Commodities
India’s BPCL in talks with Rosneft to buy oil priced on Dubai benchmark
Indian state-run refiner BPCL is in talks with Rosneft to buy about 6 million metric tons (43.8 million barrels) of discounted Russian crude at a price based on the Dubai benchmark, according to three sources with direct knowledge of the matter.
The deal would deepen India’s commitment to its now-biggest oil supplier in the wake of Western sanctions on Moscow and mark a continued shift by Rosneft to pricing its oil against the Middle Eastern benchmark used in Asia and away from the Europe-dominated Brent.
Under the pending deal, Rosneft would deliver the equivalent of 6 to 7 cargoes of about 700,000 to 720,000 barrels each per month through March 2024 to Bharat Petroleum Corp Ltd (BPCL), according to the sources, who declined to be named as they were not authorized to speak to media.
Talks are at an advanced stage for a contract, with both sides working out details including terms of payment, the sources added.
BPCL and Rosneft did not respond to requests for comment.
A deal, which needs approval from BPCL’s board, would further expand the share of Russian oil flowing to the world’s third-largest oil importer.
Russia has become India’s top oil supplier, with a 40% share, after diverting supplies away from Europe.
Indian refiners, which in the past rarely bought Russian oil due to high transport costs, are snapping up crude sold at a discount after some Western entities and nations shunned purchases from Moscow following its invasion of Ukraine.
European Union nations stopped buying Russian oil from Dec. 5 and the Group of Seven (G7) countries joined the EU in imposing a price cap on Russian crude of $60 per barrel to curb Moscow’s revenues.
Russian crude sold to BPCL would be priced at a discount of $8 per barrel to the Dubai benchmark, the sources said.
Indian Oil Corp, the country’s top refiner, struck a deal in April with Rosneft for up to 1.5 million metric tons of oil per month priced against the Middle East benchmark at a discount of $8 to $10 per barrel, according to sources.
Rosneft has been gradually moving from the Europe-dominated Brent benchmark because Russian oil sales have mostly shifted toward Asia after Europe shunned purchases from Moscow.
Both benchmarks are denominated in dollars and set by S&P Global Platts, a unit of U.S.-based S&P Global Inc.
The Dubai benchmark is heavily influenced by Asian and Middle Eastern oil trading, while Brent is mostly used to price crude from Europe, Africa, and South America.
Russia has been rerouting its energy supplies from traditional markets in Europe to Asia, mainly India, and China, since the West imposed wide-ranging sanctions, including an embargo on seaborne Russian oil imports.
BPCL, like most Indian refiners, makes spot purchases of Russian oil, mostly from traders.
In the new contract under discussion, BPCL aims to import various Russian oil grades including Sokol, Varandey, and Urals, the sources said.
Investing.com– Oil prices steadied Thursday as traders digested data showing an unexpected increase in US product inventories, while weak economic data from top importer China weighed.
At 05:25 ET (10:25 GMT), expiring in March gained 0.1% to $76.25 a barrel, while rose 0.1% to $73.37 a barrel.
The crude benchmarks had slumped more than 1% on Wednesday, but trading ranges, and volumes, are likely to be limited throughout Thursday with the US market closed to honor former President Jimmy Carter, ahead of a state funeral later in the session.
China inflation muted in December
Chinese inflation, as measured by the , remained unchanged in December, while the shrank for a 27th consecutive month, data showed on Thursday.
The reading pointed to limited improvement in China’s prolonged disinflationary trend, even as the government doled out its most aggressive round of stimulus measures yet through late-2024.
China is the world’s biggest oil importer, and has been a key source of anxiety for crude markets. Traders fear that weak economic growth in the country will eat into oil demand.
The country is also facing potential economic headwinds from the incoming Donald Trump administration in the US, as Trump has vowed to impose steep trade tariffs on Beijing.
US oil product inventories rise sharply
U.S. gasoline and distillate inventories grew substantially more than expected in the week to January 3, government data showed on Wednesday.
inventories grew 6.3 million barrels against expectations of 0.5 mb, while grew 6.1 mb on expectations of 0.5 mb.
Overall crude also shrank less than expected, at 0.96 mb, against expectations of 1.8 mb.
The build in product inventories marked an eighth straight week of outsized product builds, and spurred concerns that demand in the world’s biggest fuel consumer was cooling.
While cold weather in the country spurred some demand for heating, it also disrupted holiday travel in several areas.
