Investing.com — Crude prices had first weekly loss in four after the Federal Reserve signaled it might raise interest rates again before the end of the year — and anytime inflation gets out of hand.
The downside in oil prices was, however, limited by Russia’s export ban on fuels, which counteracted fears that slowing economies and high interest rates could crimp demand for energy.
New York-traded West Texas Intermediate, or , crude for delivery in November settled at $90.03 per barrel, 40 cents, or 0.5%, on the day. WTI earlier hit an intraday high of $91.31, after Tuesday’s 10-month high of $93.74. For the week, the U.S. crude benchmark was down 0.6%, after a cumulative gain of almost 14% over three weeks.
London-traded settled at $93.27 a barrel up, down 3 cents, or 0.03%. Brent rose to as high as $94.64 earlier on the day, after Tuesday’s 10-month high of $95.96. The global oil benchmark was down 0.7% on the week, after a cumulative gain of nearly 11% over three weeks.
The dollar strengthened after the Fed projected another quarter-percentage point by the year-end, despite leaving rates unchanged for September itself at a policy meeting on Wednesday.
“We are prepared to raise rates further, if appropriate,” Fed Chairman Jerome Powell told a news conference. “The fact that we decided to maintain the policy rate at this meeting doesn’t mean we have decided that we have or have not at this time reached that stance of monetary policy that we are seeking.”
Energy-driven inflation one of the Fed’s concerns
Powell said energy-driven inflation, led by the 30% rally in oil prices since June, was one of the Fed’s bigger concerns.
The Fed had raised interest rates 11 times between February 2022 and July 2023, adding a total of 5.25 percentage points to a prior base rate of just 0.25%.
Economists fear that the Fed’s renewed hawkish stance will dampen global growth though many also agree that a lid has to be put on oil prices if the Fed is to achieve its annual inflation target of 2%.
Russia said on Friday it has implemented an immediate ‘temporary’ suspension of gasoline and diesel exports to all countries except for four former Soviet states and its own overseas military bases, with the goal of stabilizing its domestic market.
Kremlin fuel export ban will further tighten oil market
Russia’s Transneft then suspended deliveries of diesel to the key Baltic and Black Sea (NYSE:) terminals of Primorsk and Novorossiysk on Friday, state media agency Tass said.
The Kremlin said the ban was “temporary” and designed to address rising energy prices in Russia. Russian wholesale gasoline prices were down nearly 10% and diesel down 7.5% on Friday after the ban.
The ban will “bring new uncertainty into an already tight global refined product supply picture and the prospect that the impacted countries will be seeking to bid up cargoes from alternative suppliers,” RBC said in a note.
Diesel is the workhorse fuel of the global economy, playing a crucial role in freight, shipping and aviation. Derivatives of diesel such as are particularly susceptible to winter price surges. Germany and the north-east of the U.S. are both heavily reliant on the fuel for heating homes.
Russia is the world’s second-largest seaborne exporter of diesel after the U.S., according to Kpler, a freight data analytics company, and before its invasion of Ukraine was the single biggest diesel exporter to the EU. The EU and U.S. have largely banned imports of Russian refined fuel since February, forcing Moscow to reroute its sales to Turkey and countries in North Africa and Latin America.
Russian refined fuel sales, particularly diesel, remain a critical part of oil supplies. In August Russia exported more than 30mn barrels of diesel and gas-oil — a diesel proxy — by sea, according to oil cargo tracker Kpler.
(Peter Nurse and Ambar Warrick contributed to this item)
Gold prices steady above $2,000 with nonfarm payrolls in focus
Investing.com – Gold prices moved little in Asian trade on Friday, sticking above key levels as markets awaited a potentially softer U.S. nonfarm payrolls reading, which comes just days before a Federal Reserve meeting.
The yellow metal had raced to record highs at the beginning of the week, helped by a mix of rate cut bets and safe haven demand.
