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All eyes are on the outcome of US-China trade talks to determine how oil prices will perform.
In Asian trading, oil prices maintained their gains from Thursday's previous session as investors awaited for the results of the U.S. China trade talks. They were hoping to see signs that the tensions threatening the global economic outlook would ease. Brent crude futures fell by 4 cents (0.06%) to $64.88 per barrel at 0402 GMT, after rising 52 cents the previous day. U.S. West Texas Intermediate Crude Futures fell by 9 cents, or 0.15%, to $60.39. They had risen 33 cents the day before. The U.S. president Donald Trump and China’s leader Xi Jinping held a nearly two-hour meeting at a South Korean base in Busan. It was not immediately known what the outcome of these discussions would be. Sugandha Sagandha, the founder of SS WealthStreet in New Delhi, said that any progress toward a trade deal could boost market confidence and increase global energy demand. This would provide some upside for oil. Trump said that he expected to reduce U.S. Tariffs on Chinese Goods in exchange for Beijing’s commitment to curtail the flow of precursor chemical to make the drug Fentanyl. In line with expectations, the U.S. Federal Reserve also lowered interest rates Wednesday to help boost the economy. The Fed did, however, indicate that this might be the final cut for the year due to the government shutdown. Claudio Galimberti, Rystad's chief economist, said that the Fed's move reflects a wider shift in its policy cycle. It favours reflation over restraint and supports commodities sensitive to economic activity. Brent and WTI's gains in the previous session reflected an even greater drawdown than expected in U.S. crude oil and fuel inventories. The benchmarks, however, are on course to decline by about 3% this October, marking their third consecutive month with losses. The EIA reported that crude inventories fell by 6.86m barrels, to 416m barrels for the week ending October 24. This was a far cry from the 211,000 barrels analysts had predicted in a recent poll. Investors will also be interested in the OPEC+ Meeting scheduled for November 2 where the alliance is expected to announce a further 137,000 barrels of oil per day increase for December. In a series monthly increases, the group has increased its output by over 2.7m barrels per day. This is about 2.5% global supply. This is less than half of the cumulative supply cuts the group agreed to over the years.
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South Korea releases details about the trade agreement with the US
Here are some details from the U.S. White House Factsheet and South Korea's Chief Policy Advisor Kim Yong Beom on the recent trade agreement between the two nations. Washington and Seoul agreed that tariffs on U.S. auto imports from Korea and auto parts will be reduced to 15% from 25%. This is to bring them in line with their Japanese counterparts who pay the same 15% tariffs after Tokyo made a deal with Washington. South Korean wood product and pharmaceutical manufacturers will have the lowest tariffs of all countries. Generic drugs and aircraft parts will be exempt from tariffs. Kim said that South Korean chipmakers would "not be at a disadvantage in comparison to their Taiwanese counterparts". Seoul also managed to defend the opening of additional markets for agricultural products such as rice and beef. Government-controlled Korea Gas Corporation also signed an agreement to purchase about 3.3 million metric tons of U.S. liquefied natural gas per year in long-term agreements with sellers, the White House said in a statement. INVESTMENT The two countries agreed that a $350 billion promised investment fund would be split into $200 billion of cash, to be paid out in installments. They also agreed to cap the payments at $20 billion a year. The Bank of Korea said recently that Seoul could only afford to give $20 billion per year without impacting the forex market. The remaining 150 billion dollars would be used for shipbuilding, including guarantees, investments by South Korean firms, and ship financing. Seoul stated that this would help to reduce the burden on the South Korean currency market and increase chances for South Korean companies to win orders. Kim stated that the deal is structured similarly to the agreement between Japan and the U.S. in September. However, South Korea was able to secure additional safeguards, such as the annual limit of $20 billion, to protect the local foreign currency market from any shocks. The White House announced that South Korea's cable maker LS Group has pledged to invest 3 billion dollars by 2030 in building power-grid infrastructure for the U.S. including undersea cables. HD Hyundai, a Korean shipbuilder, will work with U.S. investment company Cerberus Capital Management to invest $5 billion in a project that will improve American shipyards. White House: The two countries have also signed a Memorandum of Understanding to enhance collaboration in strategic science, technology, and research, including artificial intelligence and space exploration. RAISING FUNDS Kim, the South Korean official, said that the two parties agreed to split the profits 50/50 after the initial investment is recovered and to pursue only commercially viable projects. Kim stated that South Korea would use the operating income of its foreign assets, including interest accrued and dividends. South Korea does not need to issue government-backed bonds on the local market, but will likely raise funds through offshore markets. This is what policy banks like The Export and Import Bank of Korea do. Howard Lutnick, U.S. Secretary of Commerce, would lead a committee that would assess investment projects. Reporting by Cynthia Kim, Joyce Lee and Jack Kim in Seoul; Jihoon Lee, Ju-min Park and Juhoon Park in Gyeongju. Editing by Frances Kerry, Christian Schmollinger and Christian Schmollinger.
