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Gold gains as bets on rate hikes decline ahead of Fed decision
Gold rose for a 'fifth consecutive day' on Wednesday, as a sigh of relief over a U.S. - Iran peace deal eased expectations that the U.S. would raise interest rates. Investors awaited more details about the agreement and the Federal Reserve policy meeting. As of 0230 GMT spot gold was trading at $4,341.12 an ounce. This is near the one-week high reached on Monday. U.S. Gold Futures for August Delivery?rose by 0.2% to $4361.10. Details are beginning to emerge about a U.S. - Iran interim deal that will end the Middle East conflict. Donald Trump said it would prevent Tehran from acquiring a nuclear weapon and a U.S. government official stated that the deal would allow Iran oil sales once signed. The oil price hovered at a low of three months after news broke that Iranian fuel could?soon' hit the global market, which eased inflationary fears. The pullback in oil has cooled expectations of rate hikes and eased some upward pressure on rates. The rally in gold is losing steam, as attention turns to the Fed's monetary policy announcement, said Ilya SPivak, Tastylive's head of global macro. Investors are focusing on the U.S. Fed's policy announcement and remarks due later today, with rates expected to stay unchanged. Spivak stated that "this marks the first FOMC meeting chaired Kevin Warsh, and traders are still unsure of how he'll reconcile his hawkish record with rising inflation and pressure from a White House requesting a pivot to a more dovish stance." According to the 'CME FedWatch' tool, traders now expect a?59% probability of a?U.S. rate increase in December. This is down from 70% the week prior to the announcement of the U.S./Iran peace agreement. When rates are high, gold loses its appeal because it does not earn interest. Westpac analysts wrote in a research report that "Over the long term, structural support for gold is expected to continue, driven by continued Asian demand and continuing central bank purchases as hedges?against?geopolitical and political risks." Silver spot rose 0.3% to $70.38 an ounce. Platinum was up 0.5% at $1,812.80 and palladium gained 0.3%.
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As traders await Warsh, oil prices drop on Iran's supply prospects
Crude prices falling on news that Iranian oil may soon reach global markets sparked a fall in bond yields on Wednesday. Stocks and currencies were quieter before Kevin Warsh's first meeting as Federal Reserve Chair. Brent crude 'futures' plunged below $80, the cheapest since March when the 'U.S. - Iran conflict began. According to a senior U.S. Official, the U.S. has agreed to waive sanctions against Iranian oil as part of the agreement that ends the war. This could lead millions of barrels more of Iranian oil being supplied. U.S. bonds yields dropped and rates in Asia followed, with 10-year Japanese rates down 1.5 basis points to 2.63 percent and 10-year Australian rates down almost 5 basis points to 4.78 percent. Kim Fustier is a senior oil and Gas analyst at HSBC. The bank believes it will be until the 'end of September before the markets price in a complete normalisation of the?flow of the Hormuz. The U.S. and Iran agreement is due to be signed this Friday. However, few details have been confirmed. A three-month blockade of the 'Strait of Hormuz' has drained the oil reserves of the United States, which are now at their lowest level since 1983. Overnight, Wall Street investors reduced crowded bets made on semiconductor and tech stocks, bringing the Nasdaq index down by 1.15%. Meanwhile, the Dow reached a new record, thanks to a rise in financial and industrial stocks. Futures in Asia were slightly positive, but chip-heavy markets like Taiwan and South Korea slid lower. MSCI's broadest Asia-Pacific share index outside Japan also fell by about 0.3%. Japan's Nikkei rose 0.4%. Hong Kong and Shanghai stock markets were largely steady. FED?ON HOLD WARSH IN FOCUS The dollar has been held in a state of anticipation as traders wait to see if Warsh can balance his dovish presidency with the expectations of the markets for a rise this year. The euro was only slightly firmer?this past week to hover around $1.16. The expected rate increase in Japan on Tuesday failed to lift the Japanese yen. However, the downside was protected due to the possibility of an official intervention. The Fed funds rate is unlikely to change, so focus on the committee's projections and the press conference. In March, most members predicted that rates would be cut this year. "We expect Warsh will downplay 'forward guidance' and instead advocate patience on policy rate?and inflation – leaning dovish in relation to market pricing," said Xiao Cui senior economist at Pictet Wealth Management. If Warsh does not oppose market pricing and embraces the possibility for rate increases, it could be perceived as hawkish. (Reporting and editing by Jacqueline Wong; Tom Westbrook)
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Investors weigh the impact of Iran's war ending and Hormuz reopening on oil prices as they stabilize.