EIA data also showed that US imports from Canada rose last week to the highest on record, ahead of incoming U.S. president Donald Trump’s plans to levy a 25% tariff on Canadian imports.
Canada has been the top source of U.S. oil imports for many years, and supplied more than half of the total U.S. crude imports in 2023.
Strength in the also weighed on crude prices, as the greenback shot back up to more than two-year highs on hawkish signals from the Federal Reserve.
A strong dollar pressures oil demand by making crude more expensive for international buyers.
(Ambar Warrick contributed to this article.)
Investing.com – President-elect Donald Trump’s plan to implement sweeping import tariffs during his second term in the White House is potentially the “most bearish” policy development for the energy sector this year, according to analysts at RBC Capital Markets.
Trump, who is set to come to power in less than two weeks, has vowed to impose tariffs of as much as 10% on global imports into the US and 60% on items coming from China. He has also pledged to slap a 25% surcharge on products from Canada and Mexico.
Economists have flagged that the proposal would not only rattle global trade activity, but also threaten to reignite inflationary pressures and spark possible retaliation.
The uncertainty in markets was heightened on Wednesday after CNN reported that Trump is mulling declaring a national economic emergency in order to provide the legal underpinning for the tariffs. Earlier this week, Trump also denied a separate report that his team was mulling scaling back the levies to cover only critical goods.
In a note to clients on Thursday, analysts at RBC led by Helima Croft said that while the ultimate scope of the tariffs remains unclear, the headline duties on China could soften demand in the country and place downward pressure on oil prices. China is the world’s largest crude importer.
Business leaders with significant ties to China may advise Trump to stay away from instituting strict tariffs on the country, Croft predicted.
“We have also heard a view in Washington that President Trump could be amenable to a deal with China if Beijing offered to make large headline purchases of US goods, such as aircraft or even US [liquefied natural gas] imports,” Croft wrote.
“Beijing could also potentially seek to trade a reduction in Iranian crude imports for a tariff reprieve.”
However, Croft flagged that the overall market effect of the tariffs is still “challenging to forecast” because the Trump administration — unlike a prior round of trade tensions in 2018 — will have to weight the impact of the policies with broader macroeconomic worries “still front of mind for many in Washington”.
(Reuters contributed reporting.)
Investing.com– Gold prices edged higher Thursday, continuing the recent gains, as heightened uncertainty over a hawkish Federal Reserve and President-elect Donald Trump’s plan for trade tariffs fueled some safe haven demand.
At 06:15 ET (11:15 GMT), {68|Spot gold}} rose 0.4% to $2,683.84 an ounce, while expiring in February rose 0.3% to $2,668.60 an ounce.
Trading activity is likely to be limited Thursday, with US traders on holiday to honor former President Jimmy Carter, with a state funeral due later in the session.
Safe haven demand on economic uncertainty
Bullion prices benefited from some safe haven demand this week, as uncertainty over Trump’s trade and immigration policies dented risk appetite.
A CNN report said Trump could declare a national economic emergency to legally justify his plans to impose universal trade tariffs.
Concerns over Trump’s policies also came into focus after the of the Fed’s December meeting showed policymakers expressing some concerns over sticky inflation.
Specifically, Fed officials were growing concerned that Trump’s expansionary and protectionist policies could underpin inflation in the long term.
The minutes also largely reiterated the Fed’s plans to cut interest rates at a slower pace in 2025, after the central bank effectively halved its projected rate cuts to two from four in 2025.
Treasury yields shot up after the Fed’s minutes, as did the dollar.
Higher for longer rates bode poorly for non-yielding assets such as metals, given that they increase the opportunity cost of investing in the sector.
Other precious metals were edged higher Thursday. fell 0.1% to $983.85 an ounce, while rose 0.8% to $30.930 an ounce.
Copper rises as weak China inflation fuels stimulus hopes
Benchmark on the London Metal Exchange rose 0.7% to $9,093.0 a ton, while March rose 1.2% to $4.3115 a pound.
Chinese were flat in December, while shrank for a 27th consecutive month, indicating little improvement in disinflation.
Inflation remained weak even as Beijing doled out its most aggressive round of stimulus measures through late-2024.
But Thursday’s inflation data fueled increased bets that Beijing will do more to shore up Chinese growth, especially on the fiscal front.
(Ambar Warrick contributed to this article.)
Among industrial metals, copper prices firmed as weak inflation data from top importer China spurred bets on more stimulus measures from Beijing.
But metal markets remained under pressure from strength in the dollar, which came back in sight of over two-year highs on hawkish signals from the Fed.
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