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Asia stocks rise as Fed cuts and Trump-Xi Meeting in focus
Asian stocks rose on Thursday, after the Federal Reserve lowered interest rates. U.S. leaders and Chinese officials met to negotiate a trade agreement. The yen fell after the Bank of Japan held rates as expected. MSCI's broadest Asia-Pacific index outside Japan rose 0.4% last, while U.S. S&P500 e-minis futures advanced 0.4% after Wall Street stocks posted a small loss to end a four-day streak of gains. As the Trump Administration imposes tariffs on imports from abroad, global markets are undergoing a series of central bank decisions. These will provide clues as to the future path of interest rates. Fred Neumann is the chief Asia economist for HSBC Hong Kong. He said that "the BOJ is tiptoeing toward a hike." All eyes are on December now, as a rate increase appears to be likely. After the Bank of Japan decision, Nikkei fluctuated between gains or losses. It was 0.2% higher at its last close. Although it did not change rates, the Bank of Japan reiterated its promise to increase borrowing costs in case the economy continues to move according its projections. The yen has reversed earlier gains against US dollar, and last was 0.2% weaker. Later today, BOJ Governor Kazuo Ueda is scheduled to hold a media conference. Donald Trump, the president of the United States, is meeting with Chinese leader Xi Jinping at this time in South Korea. U.S. negotiators are signaling that they want to return to the fragile truce in the trade war, but tensions between geopolitical opponents remain high. Fed Chair Jerome Powell said that policymakers will likely become more cautious in the absence of additional job and inflation data. The traders have reduced their expectations of a rate cut by the U.S. Central Bank in December. This was viewed earlier as near certainty. Fed funds futures indicate a 67.8% chance that the Fed will maintain rates at its December 10 meeting, compared to a 9.1% possibility on Wednesday. The yield of the 10-year Treasury Bond in the United States was at its highest point of 4,068% last week, an increase of 1 basis point from a previous closing of 4,058%. The dollar index (which measures the strength of the greenback against a basket six currencies) has slipped from its two-week high and is now down by 0.1% to 99.09. The last increase in gold was 0.1% to $3,932.08 an ounce. The euro last firmed up 0.1% at $1.1613, ahead of the policy decision made by the European Central Bank in the afternoon. It is expected that the bank will leave interest rates unchanged for the third time in a line. The KOSPI index also jumped by 0.8%, after Trump and South Korean president Lee Jae Myung finalised the details of a deal. Samsung Electronics shares soared by 3.9% on Friday after the company reported a 32% increase in its third-quarter operating profits. Investors are becoming more anxious about the AI buildout as corporate earnings season approaches. This is despite the fact that the U.S. economic outlook appears to be in good health. The pressure is being put on the tech megacap stocks, which account for the largest weighting of the S&P 500 Index. Meta forecast on Wednesday "significantly larger" capital expenditures next year, as its revenues exceeded market expectations. Microsoft's spending for artificial intelligence infrastructure reached a record high of almost $35 billion during the third quarter. Both companies' shares fell. Alphabet, the parent company of Google, a rival tech giant, bucked this trend. Its shares rose in after-hours trade after exceeding revenue expectations. Brent crude oil was down 0.4% last week, at $64.64 a barrel.