But it had lost the record highs as abruptly as it had reached them, as traders locked in profits amid some uncertainty over U.S. monetary policy.
steadied at $2,030.26 an ounce, while expiring in February were flat at $2,046.05 an ounce by 01:17 ET (06:17 GMT). Both instruments had touched record highs above $2,100 an ounce on Monday, before swiftly reversing most gains.
Still, the yellow metal had now maintained the $2,000 an ounce level for nearly three weeks, indicating increased optimism over gold’s prospects in the coming months.
Nonfarm payrolls in sight, markets seek softer reading
Focus was now squarely on data for November, due later on Friday.
The reading is expected to show further cooling in the labor market, after a drop in and data signaled some unwinding in the sector.
Any further cooling in the labor market gives the Federal Reserve less impetus to keep interest rates higher for longer-a scenario that benefits gold.
While the central bank is when it meets next week, its outlook on monetary policy, particularly on when it plans to begin trimming rates, remains uncertain.
Bets that the were a key point of support for gold prices earlier this week. But traders scaled back those bets, given that the Fed has largely maintained its stance that rates will remain higher for longer.
Still, the yellow metal may be poised for more strength in the coming months, especially if interest rates fall and global economic conditions deteriorate further.
A raft of recent economic readings from the U.S., Asia and the euro zone suggested that growth was set to cool in 2024.
Factbox-Australia’s Woodside, Santos in talks for $53 billion oil-gas merger
© Reuters. FILE PHOTO: FILE PHOTO: View of a model of carbon capture and storage designed by Santos Ltd, at the Australian Petroleum Production and Exploration Association conference in Brisbane, Australia May 18, 2022. REUTERS/Sonali Paul/File Photo/File Photo
(Reuters) – Australia energy companies Woodside (OTC:) and Santos Ltd said late on Thursday that they are in preliminary merger talks, in what could be the latest big deal in a wave of global consolidation the in oil and gas sector.
A potential combination of the companies, which together have a market value of about $52 billion, comes amid challenges faced by both in their domestic projects from Indigenous people as well as rising pressures of decarbonisation.
Both companies have seen their share performance lag global peers.
Woodside in October cut its its 2023 production outlook and missed third-quarter revenue estimates, while it was ordered by the Australian federal court to seek new approval to conduct seismic blasting under the seabed for its $12 billion Scarborough gas project after a legal challenge by an Indigenous woman.
Santos is contending with legal challenges from a traditional land owner from the Tiwi Islands on undersea pipeline works for its $3.6 billion Barossa gas project and has forecast lower output in 2024 as its Bayu-Undan gas field reached the end of its life and its West Australian offshore field’s output declined.
Below are key details on both companies, including production and reserves measured in million barrels of oil equivalent (mmboe):
Market cap ($ in billion) 37.39 15.56
Revenue ($ in billion)
Production (mmboe) Domestic 136.6 61.3
International 21.1 41.9
Total 157.7 103.2
Proved plus probable reserves (mmboe) 3,640.3 1,745
Production forecasts (mmboe)
183-188 (2023) 84-90 (2024)
ASSETS AND PROJECTS
Woodside operates major liquefied (LNG) export facilities in Australia, including North West Shelf and Pluto LNG, and three floating production storage and offloading (FPSO) facilities in western Australia. The company also owns a stake in the Chevron-operated Wheatstone LNG project.
The company is involved in oil-gas joint ventures in the Bass strait and partners with Santos at Macedon, a gas field off western Australia. Woodside has been trying to sell ageing domestic oil and gas assets where production is declining and high decomissioning costs are required.
The company received approval for its Scarborough and Pluto Train 2 projects in Australia in 2021, with first LNG cargo expected in 2026.
Globally, Woodside operates in the U.S. Gulf of Mexico with three offshore platforms, as well as an offshore processing facility in Trinidad and Tobago.
In Senegal, Woodside is targeting first oil production at the Sangomar Field Development Phase 1 in 2024. Woodside has also made a final investment decision to develop the large, high-quality Trion resource in Mexico, with first oil output targeted for 2028.