Investors questioned whether the Iran War will end and the Strait of Hormuz will reopen. Brent crude futures rose 47 cents (0.6%), to $79.43 per barrel. U.S. West Texas Intermediate was up 48 cents (0.6%), to $76.53 per barrel as of 0038 GMT. The benchmarks for both fell 5% on Tuesday, a second consecutive session. They reached three-month lows in hopes that a U.S. Iran deal would allow oil to flow through the Strait. Oil markets fell on the expectation that the Strait of Hormuz will reopen after the?peace accord, but traders held back further sales pending more details, said Hiroyuki Kikukawa. Kikukawa is the chief strategist of Nissan Securities Investment. He added that WTI will likely remain volatile between $10 above and below $80 per barrel. Tuesday, details of the interim peace agreement began to emerge. U.S. president Donald Trump said it would 'rule out' a nuclear weapon for Tehran. A U.S. official stated that it would allow Iran oil sales upon signing. The not-yet-public memorandum extends the tenuous ceasefire that was announced in April for another 60 days, allowing talks to lead to a permanent truce. The deal would see the United States lift its blockade on Iran's ports while Tehran would allow oil tanker traffic to flow through the Strait which has been effectively blocked since U.S.-Israeli strikes?on February 28, 2009. Officials in the industry say it will take weeks, even months, to return to levels of production and refinement that existed before World War II. Israel has disassociated itself from the April ceasefire as well as the latest U.S. Iran agreement, increasing uncertainty about whether the new truce is going to hold. Lebanon's National News Agency reported that Israeli drone strikes on three vehicles in the southern Lebanon killed at least four people, and injured others. Trump has issued a rare public rebuke to Israel's military tactics. Data showed that China's crude throughput in may?fell by 9.1% over the past year, to its lowest level in nearly four years. This also indicated that refiners are starting to draw down on stockpiles in the face of the Iran War. According to sources, the American Petroleum Institute's report revealed that U.S. crude stockpiles fell by 8.3 million barrels during the week ending June 12. The Energy Information Administration is expected to release official figures at 10:30 am. This exceeded the expectations of a 4.6-million barrel draw. ET (1430 GMT), on Wednesday. Reporting by Yuka Obabayashi, Editing by Sonali Paul
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Russian-held Crimea restricts motorcycle use, claiming they sound like drones
Moscow-installed officials in Crimea have banned motorised vehicles such as quad bikes, motorcycles and scooters from being used at night. They claim that they sound like drone attacks. The peninsula's Russian-installed Governor, Sergei Aksyonov said that the ban would be enforced between 8 p.m. to 6 a.m. on Wednesday. He called it a temporary measure for the protection of military and important facilities. The moped's noise interferes with the operation of defense systems. "Their engines sound like drones,"?Oleg?Kryuchkov, Aksyonov’s advisor, said on Telegram separately on Tuesday. "The enemy is enlisting your children for nighttime rides." The Crimea ban does not apply to larger vehicles or cars. Ukraine recently intensified drone attacks against?Crimea - home to Russia's Black Sea Fleet - targeting the peninsula’s supply routes, causing a fuel shortage as the holiday season begins. Mikhail Razvozhayev said that the limit of 20 litres of fuel (5.3 gallons of gasoline) per car would remain at local petrol stations, in a Telegram message posted late Tuesday. Sources say that a Ukrainian drone attack on Tuesday halted the operations of the oil refinery in Moscow, adding to the damage done by the strike and spreading the fuel crisis further into the country. On Wednesday morning, Sergei Sobyanin, the Mayor of Moscow, said that Russian defence systems had shot down 10 drones headed for Moscow overnight. Donald Trump, the U.S. president, said that Russia should make peace in Ukraine after a "very successful" meeting with President Volodymyr Zelenskiy on Tuesday. His comments sparked cautious optimism from G7 leaders about the possibility of a peace agreement. (Reporting and editing by Lincoln Feast in Tokyo. Reporting by Jekaterina Glubkova.
