warda’s death brought the total number of Palestinian journalists who have been killed in Gaza since 10/7/2023 to 220. The media office released a statement saying that Israeli forces controlled 77% of Gaza Strip either by ground forces, evacuation orders, or bombardment which keeps residents from returning to their homes. In separate statements issued on Sunday, the armed wings of Hamas (Hamas' wing) and Islamic Jihad (Islamic Jihad's wing) said that their fighters had carried out ambushes and attacks against Israeli forces in various areas in Gaza using anti-tank missiles and bombs. The Israeli military announced on Friday that it had carried out more strikes overnight in Gaza, including 75 targets such as weapons storage and rocket launchers. Israel began an air and land war in Gaza following the Hamas militants’ cross-border attack of October 7, 2023. The Israeli counted 1,200 dead, with 251 hostages taken into Gaza. Gaza's health authorities report that the conflict has caused more than 53,900 Palestinian deaths and has devastated coastal areas. Aid groups report widespread signs of severe malnutrition.
Esgian Week 36 Report: New Contracts Awarded in India, Guyana and West Africa
Esgian provides an update on new contract awards for Greatship, Transocean, Noble and Stena Drilling in its Week 36 Rig Analytics Market Roundup.
Report Summary
Contracts
Greatship has secured a contract with Cairn for its 350-ft Greatdrill Chetna jackup drilling rig in India. The contract is firm for six months at a dayrate of approximately $90,000, starting in late November or early December 2024.
Transocean has secured a binding letter of award from Reliance Industries for its 6th generation 12,000-ft drillship Dhirubhai Deepwater KG1 in India.
ExxonMobil has awarded 4.8 years of backlog to Noble's four drillships operating under a Commercial Enabling Agreement (CEA) offshore Guyana. This additional time has been assigned evenly to each of the four rigs, extending their contract durations from the second quarter of 2027 to the third quarter of 2028.
Stena AB, owner of drilling contractor Stena Drilling, has confirmed that ExxonMobil extended its contract for the 10,000-ft drillship Stena Carron offshore Guyana until 30 June 2025.
Constellation 9,000-ft semisubmersible Alpha Star has started a new contract offshore Brazil, carrying out workovers at BC-10 field in the Campos Basin for Shell.
Mexican state oil company Pemex has requested an extension to the contracts for Constructora y Perforadora Latina (CP Latina) jackups La Santa Maria and La Covadonga. The two 400-ft jackups are currently contracted to Pemex until 31 December 2024.
Shelf Drilling has secured new contract awards for two jackup rigs in West Africa.
Drilling Activity and Discoveries
Mexican state oil company Pemex has received permission from regulatory agency Comisión Nacional de Hidrocarburos to drill the Tlalkivak-101EXP exploration well with owner operated 400-ft jackup Kukulkan.
The Norwegian Ocean Industry Authority (Havtil) has given consent to OKEA for the use of Odfjell Drilling’s 6,560-ft semisub Deepsea Nordkapp for pilot hole drilling in block 31/7 in the North Sea.
Oil production has started from the Tyrving field in the Alvheim area of the North Sea offshore Norway.
ExxonMobil is using Stena Drilling 10,000-ft drillship Stena Carron for exploration drilling at the Hammerhead-4 well on the Stabroek Block offshore Guyana.
Chevron has begun water injection operations at the Jack/St. Malo and Tahiti facilities in the US GOM to boost oil and natural gas recovery from these deepwater fields.
Murphy Oil Corporation is preparing to spud the Sebastian #1 exploration well in 6,571 ft of water on Mississippi Canyon Block 387 in the US GOM this month.
Island Drilling’s 4,000-ft semisub Island Innovator has recently started the 2024 abandonment campaign in Mauritania for Tullow Oil, managed by Petrofac.
Talos Energy has reported that the Walter Oil & Gas-operated Ewing Bank 953 well discovered commercial quantities of oil and natural gas.