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Equinor Profit Falls, Impairments Mount as Oil Price Forecasts Trimmed
Equinor posted a bigger than expected drop in third-quarter profit on Wednesday as oil and gas prices fell, and booked asset impairments on a weaker long-term outlook for crude prices.The Norwegian energy group's adjusted earnings before tax for July-September fell 9.9% to $6.21 billion from $6.89 billion a year earlier, slightly lagging the $6.31 billion predicted in a poll of 21 analysts compiled by Equinor.Equinor maintained a projection that its oil and gas output will grow by 4% this year compared to 2024 and kept its forecast for capital expenditure in 2025 of $13 billion.Lower Price Outlook, Weaker TradingBut the group booked net asset impairments for the quarter, including some reversals of previous writedowns, of $754 million, "primarily driven by lower price outlook".Equinor now expects the benchmark Brent Blend oil price to be $75 per barrel between 2030 and 2040, while it had previously predicted a price of $80 at the start of that decade, declining to $75 by the end.The biggest impairment was a revaluation of British assets, including the North Sea Rosebank oilfield development, that Equinor is merging with Shell SHEL.L in a deal expected to complete by the end of this year, taking a $650 million hit.In the United States, Equinor booked an impairment of $385 million on offshore oil fields due to reduced production estimates, increased cost estimates, and the lower oil price assumption for the decade from 2030-2040, it said.Equinor lowered its quarterly guidance for its Midstream, Marketing and Processing segment, home to its energy trading activities, to an average adjusted operating income of around $400 million, from a previous $400 million to $800 million range."This is due to changing market conditions and earlier divestment of certain assets," it said.(Reuters - Reporting by Nerijus Adomaitis and Nora Buli, editing by Terje Solsvik and Alexander Smith)
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Mermaid Subsea Wraps Up North Sea Subsea Recovery Project
Mermaid Subsea Services (UK) has completed a fast-track subsea recovery campaign in the North Sea for a major operator.The operation involved the internal and external severance of casing, conductor, guide pipe and cement lines, as well as local seabed excavation and recovery of the CAN-Basic structure.Mermaid also handled waste management of recovered items and backfill operations to prepare for an over-trawl survey. “This was a time-critical project, and our team responded with professionalism and agility to ensure safe and efficient delivery. The successful recovery reinforces our reputation for handling complex subsea operations across the North Sea,” said Scott Cormack, Regional Director for Mermaid Subsea Services (UK).The campaign follows several North Sea operations completed by Mermaid earlier this year, including a scale-inhibitor treatment on the Teal P2 well in the Anasuria Cluster and a complex wellhead severance project in the Southern North Sea.Both projects were executed from the Island Valiant vessel, which the company has chartered for a second year.