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Officials say that four people were killed in Russian attacks on eastern Ukrainian towns
Officials and prosecutors reported late Tuesday that Russian 'attacks' on cities in Ukraine’s east and south-east had killed four people and set a residence and shopping centre ablaze. In the Donetsk Region, which is the center of Ukraine's frontline, prosecutors said that three people died in two bombings in the city of Slovansk. Five people were also injured. Sloviansk forms part of the "fortress belt" heavily defended by military forces and is seen as a key location in containing a slow-moving Russian attack on Donetsk. National police in?the southeast Ukrainian city of Zaporizhzhia? said that a wave dozens of drones had killed one man and injured seven other people. Online pictures showed flames on the roof and inside of a building. At least one façade was reduced to rubble. Regional Governor Ivan Fedorov confirmed that there were five attacks?on the city. Fire broke out at a home and shopping centre, and an education institution was damaged. Could not independently verify these reports. Russia and Ukraine deny that they deliberately targeted civilians during the war which began with Russia's full scale invasion of Ukraine in 2020. Reporting by Ron Popeski, Oleksandr Kozoukhar and Mark Porter; editing by Jamie Freed and Mark Porter
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Oil prices tumble again on US-Iran deal; S&P 500 falls
Oil prices dropped more than 5% Tuesday, continuing this week's losses, on hopes that a U.S. Iran deal will end the Middle East war and allow oil to flow through the Strait of Hormuz. Meanwhile, technology shares weighed on the S&P 500 & Nasdaq. The details of the U.S.-Iran interim agreement began to emerge. U.S. president Donald Trump said it would rule out Tehran acquiring a nuclear weapon, and an official from the U.S. stated that it allowed Iran to immediately sell oil after signing. Brent crude futures dropped $4.21 or 5.1% to settle at 78.96 per barrel. U.S. West Texas Intermediate crude (WTI crude) fell $4.70 or 5.8% to $76.05. SpaceX's stock valuation soared above that of Amazon and briefly overtook Microsoft's, amidst a frantic trading day driven by the newly listed option contracts of the company. SpaceX, which began trading on the Nasdaq last Friday, was up 4.8% for the day. Bruce Zaro is the managing director of Granite Wealth Management, Plymouth, Massachusetts. He said that the second quarter U.S. earnings are still a few weeks away. Nvidia, the most valuable AI chip maker in the world, surprised investors by tapping into the bond market for $25 billion. The company stated that the money would be used to fund general corporate needs and that the debt sale was a benchmark for future issuance. Nvidia shares dropped 2.4%. Investors also remained cautious in advance of the Federal Reserve policy update scheduled for Wednesday afternoon. Some investors were concerned that new Fed Chair Kevin Warsh might adopt a more hawkish stance at his first meeting. It is expected that the Fed will hold rates at between 3.50% and 3.75%, but it could also drop its easing policy. The Dow rose for the second day in a row. While the S&P 500, Nasdaq and other major indices ended the day lower, the Dow closed at a record high. The S&P 500 saw a decline in technology, but a rise in financials. A semiconductor index fell 5.7%. The Dow Jones Industrial Average rose by 328.64, or 0.6%, to 51,999.67. The S&P 500 dropped 42.94, or 0.5%, to 7,511.35. And the Nasdaq Composite fell 307,60, or 1.15, points to 26,376.35. MSCI's index of global?stocks fell by 2.98 points or 0.26% to 1,128,30. The pan-European STOXX 600 rose by 0.25%, and closed at a record high. The dollar fell in foreign exchange due to the optimism surrounding a possible peace agreement with Iran. The dollar index (which measures the greenback versus a basket including the yen, the euro and others) fell by 0.14%, to 99.55. Meanwhile, the euro was up 0.16%, at $1.1609. The Japanese yen fell 0.06% to 160.43 dollars after the Bank Of Japan raised its benchmark rate as expected by 25 basis points, reaching 1%. Reserve Bank of Australia held rates at 4.35%, in an unanimous decision. This was its first pause of the year despite high inflation. The Australian dollar was barely changed at $0.707 The yield on the 10-year U.S. Treasury bill was down 4.5 basis points at 4.424%. The auction of $13 billion in 20-year notes was successful. 20-year yields, which peaked at 4,938% on the trading day, are now at 4.93%. Gold spot rose by 0.59%, to $4331.14 per ounce. Reporting by Caroline Valetkevitch and Amanda Cooper, both in New York; Additional reporting from Alun John and Gregor Stuart Hunter, both in London; Editing by Jacqueline Wong and Rod Nickel; Jamie Freed.
