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As oil prices drop and earnings loom, shares in Asia are on the rise
Asian shares were mostly higher on Monday as Wall Street futures started the week on a positive note on the back of a good earnings season. Meanwhile, oil prices are dropping, which will ease inflationary pressures. Although there have been no developments in the U.S. Iran peace talks, 160 ships were reported passing through the Strait of Hormuz from Monday to last Saturday. OPEC+ agreed to increase output targets for August by 188,000 barrels a day, in addition to the increases made in June and July. Brent crude fell 0.6%, to $71.70 per barrel, a level near the four-month low. U.S. Crude also lost 0.5% at $68.38. Futures indicate that there is a 78% probability of a stable outcome at the Federal Reserve meeting on July 29. This is due to the cooling of energy prices and a soft U.S. payrolls data. The minutes of the Fed meeting last week are due Wednesday. They should provide some insight into the recent hawkish turn by certain board members. Richard Yetsenga is the head of research for ANZ. He said: "Even if there were any fears that the Fed would move soon, we are safe, at least, for another month." He added, "Our overall view is that the Fed will not do anything. But clearly we have been above the Fed's preferred measure of inflation for five years." "There's a risk that the Fed runs out of patience." Investors should be able to focus on the earnings season ahead, when the AI boom will deliver bumper profits in tech. The only two companies to have made a big splash this week are Delta Air Lines (and PepsiCo), though Samsung Electronics will make a huge one on Tuesday, as analysts anticipate an 18-fold rise in profits. CHIMP MAKER BONUS PROFIT According to LSEG SmartEstimate, the world's biggest memory chipmaker based on sales will likely report an operating profit for the quarter of April to June of 86 trillion won (56.35 billion dollars). South Korea's hot market has cooled down a bit last week, but it is still up 92% this year as AI demand and limited supplies have boosted chip prices. The index gained another 2.25% Monday while Japan's Nikkei fell 0.1%. The broadest MSCI index of Asia-Pacific stocks outside Japan rose 0.4%. In Europe, EUROSTOXX Futures were flat. DAX Futures rose by 0.2%, and FTSE Futures declined by 0.2%. S&P futures rose 0.5% while Nasdaq rose 1.4%, adding to a 2.1% increase last week. The first data release is the U.S. ISM Services Survey is due to be released on Monday. Forecasts suggest a slight decline in June, but still a healthy 54.0. Later in the day, a number of central bankers, including Christopher Waller from the Fed Board, will be speaking at ECB's conference, and Christine Lagarde, ECB President, is also scheduled to speak in Paris. Markets are betting that New Zealand's Central Bank will increase its cash rate from 2.25% to 2.35% by a quarter-point, marking the first increase since mid-2023. The policy makers have been predicting a tightening of rates for some time. However, this was before the fall in oil prices. There is a chance that they will surprise us by keeping them steady. The?dollar index has stabilized at 100.880 on the currency markets after the disappointing payroll report for June. The euro remained flat at $1.1445 just above its recent 13-month low. As speculators continue to be wary of Japanese interventions, the dollar is still trading at 161,45 yen - not far off its 40-year high of 162,84. Gold was barely moved on the commodity markets at $4,177 per ounce after a 2% increase last week. (Reporting and editing by Jacqueline Wong; Wayne Cole)
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Can it deliver? Who will buy and how much crude oil can OPEC+ increase? Russell
Two questions are raised by the decision of OPEC+, to increase crude production quotas a fifth consecutive month? from August. Who will purchase the product if they are able to ship it? At a Sunday meeting, the'seven core members' of OPEC+ (which groups together OPEC, as well as other producers like Russia) agreed to increase quotas - by 188,000 barrels a day starting August. This will bring the 'total increase since April to nearly 800,000 bpd. The first question can be answered positively if the Strait of Hormuz remains open and the volume of water flowing through the narrow waterway is restored to levels similar to those before the United States, Israel and Iran attacked Iran on 28 February. It's important to note that the benchmark should be total crude exports from the Middle East, not just the flows through the Strait. Saudi Arabia and the United Arab Emirates continue to use ports that are outside of the Strait of Hormuz. Even though the total number of shipments out of the Middle East has increased since the United States, Iran and other countries agreed on a 60-day truce on June 17, the volume is still below the pre-war levels. According to Kpler, data from commodity analysts, June exports were 9,62 million bpd. This is about half the average of 18,4 million bpd for the three-month period leading up to the conflict with Iran. Kpler is tracking shipments at 9.99 million bpd in July. However, this number is likely be revised higher once more cargoes have been?assessed. Even so, data shows that Middle East exports remain constrained, and the increased shipments of other regions such as Americas and Africa have not been enough to offset losses in the Gulf region. The oil industry is known to adapt quickly and it's reasonable to assume that they can increase production and exports from the Middle East as long as the Strait oh Hormuz remains open. The crude oil market prices crude as if OPEC+ will be able deliver its higher production quotas and as if there will be additional crude from former OPEC+ members the United Arab Emirates as well as Iran. Brent contracts