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Gold rises on dollar decline; Trump-Xi Meeting in Focus
Gold prices rose on Thursday as a result of a slight drop in the dollar. Investors were waiting to see if U.S. president Donald Trump and Chinese counterpart Xi Jinping could reach a deal. As of 0235 GMT, spot gold was up by 0.2% to $3,937.88 an ounce. U.S. Gold Futures for December Delivery fell 1.2% to $3950.70 an ounce. The dollar index dropped 0.2%, after reaching a two-week peak against its rivals during the previous session. This made gold cheaper for holders of other currencies. "There is no catalyst other than a little technical bounce. This week, gold has been under pressure. The U.S. China trade deal is a negative for geopolitics and trade, according to Capital.com analyst Kyle Rodda. Gold is also negatively affected by the Federal Reserve's hawkish stance and the decline in odds of another rate reduction in December. This dynamic could cause gold to continue its decline. "Gold is on the rise in the long term." The U.S. Central Bank cut interest rates for the second consecutive time by a quarter percentage point, bringing benchmark overnight rates to a range of target 3.75%-4.00%. Fed Chair Jerome Powell stated that officials are still struggling to come to a consensus on what the future holds for monetary policies and that the financial markets shouldn't assume another rate reduction will occur at the end the year. Gold that does not yield is a good investment in low-interest rate environments and economic uncertainty. The market is now focused on Trump's meeting in South Korea with Xi. U.S. negotiators are signaling that they want to return to the fragile truce in the trade war, but tensions still remain high. Long-term economic irritations will continue between geopolitical competitors. Trump and South Korean president Lee Jae Myung finalised the details of their fraught deal at a South Korean summit, and the U.S. President also sounded optimistic about the summit with China’s Xi. Spot silver was unchanged at $47.51 an ounce. Platinum rose 0.3% to 1,590.21 while palladium increased 1.2% to $1417.80. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)
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Asia stocks rise as Fed cuts and Trump-Xi Meeting in focus
Asian stocks rose in the morning trade on Thursday, after the Federal Reserve lowered interest rates. U.S. leaders and Chinese leaders also met to negotiate a deal. The Bank of Japan is due to announce its interest rate decision shortly. MSCI's broadest Asia-Pacific index outside Japan rose 0.5% last, while U.S. S&P500 e-minis futures advanced 0.4% after Wall Street stocks posted a small loss to end a four-day streak of gains. As the Trump Administration imposes tariffs on imports from abroad, global markets are undergoing a series of central bank decisions. These will provide clues as to the future path of interest rates. Kyle Rodda is a senior analyst at Capital.com, in Melbourne. He said, "There are a lot of things to digest and the Bank of Japan's decision should not be forgotten, as it could have a major impact on the region if they were to say or act hawkishly today." The U.S. China trade deal may reignite animal spirit, although I suspect, with the rally on Wall Street this week and the boost given to the Asian region, that a lot of good news has already been priced in. Donald Trump, the president of the United States, is meeting with Chinese leader Xi Jinping at this time in South Korea. U.S. negotiators are signaling that they want to return to the fragile truce in the trade war, but tensions between geopolitical opponents remain high. Sally Auld is the chief economist of the National Australia Bank, Sydney, in a podcast. She said that after a lot of activity in the first two days of the week, the central banking story will probably end with a whimper over the next 24 to 48 hours. The Nikkei fluctuated between gains, losses, and was lastly 0.1% higher before a Bank of Japan decision on Thursday. It is widely expected that the central bank will keep interest rates unchanged. The U.S. Dollar was last down 0.2% against the yen at 152.455 yen. This is after comments by U.S. Treasury Sec. Scott Bessent, who called for faster rate increases to avoid a currency devaluation. Analysts said that this may have an impact on the BOJ communication about the pace of future rate hikes. Fed Chair Jerome Powell said that policymakers will likely become more cautious in the absence of additional job and inflation data. The traders have reduced their predictions of a rate cut by 25 basis points next month. This was a prediction that had been considered a near certainty earlier. Fed funds futures indicate a 67.8% chance that the Fed will maintain rates at its December 10 meeting, compared to a 9.1% probability on Wednesday. The yield of the 10-year Treasury Bond in the United States was trading at a high of 4,068% last week, an increase of 1 basis point from a previous closing of 4,058%. The dollar index (which measures the strength of the greenback against a basket six currencies) has slipped from its two-week high and is now down by 0.1% to 99.032. The last increase in gold was 0.2% to $3,937.19 an ounce. The euro last firmed up 0.1% at $1.1617, ahead of the policy decision made by the European Central Bank in the afternoon. It is expected that the bank will leave interest rates unchanged for the third time in a line. The KOSPI index rose by 1.1% in South Korea after Trump and President Lee Jae Myung reached a final agreement on their trade deal. Samsung Electronics shares soared by 4.3% on Friday after the company reported a 32% increase in its third-quarter operating profits. Investors are becoming more anxious about the AI buildout as corporate earnings season approaches. This is despite the fact that the U.S. economic outlook appears to be in good health. The pressure is being put on the tech megacap stocks, which account for the largest weighting of the S&P 500 Index. Meta forecast on Wednesday "significantly larger" capital expenditures next year, as its revenues exceeded market expectations. Microsoft's spending for artificial intelligence infrastructure reached a record high of almost $35 billion during the third quarter. Both companies' shares fell. Alphabet, the parent company of Google, a rival tech giant, bucked this trend. Its shares rose in after-hours trade after exceeding revenue expectations. Brent crude oil was down 0.5% last week, at $64.62 a barrel.