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IG4 negocia o controle da Raizen com Moelis e Journey
O banco ?de investimentos independente Moelis & Company e ?a consultoria financeira Journey Capital, assessores dos credores ?da produtora de ?acucar e ?etanol Raizen, receberam ?ofertas nao vinculantes da gestora de private equity IG4 na noite de segunda-feira para adquirir creditos e o controle da empresa, de acordo com tres pessoas familiarizadas com ?o assunto. Duas delas, entretanto, alertaram que qualquer acordo ainda esta ?longe de ser certo, sendo que uma acrescentou que os credores ?dificilmente chegarao a uma decisao em breve. Ainda, uma das tres pessoas disse ?que os credores aceitaram a proposta da ?Raizen de converter ?divida em participacao acionaria por ser a melhor alternativa disponivel naquele momento, mas que prefeririam nao permanecer como acionistas. "Portanto, (o sucesso da proposta) vai depender 100% das condicoes oferecidas pela IG4", disse a ?pessoa. IG4, Moelis e Journey Capital nao quiseram comentar. A IG4, que recentemente se tornou ?co-controladora da petroquimica Braskem ao lado da gigante do ?petroleo Petrobras, ?busca adquirir o controle da Raizen, que acaba de concluir uma reestruturacao de ?divida de cerca de R$65 ?bilhoes com credores locais e internacionais, a maior reestruturacao extrajudicial ja registrada no ?Brasil. Conhecida por buscar o ?controle ou co-controle de ?suas aquisicoes, a IG4 so avancara com a oferta se garantir ao menos 50% mais um dos creditos reestruturados, disseram as pessoas.
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IG4 is aiming to take control of Brazil's Raizen as it approaches Moelis, Journey and Moelis
Three people with knowledge of the situation say that independent investment 'bank Moelis & Company, and financial consultancy 'firm Journey Capital are advisers of creditors of ethanol and sugar producer Raizen. They received a 'non-binding offer?from the private equity firm IG4 on Monday evening to purchase credits and control. Two of them warned?that any agreement remains far from sure, and one said that creditors are unlikely?to reach a decision any time soon. One of the creditors said that they accepted Raizen’s offer to convert their debt into equity because it was the 'best alternative available', but would not like to be shareholders. The person who said this stated that the success of the proposal will depend 100% on the conditions set forth by IG4. IG4, Moelis, and Journey Capital declined comment. IG4 recently became cocontroller of petrochemical company Braskem along with oil giant Petrobras. It is now'seeking to buy control of Raizen. This company?just announced a?65 billion reais (12.7% billion) debt restructuring, which was the 'largest non-court debt restructuring in Brazil. The people who spoke to IG4 said that the company is known for pursuing co-control or control over its acquisitions. IG4 would 'likely' move forward with the offer if they'secured at least 50% plus 1 of the restructured credit, according to the sources.
Higher margins for global oil refiners provide a short-term boost
In recent weeks, refiners around the world have made unexpected profits by producing fuels that are essential to summer demand. This is a welcome respite for a sector in trouble, before a predicted weakening of this year.