traded around $71.72 a barrel in the early Asian trading on Monday. This is down from the closing price of $72.12 on the 3rd July and also lower than the $72.48 on the 27th February, the day before U.S. - Israeli attack on Iran. SUPPLY GLUTEN The crude futures markets appear to be pricing in a return to a narrative of oversupply that was prevalent prior to the Iran War. This narrative can only be justified if supply chains are restored, and OPEC+ producers and non-OPEC ones are able deliver increased production. There are other factors at play besides the obvious danger of a return of some sort of conflict between Iran and the United States. Brent prices were not able to rise above $126 per barrel during the Iran War because China, the world's largest crude importer, drastically reduced purchases. Kpler estimated that China's seaborne exports fell to their lowest level in over a decade, in June. Arrivals were?5,84 million bpd or half of pre-war levels. Kpler's tracking of imports shows that only 5.31 million bpd were imported in July. However, this number will increase as more cargoes arriving in July are assessed. If past experience is any indication, China will return to the crude market when refiners feel that crude prices have dropped enough. China's imports have a strong track record for increasing when prices drop and decreasing when they increase. This pattern has been accelerated in the last few months. Imports of petroleum products from smaller refineries will likely increase by August. If prices remain low, China's largest refiners will also be?likely to repurchase, though it won't show up until the fourth quarter at least. You like this column? Check out Open Interest, your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. Editing by Jacqueline Wong
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Tennis-Sinner is prepared for Wimbledon heatwave
Jannik Sinner, who has been battling in the heat at the previous two Grand Slams, said that he is well-prepared to deal with it when temperatures are expected to soar in Wimbledon this week. The second week of the tournament will see temperatures rise again above 30 degrees Celsius. This is after a heatwave that broke British records in June with temperatures around 37 degrees Celsius. Sinner is from the Alpine region in northern Italy of South Tyrol. He struggled to stay physically fit during the heatwave in Paris in May, and fell in the second round?of the French Open. In January, he suffered cramps after an early scare in the Australian Open. The four-time major winner will face German Jan-Lennard Stuff in the quarterfinals, but he did not engage reporters in a discussion about when he would take to the court. It seems that you know the schedule better than I do. I don't remember when they put me in. It doesn't matter to me. I'm prepared. Sinner, after winning 6-3 7-6(0) and 6-3 over Japanese qualifier Shintaro mochizuki, said: "We did a great job preparing." "Whatever happened before, it is gone now. We'll now see if we have a solution. We'll keep trying to find the next solution if we don't. In any case, when you reach the quarter-finals of a Grand Slam tournament, your feelings will be different. "There is definitely more tension. In the same time, I am?very satisfied with where I am right now. We'll have to see what happens." Sinner stated that it is important to have the correct attitude on the court during the Grand Slam business stage. He added, "We know that the stages are becoming bigger and more important." "There is a greater attention to detail. We prepare each match as if it were the most important and then we'll know. "I try to control what I can, and then the others are trying to solve the problems." Reporting by Shrivathsa Shridhar in London, editing by Clare Fallon
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Sources say that OPEC+ is set to increase oil production again.
Sources with knowledge of the matter say that OPEC+ will agree to a further increase in production targets for August. This would add to the global supply amidst falling oil prices due to the gradual reopening of Strait of Hormuz to oil exports. One?OPEC+ official said that the oil producing group had agreed to increase quotas in principle by 188,000 barrels a day starting August. This is on top of the similar increases made for June and July. According to two other sources, a decision to increase this amount is the most likely result of the online discussion. Seven members of OPEC+ (which includes Russia and allied producers) have increased their production quotas by nearly 800,000 barrels a day between April and July. The production?begins to recover. However, the increase remained largely on the paper due to the U.S. and Israel war against Iran which shut down the Strait of Hormuz, preventing tankers from Saudi Arabia, Kuwait, and Iraq, some of the most significant OPEC+ member countries. OPEC data shows that OPEC+ production fell from 42.77 to 33.13 millions bpd between February and May. The U.S. helped the 'UAE and other OPEC+ countries export more oil in June, but it is still below pre-war levels. Oil prices are back to pre-war levels despite the supply disruptions. This is due to lower Chinese imports and higher exports by non-Middle East producers. Also, an unprecedented global strategic stock release coordinated by the International Energy Agency has pushed oil prices up. The Memorandum of Understanding to end the War has also helped to convince traders that eventually supply will return to normal levels. Brent crude prices LCOc1 were trading at $72 per barrel Friday, down significantly from recent highs of over $120 per barrel. Reporting by Alex Lawler and Olesya Astakhova; editing by Joe Bavier, David Holmes and Ahmad Ghaddar
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Sources say that OPEC+ is set to increase oil production again.
