Commodities
Oil rises as dollar slides before CPI data, Brent nears $80
© Reuters.
Investing.com — Oil prices rose in Asian trade on Wednesday, with Brent coming close to bullish levels as the dollar sank ahead of key U.S. inflation data, while Chinese stimulus measures and a potential build in U.S. stockpiles were also in focus.
Crude prices had surged on Tuesday, tracking weakness in the , which sank to a two-month low on bets that the Federal Reserve was close to reaching peak interest rates in its current cycle. The greenback extended its fall into the Asian session, falling 0.4% against a basket of currencies.
Tightening supplies, as production cuts from Saudi Arabia and Russia took effect, also buoyed oil prices.
futures rose 0.4% to $79.62 a barrel, their strongest level since early-May, while futures rose 0.3% to $75.03 a barrel by 21:32 ET (01:32 GMT). Both contracts rallied over 2% on Tuesday, settling at 10-week peaks.
Brent was close to breaking above $80 a barrel, which analysts said could send more bullish signals to crude markets.
U.S. CPI in focus amid Fed rate hike speculation
However, anticipation of key U.S. (CPI) inflation data spurred some cooling in oil’s recent rally. Wednesday’s CPI reading is expected to show lower headline inflation, while is expected to have remained sticky.
Stubborn core inflation is largely expected to invite more interest rate hikes from the Fed as it moves to cool high price pressures. The central bank is in an end-July meeting, with a slew of officials warning that more hikes are in store.
But several Fed officials also said that the Fed was close to concluding its rate hike cycle, which sparked a rally in risk-driven assets this week, while denting the dollar.
U.S. inventories seen rising
Data from the (API) showed that U.S. crude stockpiles unexpectedly grew by over 2 million barrels in the week to July 7.
The API data usually heralds a similar reading from official due later on Wednesday, which is forecast to show a draw of 2.2 million barrels.
China stimulus in store?
Oil markets were also awaiting signals on any more stimulus measures in major crude importer China, as the country grapples with a slowing post-COVID economic recovery.
Chinese Communist Party-backed media house the China Securities Journal reported on Wednesday that Beijing is likely to increase stimulus spending to support the economy, following a string of weak economic readings in the country.
Increased Chinese stimulus measures are expected to spruce up economic growth in the country, which in turn could help drive oil demand higher as domestic fuel consumption increases.
Commodities
Oil prices hover near 4-month highs as Russia sanctions stay in focus
By Arunima Kumar
(Reuters) -Oil prices paused their rally on Tuesday, but remained near four-month highs, with the market’s attention focused on the impact of new U.S. sanctions on Russian oil exports to key buyers India and China.
futures slipped 54 cents, or 0.67%, to $80.47 a barrel by 1033 GMT, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.67% to $78.29 a barrel.
Prices jumped 2% on Monday after the U.S. Treasury Department on Friday imposed sanctions on Gazprom (MCX:) Neft and Surgutneftegas as well as 183 vessels that transport oil as part of Russia’s so-called “shadow fleet” of tankers.
“With several nations seeking alternative fuel supplies in order to adapt to the sanctions, there may be more advances in store, even if prices correct a bit lower should tomorrow’s U.S. CPI data come in somewhat hotter-than-expected”, said Charalampos Pissouros, senior investment analyst at brokerage XM.
The U.S. producer price index (PPI) will be released today, followed by the consumer price index (CPI) on Wednesday.
A core inflation rise above the 0.2% forecast could lower the likelihood of further Federal Reserve rate cuts, which typically support economic growth and could boost oil demand. [MKTS/GLOB]
While analysts were still expecting a significant price impact on Russian oil supplies from the fresh sanctions, their effect on the physical market could be less pronounced than what the affected volumes might suggest.
ING analysts estimated the new sanctions had the potential to erase the entire 700,000 barrel-per-day surplus they had forecast for this year, but said the real impact could be lower.
“The actual reduction in flows will likely be less, as Russia and buyers find ways around these sanctions,” they said in a note.
Nevertheless, analysts expect less of an supply overhang in the market as a result.