Fuel markets are strong in contrast to crude oil prices that fell in May to a 4-year low after OPEC+ increased output faster than expected. This also indicates that demand has remained resilient despite concerns over tariffs.
Neil Crosby, analyst at Sparta Commodities, said that margins are high because supply and demand balance is tight.
The refining margin is the profit a refinery makes by converting crude oil into fuels like gasoline or diesel.
Only a few short months ago, the oil majors warned that 2025 would be a difficult year for refinery. TotalEnergies reported lower profits in the first quarter due to weaker fuel earnings.
Refiners are struggling with the waning of demand due to economic slowdowns. They also face increased competition from newer plants from Asia and Africa.
According to Wood Mackenzie consultancy, global composite refining margins in May 2025 reached $8.37 a barrel, the highest level since March 2024. However, this is still lower than the average of $33.50 in June 2022, when demand recovered after the pandemic and Russia invaded Ukraine.
Closures of refineries in the United States, Europe and Asia have helped to slow global net refinery growth below demand growth. This has made operational refineries more profitable.
According to FGE, the global diesel supply is expected to decline by 100,000 barrels a day (bpd), while demand will fall by 40,000 bpd. Demand will increase by 28,000 barrels per day, while gasoline supply will decrease by 180,000 barrels per day.
"We're seeing a tighter market for transport fuels, which is putting upward pressure on margins. This is much to the joy and relief of regional refiners," said FGE head of refined products Eugene Lindell.
Qilin Tam, FGE’s head of refinery, said that all fuel-producing configurations benefit from the current margins. This is because both light fuels like gasoline and heavier products like fuel oils have increased recently.
Shell's Wesseling plant and Petroineos Grangemouth refinery, both in Scotland, were closed this year. BP's Gelsenkirchen refining plant was also partially shut down.
The refineries of Phillips 66 in Los Angeles and Valero in Benicia are scheduled to shut down in October 2025, respectively, in April 2026.
The impact of refinery closures has also been compounded by unplanned shutdowns.
JPMorgan reported that a power outage on the Iberian Peninsula on April 28 knocked down around 1.5 million barrels per day of refinery production. 400,000 barrels per day of this capacity were still offline two weeks later.
In April, two of the world's largest new refinery projects - Nigeria's Dangote Refinery and Mexico's Olmeca Refinery - experienced unplanned shutdowns on their gasoline-producing units.
TIGHTER BALANCES
Fuel inventories in key hubs are down this year, causing an increase in demand for refinery production as we head into peak summer.
JPMorgan analysts report that stocks in the OECD area, which includes the U.S. EU and Singapore, have fallen by 50 million barrels between January-May.
Analysts said that the "significant reduction in product stock has highlighted the resilience of product prices."
In the northern hemisphere, fuel demand is at its highest during summer due to an increase in motoring and aviation. Heavy fuel oil is most in demand during the summer months to cool down when temperatures are high.
Janiv Shah, Rystad analyst, said that margins are supported by the strength of summer demand in northern hemisphere.
Executives in the U.S. refinery industry are optimistic about demand while pointing out that stocks are relatively low.
Brian Mandell, executive vice president of Phillips 66's first quarter earnings call, said that the company's current outlook for gasoline supplies is that inventories will continue to tighten.
Maryann Mannen, CEO of Marathon Petroleum, said that the company's domestic and international businesses saw steady demand for gasoline and growth in diesel and jet fuel compared to 2020.
Analysts warn that current strength could soon be eroded as trade wars hit demand and fuel production increases as plants seek to profit from higher profits.
Austin Lin, Wood Mackenzie's analyst, said: "We think there will be a slight short-term bump."
According to the International Energy Agency, the growth in global oil demand is expected to be 650,000 barrels per day (bpd) for the rest of 2025. This is down from 1 million bpd during the first quarter, as trade uncertainty has weighed on the world economy.
A veteran oil trader who requested anonymity said, "I think that this is the best thing for refining companies."
(source: Reuters)