OPEC+ will 'agree' on Sunday to increase output targets from the August levels, a source with knowledge of this matter said. This would add to the global?supply? amid falling oil prices as a result of a gradual reopening of Strait of Hormuz to oil exports. OPEC+ sources said that the oil producing group had agreed to increase quotas in principle by 188,000 barrels a day starting August. This is on top of increases similar to those for June and 'July. According to two other?sources, an increase in this amount is the most likely result of the online discussion. Seven members of OPEC+ (which includes Russia and allied producers) have increased their output quotas by nearly 800,000 barrels a day from April to July. PRODUCTION BEGINS RECOVERING The increase is largely a paper figure because of the U.S. and Israel war against Iran. This conflict has closed the Strait of Hormuz to tankers from the most important OPEC+ countries, including Saudi Arabia Kuwait, and Iraq. OPEC+ production fell to 32.13 million bpd from 42.77 in February, according to OPEC's data. The U.S. helped the UAE and other OPEC+ countries export more oil in June, but it is still below pre-war levels. Oil prices are back to pre-war levels despite the supply disruptions. This is due to lower Chinese imports and higher exports from non-Middle East countries, as well as a record global release of strategic stocks coordinated by the International Energy Agency. The Memorandum of Understanding to End the War has also helped to convince?traders, that eventually supply will?return? to normal levels. Brent crude prices,?LCOc1, traded at $72 per barrel Friday. This is down from recent highs of over $120 per barrel. (Reporting and editing by Joe Bavier, David Holmes, and Olesya Almakhova; Reporting by Alex Lawler and Olesya Kazhdannikov)
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Trump will mark the 250th anniversary of US with a rally in campaign style on National Mall
U.S. president?Donald Trump is set to mark the 250th anniversary of the United States on Saturday, with a political event on a fenced off National Mall in Washington. The rally will cap a celebration lasting weeks that has been described as divisive. Washington's annual?celebration of July 4?usually draws hundreds of thousands. This year, visitors will have to deal with increased security and possible thunderstorms as well as a record-breaking temperature wave. The crowds were sparse initially, but they have grown in recent days. Visitors are now forced to wait for entrance lines that stretch several blocks. Frank DiGiovine said that gift shops and restaurants near the Smithsonian Institution near the event had reported sales nearing records on Friday. The temperature reached 102 degrees Fahrenheit on Saturday afternoon (39 degrees Celsius) and people near the National Mall waited in line at security checkpoints for prime viewing spots of a fireworks show that wasn't due to begin for several hours. It's part of my contract," Glen Solander said, 60, a visiting software engineer from Sioux Falls in South Dakota. WHITE NATIONALISTIC GROUP ARRIVES Patriot Front, a white nationalist group, was also among the visitors. The group announced on social media its arrival in the capital. Hundreds of people dressed as members of the group traveled to the city by D.C. Metro train. Local police claimed that they had not received any violence reports. Trump has billed his 10:10 p.m. ET (0200 Sunday GMT) appearance at the Lincoln Memorial as "the most spectacular TRUMP RALLY of them all." The Lincoln Memorial appearance at 10 p.m. ET (0200 GMT Sunday) was billed as "the most spectacular Trump rally of all time." The past presidents of the United States have avoided making in-person public appearances during July 4 celebrations. But Trump has blurred that line between official commemoration, and campaign-style politics. Freedom 250, a Trump administration group, has largely ignored a nonpartisan organization set up in 2016, which was responsible for handling the 250th anniversary. It has also fenced off a large portion of the National Mall (1.5 miles / 2.4 km) to host a "Great American State Fair", featuring attractions like a Ferris?wheel and displays by conservative groups. Freedom 250 claims the fair's goal is to show the innovations and people that make America "the greatest nation in the world." Many Democratic-led state delegations declined to attend, and performers who were scheduled to appear canceled their appearances due to concerns over partisanship. Trump kicked off the event on June 24, with a rally. The?Freedom 250 brand is also used for a 'faith rally with mostly conservative Christian speakers and a number of sports events. One such event was a mixed martial arts card on the White House grounds to celebrate Trump's 80th Birthday. IndyCar racing in Washington is scheduled for August. Freedom 250 also sponsors "Freedom Trucks", which critics claim paint an overly-religious?version of American?history and gloss over issues like slavery and racial justice. A /Ipsos survey found that the majority of Americans, including the three quarters of Democrats and the half of Republicans, believe the events celebrating the 250th anniversary of the United States have become too political. Trump's efforts to transform large swaths in the capital city before the 250th anniversary celebration have had mixed results. Many statues and fountains have been renovated. However, the much-touted 15 million dollar renovation of Lincoln Memorial's reflecting pool has had problems. The pool's algae-covered waters and peeling paint are now under the watchful eye of soldiers and security cameras. Andy Sullivan, Jana Winter, Alistair Bell and David Gregorio edited the story.