“We anticipate that the latest round of sanctions are more likely to move the market closer to balance this year, with less pressure on demand growth to achieve this,” said Panmure Liberum analyst Ashley Kelty.
Uncertainty about demand from major buyer China could blunt the impact of the tighter supply. China’s imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic, official data showed on Monday.
Commodities
Peru’s niche Bretaña crude oil gains popularity in US
By Arathy Somasekhar
HOUSTON (Reuters) – Peru’s niche Bretaña is gaining popularity in the United States, with the first cargo discharging in the U.S. Gulf Coast this month as U.S. refiners seek alternatives for declining Mexican heavy crude.
Bretaña, a rare heavy sweet crude with minimal metals, is produced in the Peruvian side of the Amazon (NASDAQ:) rainforest. It is then barged along the Amazon river and loaded onto larger ships that depart from Brazil.
The vessel Radiant Pride transported about 300,000 barrels of Bretaña from Manaus, on the banks of the Negro river in Brazil, and discharged on Jan. 2 in Houston, ship tracking data from Kpler and LSEG showed.
The cargo was bought by oil major Shell (LON:), a source said. Shell declined to comment.
“Given the drop in heavy sour crude from Mexico to the U.S. Gulf Coast over the last year, we are starting to see new heavy grades being pulled in to backfill this loss – this is a trend we only expect to continue,” said Matt Smith, an analyst at Kpler.
U.S. imports from Mexico fell to their lowest on record in 2024 as the Latin American country’s oil production fell and a larger portion of output remained at home to be refined.
Two cargoes of Peru’s Bretaña, a relatively new entrant into the market since production began in 2018, discharged at the U.S. West Coast last year – one at Marathon Petroleum (NYSE:) and another at PBF Energy (NYSE:) terminals, the Kpler data showed.
Marathon Petroleum declined to comment. PBF Energy did not immediately reply to a request for comment.
PetroTal Corp, the producer of Block 95 where the Bretaña oilfield is located, bought the assets from Canadian producer Gran Tierra Energy (NYSE:) in 2017, and currently produces about 20,000 barrels of oil per day, according to Chief Executive Officer Manuel Zúñiga.
Challenges with transporting the crude via a pipeline operated by Peru’s state oil firm Petroperu led to a brief halt in exports between 2022 and 2024, Zúñiga said.
Petroperu has struggled in recent years to keep the line operational amid spills and social conflict interrupting its flow.
Three cargoes of Bretaña headed to the U.S. West Coast and one to the U.S. East Coast between 2020 and 2022, Kpler data showed.
About 90% of the Bretaña crude produced by PetroTal is exported, and the remaining is transported by barges to Petroperu’s refinery in Iquitos, Zúñiga said.
PetroTal has a contract with Houston-based Novum Energy under which Novum buys the crude for export and arranges its transportation, Zúñiga added.
Novum did not immediately respond to a request for comment.
While PetroTal hopes to increase production, permitting delays as well as reliance on barges are a current limitation, Zúñiga said.
“You need access to the pipeline,” Zúñiga said, adding that the company is working to secure use of the infrastructure.
Petroperu said last year that it would hold negotiations with producers in the Peruvian jungle so that they can use the pipeline with a fair rate to help cover operational costs.
Commodities
Copper outlook uncertain amid stronger dollar and tariffs- analysts
Investing.com — The future of is unclear due to the anticipated strengthening of the dollar, impending tariffs, and a potential slowdown in the energy transition under the incoming administration of President-elect Donald Trump, according to analysts at BMI, cited by Wall Street Journal.
They point out that even though copper is likely to prosper due to environmental-driven sentiment, the risks associated with their relatively optimistic perspective are leaning towards the negative side.
In a note, the BMI analysts stated, “While we still expect that copper will continue to thrive due to climate-driven sentiment, we note that the balance of risks to our relatively bullish outlook is tilted to the downside.” They do not anticipate a substantial increase in metals demand from the Chinese construction industry.
Nonetheless, they suggest that enhanced industrial activity and growth, driven by government stimulus, could be enough to elevate prices. As of now, the London Metal Exchange (LME) three-month copper is trading 0.6% higher at $9,153 per metric ton.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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