Other Woodside projects include proposed hydrogen and ammonia projects H2Perth and H2TAS in Australia and another hydrogen project, H2OK, in North America.
Santos operates Gladstone LNG and holds a stake in Papua New Guinea LNG.
The company expects production at the Timor-Leste Bayu-Undan field to cease in 2025 and plans to backfill Darwin LNG with supply from the Barossa field.
Santos is the second-biggest producer of domestic gas in Western Australia and has invested in two offshore oil fields, Van Gogh and Pyrenees.
On the Australian east coast, Santos portfolio includes the Cooper and Eromanga Basins as well eastern Queensland production.
In the U.S., Santos is advancing its Pikka Phase 1 project in Alaska, expecting first oil production in 2026.
If the companies merge, they would have a 26% share of Australia’s east coast gas market.
Combined oil and gas production in 2022 for the two totaled slightly over 260 million barrels of oil equivalent (mmboe), and their total proven plus probable reserves are 5.39 billion mmboe, based on data from the companies.
The Australian Competition and Consumer Commission (ACCC) said on Thursday it would consider whether a public merger review into the impact on competition was required if the deal goes ahead.
“Given ACCC’s focus on East Coast gas, we expect a (merged company) may be a forced seller of the Cooper Basin,” Macquarie bank analyst Mark Wiseman said in a note.
($1 = 1.5154 Australian dollars)
Oil heads for seven week decline for first time in five years
© Reuters. An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021. Mandatory credit Kyodo/via REUTERS ATTENTION EDITORS – THIS IMAGE WAS PROVIDE
By Paul Carsten
LONDON (Reuters) -Oil benchmarks were on track for a seven-week decline on Friday, their first in half a decade, on worries about a supply surplus and weak Chinese demand, though prices rebounded after Saudi Arabia and Russia lobbied OPEC+ members to join output cuts.
futures were up $1.51, or 2%, at $75.56 a barrel at 1234 GMT, while U.S. West Texas Intermediate crude futures were up $1.42, or 2%, to $70.76 a barrel. Brent had earlier risen by $2.
Both benchmarks slid to their lowest since late June in the previous session, a sign that many traders believe the market is oversupplied. Brent and WTI are also in contango, a market structure in which front-month prices trade at a discount to prices further out.
OPEC+’s “weakening position in providing support coupled with record high US production and sluggish Chinese import figures can only mean one thing: there is an abundance of oil available, which is neatly reflected in the contangoed structure of the two pivotal crude oil benchmarks,” said Tamas Varga of oil broker PVM in a note.
Friday’s gains, meanwhile, are a “correction and nothing else,” Varga said.
Saudi Arabia and Russia, the world’s two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts for the good of the global economy, only days after a fractious meeting of the producers’ club.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to a combined 2.2 million barrels per day (bpd) in output cuts for the first quarter of next year.
“Despite OPEC+ members’ pledges, we see total production from OPEC+ countries dropping by only 350,000 bpd from December 2023 into January 2024,” said Viktor Katona, lead crude analyst at Kpler.
Some members of OPEC+ may not adhere to their commitments due to muddied quota baselines and dependence on hydrocarbon revenues, Katona said.
Brent and WTI crude futures are on track to fall 4.2% and 4.5% for the week, respectively, their biggest losses in five weeks.
Fuelling the market’s downturn, Chinese customs data showed its crude oil imports in November fell 9% from a year earlier as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.
In the United States, output remained near record highs of more than 13 million bpd, U.S. Energy Information Administration data showed on Wednesday. [EIA/S]
The market is also looking for monetary policy cues from the official U.S. monthly job report due later today, which is expected to show November job growth improving and wages increasing moderately. That would cement views that the U.S. Federal Reserve is done raising interest rates this cycle.
In Nigeria, the Dangote oil refinery is set to receive its first cargo of 1 million barrels of crude oil later on Friday, the start of operations that, when fully running at 650,000 barrels a day, would turn the OPEC member into a net exporter of fuels after having been almost totally reliant on imports.
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