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Ukraine denies Russian takeover of Kostiantynivka, a key eastern city
Ukraine's 'general staff' rejected Russian claims on Saturday that Moscow's forces captured the key eastern city of 'Kostiantynivka. "We ?deny this. "These are fake claims," said a member of the general staff. The General Staff stated that Kostiantynivka remains under Ukrainian control. It said that "military units and subunits of 19th Army Corps" continue to conduct offensive operations on designated lines in the town as well as its approach. The Russian military informed President Vladimir Putin, on Friday, that it had taken control of Kostiantynivka. This strategic target has been sought by Moscow for a long time in its advance across the Donetsk Region. Kostiantynivka, the southernmost settlement of the four that make up the defensive line in Ukraine's attempt to keep the heavily industrialised Donetsk Region. Analysts believe that capturing Kostiantynivka would 'give Russian forces an advantage to push north on the 'defensive belt. This is now the main axis of the campaign. The Russian military has been claiming to control parts of Kostiantynivka for some time. This is one of the heavily fortified cities in Ukraine's "fortress belt", which includes Donetsk. Reporting by Pavel Polityuk. Mark Potter (Editing)
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Russian officials claim that a major drone attack on St Petersburg has been carried out by Ukraine.
St Petersburg, Russia's second largest city and the surrounding Leningrad area were hit by a major Ukrainian drone attack over night. A Baltic Sea port which handles oil exports was also reported to have been affected. Alexander Beglov, the governor of St Petersburg, said that the city's?6-million population had been subjected to a "large scale" drone attack. He did not give any details about specific targets but the local media outlet Bumaga reported that there was a fire in the oil terminal of St Petersburg. Alexander Drozdenko, Governor of the Leningrad region, said that drones struck the port of Vysotsk located about 170 kilometers (105 miles), northwest of St Petersburg in the Gulf of Finland. The port is used to handle oil, grain and coal. Drozdenko said 72 drones had been shot down in the Leningrad area. Ukraine has intensified its?strikes against Russian energy infrastructure in the past year, causing fuel shortages throughout Russia. St Petersburg is about 900km (560miles) from Ukrainian-held territory. Drones have occasionally attacked St Petersburg. The?city's?oil terminal and a moored?warship were among the targets during the St Petersburg International Economic Forum held in June. Reporting by Felix Light. Felix Light is the author. Mark Potter (editing by Felix Light)
Oil prices drop after OPEC+ agrees on raising output targets
The oil prices fell on Monday as OPEC+ agreed that it would?increase the output target for August, while key?producers are recovering their exports via the Strait of Hormuz. This could add to global supplies.
Brent crude futures fell 24 cents or 0.33% to $71.88 per barrel by 0010 GMT, after closing 0.45% higher Friday. U.S. West Texas Intermediate Crude was $68.58 per barrel, down by 11 cents or 0.16%. WTI was not settled on Friday due to the U.S. market being closed for Independence Day on Saturday.
The two contracts were largely unchanged last week after falling over the previous few weeks. Investors kept an eye on the talks between the United States and Iran regarding the fate of shipping via the Strait of Hormuz, while also keeping tabs on the recovery of 'Gulf oil exports.
On Sunday, the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia have agreed to increase their output targets by 188,000 barrels a day starting in August. This is on top of the similar increases made for June and July.
The increase in oil production has remained largely on paper due to the U.S./Israeli war against Iran. This conflict closed the Strait of Hormuz for tanker traffic, limiting the output of key OPEC producers such as Saudi Arabia, Kuwait, and Iraq.
Tony Sycamore, IG's market analyst, said that the number was in line with expectations.
"I'm not certain they mean much right now. With UAE leaving, and when quotas probably aren't being met because production is still ramping up following the conflict, I don’t think they really matter."
The United Arab Emirates left OPEC on?May 1?
Gulf countries have started reopening the supplies that were closed during the Iran War and are increasing exports.
OPEC's oil?output? in June increased by 3.3 millions barrels per month, a study found. It had been at its lowest in over two decades.
Gulf oil exports increased by?more than three million barrels in June from May, to 10 million barrels a day. However, the volume was still 40% below pre-war levels, according to data.
Sources in the industry said that oil shipments from Russia's western port ports reached a record high in June, and that they are expected to remain at that level throughout July, as Ukraine drone attacks have damaged its refineries, forcing Moscow to increase crude exports. (Reporting and editing by SonaliPaul)
(source: Reuters)