Esso Australia Resources, a subsidiary of ExxonMobil, has submitted an environment plan to NOPSEMA for the drilling of the production well as part of the Kipper Stage 1B development of the Kipper gas field in VIC/L25 in the Bass Strait, off the coast of Australia.
Demand
In recent weeks, the UK government has announced a number of measures which have materially increased the level of uncertainty in relation to the UK’s oil and gas sector, leaving investment decisions in this context in a challenging situation.
Chevron and its partners in the Aphrodite field on Block 12 offshore Cyprus have submitted an updated plan for development of the field to the government of Cyprus, based on a previously approved development and production plan.
Hartshead Resources has re-processed seismic over its P2607 licence, which comprises its Phase I project (Anning and Somerville fields), located in the UK North Sea.
UK operator EnQuest has shared its disappointment over the current fiscal situation in the UK, warning about the impact of the new government’s announced policy changes on investment in the UK North Sea.
Mobilisation/Rig Moves
Borr Drilling’s 400-ft jackup rig Gerd has completed its contract with Bunduq in the UAE.
COSL Drilling’s 2,460-ft semisub COSLPioneer has finished its contract with CNOOC in the UK waters of the North Sea and is heading to Norway.
Shelf Drilling’s 300-ft jackup Harvey H. Ward has moved to Ras Al Khair anchorage, marking the beginning of its contract suspension with Saudi Aramco.
Valaris' 350-ft jackup Valaris 147 has moved to Saudi Arabia's Ras Tanura anchorage, starting its contract suspension with Saudi Aramco.
Rig Sales
Transocean has entered into agreements with an undisclosed third party to sell the 10,000-ft semisubmersible Development Driller III and associated assets for $195 million and the 12,000-ft drillship Discoverer Inspiration and associated assets for $147 million.
Stena Drilling 5,000-ft semisubmersible Stena Spey has been sold for recycling and is expected to be towed to a yard in Turkiye in January 2025.
Other News
Noble Corporation and Diamond Offshore Drilling, Inc. have received clearance from the Australia Competition & Consumer Commission, in relation to the pending merger.
Norwegian oil and gas operator DNO has completed the acquisition of stakes in five oil and gas fields, including an operatorship, in the Norne area in the Norwegian Sea from Vår Energi.
Australian oil and gas company Santos informed on Monday that the Bayu-Undan field joint venture has agreed terms of a Sale and Purchase Deed (SPD) to transfer a 16% stake in the Bayu Undan upstream project to Timor GAP, a Timor-Leste government-owned oil company, with an economic date of 1 July 2024.
Energy industry trade body, Offshore Energies UK (OEUK), on Monday 2 September released data which models the impact of the UK’s government’s announced stronger Energy Profits Levy (EPL) on the UK economy.
Conrad Asia Energy has signed a binding Gas Sales Agreement (GSA) for the sale and purchase of the export portion of natural gas from the Mako gas field with Sembcorp Gas Pte Ltd in Singapore.
Brazilian independent company 3R Petroleum has changed its name following the merger with another independent oil company, Enauta.
bp Trinidad and Tobago (bpTT) has agreed to divest its Immortelle, Flamboyant, Amherstia, and Cashima offshore gas fields and associated production facilities to Perenco T&T. The undeveloped resources from the Parang field are also part of the agreement.
Indonesia's Ministry of Energy and Mineral Resources has announced the winners of the first bidding round for oil and gas blocks in 2024.
Sunda Energy has submitted applications for two offshore licence areas in the Philippines.
As of 3 September 2024, Wintershall Dea's E&P business, excluding Russia-related activities, has been transferred to Harbour Energy.
Greenpeace Nordic and Natur og Ungdom (Young Friends of the Earth Norway) are facing the Norwegian government in court once again, in appeal proceedings starting on 4 September and running until 12 September 2024.
Noble Corporation plc has completed its acquisition of Diamond Offshore Drilling, Inc. The acquisition adds around $2 billion of backlog to Noble, which now reports its current backlog at $6.7 billion.