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Profit-taking dampens gains as iron ore prices rise on hopes of a US-China trade agreement
Iron ore futures rose a fourth consecutive session on Thursday. This was boosted by hopes for a trade agreement between the two world's largest economies. However, gains were limited by profit-taking due to fears of price reversal. Donald Trump, the U.S. president, and Xi Jinping, China's leader were scheduled to meet in South Korea Thursday morning to discuss a possible return to a fragile truce in the trade war between these two superpowers. As of 2100 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange was up 0.81% to 806 yuan (113.15 dollars) per metric ton. It had earlier reached a session high of 808 Yuan, which is a record by two weeks. The benchmark December Iron Ore at the Singapore Exchange was unchanged at $107.2 per ton, after reaching its highest level since October 14, at $107.5. Steven Yu, senior analyst at Mysteel, stated that the expectation of an increased pickup in portside inventory also puts pressure on prices. Yu stated that "the price rally has already exceeded expectations and the thinning of spot trading did not inject the same-scale momentum into spot prices." Investors were cautious about signs of seasonal weakness in the steel market, despite cheering macroeconomic gains. China's factory output likely fell for the seventh consecutive month in October as producers tried to export their price wars at home. Some investors booked profits due to concerns about a possible price reversal after a rally that was repeated, said a Zhejiang trader under condition of anonymity because he wasn't authorized to speak to the media. On the back of expectations that supply will be constrained, coke and other steelmaking materials, such as coking coal, have risen by 2.29% and 1.07 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange have advanced. The benchmarks for steel on the Shanghai Futures Exchange advanced.
Shares of Australia's Ampol drop due to weaker retail volume; margins at Lytton increase
Ampol, Australia's largest fuel retailer, recorded a lower third-quarter sales volume due to softer performance in its domestic convenience retailing business as a result of challenging weather conditions during August.
The company's shares fell by as much as 3,1% Thursday, their lowest intraday performance since June. Stocks fell to their lowest level since October 23, 2009.
The Australian convenience retail segment performed poorly compared to the previous year when it had enjoyed favorable market conditions due to the decline in fuel input costs.
In August, New South Wales, Queensland, and other states experienced prolonged bad weather, which negatively affected sales. However, conditions began to improve in September.
The company reported a total third-quarter volume of 6,028 millions litres. This is a 7.6% drop compared to the previous year.
Ampol attributes the decline in volumes to the "timing of the opportunities and the availability during the period".
Ampol has reported an increase of 22.2% in the refining margins on its Lytton refinery. This was due to improved performance and higher margins from fuel production in Asia.
The company reported that its Lytton Refinery margin increased from $8.71 per barrel to $10.64 in the third quarter.
The increase in the refining margins was attributed to the strengthening of Singapore refine cracks compared to first half of fiscal year.
The company said that global refining margins had risen since late September, due to a tightening of supply, mainly driven by refinery interruptions and low inventories. Newly announced EU restrictions on Russian Crude and U.S. Sanctions on Russian Oil Firms have also added pressure.
Ampol said that the replacement cost earnings for the quarter had been higher than the average quarterly result of the first half due to the stronger margins in the fuel and infrastructure businesses, excluding Lytton. The refinery also contributed to the improvement.
(source: Reuters)