Oil stays above $120 per barrel ahead of NATO Russia-Ukraine summit

LONDON - World share markets were choppy on Thursday as the Russia-Ukraine war kept oil above $120 a barrel, while "stagflation" worries rose on renewed talk of aggressive US interest rates hikes and slowing growth.

Europe's main stock indexes barely budged and government bond yields edged up toward multi-year highs hit earlier in the week as March PMI data came in reassuringly robust. 

Focus was otherwise on a Thursday special NATO summit in Brussels, which US President Joe Biden will attend, to discuss further responses to Russia's month-old invasion of Ukraine, which Moscow calls a "special military operation". 

Rabobank's head of macro strategy, Elwin de Groot, said markets would be watching what emerges closely, especially how unified NATO members remain and what Biden can offer European countries to help wean themselves off Russian gas.

"The NATO meeting is certainly important," de Groot said. "At the minimum you would expect the members to come up with preparations for a possible further escalation in the Ukraine war."

Wall Street futures were up a solid 0.6 percent ahead of trading there, but the mood seemed changeable.

MSCI's broadest index of Asia-Pacific shares outside Japan recouped some of its early losses overnight but ended down 0.6 percent after more falls in China and Hong Kong.

Japan's Nikkei bucked the trend, rising 0.25 percent to a nine-week high as its exporters cheered the yen falling to its lowest against the dollar since 2015. 

At 1000 GMT, the dollar was up 0.4 percent versus the yen, at 121.65, with expectations that the Bank of Japan will be far behind other top central banks in raising interest rates.

HAWKISH

Driving some of the volatility, Federal Reserve policymakers on Wednesday signaled they stood ready to take more aggressive action to bring down decades-high inflation, including a possible half-percentage-point rate hike at the next policy meeting in May. 

Those signals pushed all three main US share benchmarks 1 percent lower overnight. 

"The sharp hawkish repricing of Fed rate hike expectations has mainly benefited the US dollar against low yielding currencies whose own domestic central banks are expected to lag well behind the Fed in tightening policy," MUFG currency analyst Lee Hardman wrote in a note to clients.

Oil and gas markets also remained hot amid the geopolitical uncertainty.

Russian President Vladimir Putin said on Wednesday that Moscow would seek payment in roubles for gas sold to "unfriendly" countries, jolting energy markets, although Italy's President Mario Draghi said it planned to keep paying in euros. 

Brent futures were little changed at $121.67 a barrel and US West Texas Intermediate futures fell 41 cents, or 0.35 percent, to $114.5 a barrel

The bond market was starting to shift again with the yield on benchmark 10-year Treasury notes up at 2.37 percent and German bunds creeping over 0.52 percent.

"Inflation is really the big driver," Rabobank's de Groot said, adding that it was also behind falling consumer confidence.

EU leaders are expected to agree at a two-day summit starting on Thursday to jointly buy gas, as they seek to cut reliance on Russian fuels and build a buffer against supply shocks. But the bloc remains unlikely to sanction Russian oil and gas. 

Gold was slightly lower at $1,942.9 per ounce.

(Reporting by Marc Jones; Editing by William Mallard)

-reuters-

Moscow warns: Ban on Russian oil will have ‘catastrophic consequences’

Russian Deputy Prime Minister Alexander Novak warned Monday that a ban on Russian oil imports would have "catastrophic" consequences, as Western allies considered further sanctions on Moscow over Ukraine.

"A ban on Russian oil will lead to catastrophic consequences for the global market. The surge in prices will be unpredictable — more than $300 per barrel, if not more," Novak said in remarks carried by Russian news agencies. 

Novak added that it would be "impossible" to quickly replace Russian oil on the European market. 

"It will take more than one year and it will be much more expensive for European consumers," he said. 

"European politicians should then honestly warn their citizens, consumers what awaits them and that prices at gas stations, for electricity, for heating will skyrocket," he said. 

Novak said talks of an embargo on Russian oil creates "instability and leads to significant harm for consumers". 

He added that in retaliation for the halt on the Nord Stream 2 pipeline project, Russia could stop supplies via the Nord Stream 1 pipeline. 

"So far we have not made this decision. Nobody will benefit from this," Novak said. 

"Although European politicians are pushing us to this with their statements and accusations against Russia," he added. 

Agence France-Presse

Oil, wheat and aluminum jump as sanctions on Russia bite

LONDON - Brent crude jumped to near eight-year highs, wheat to 14-year peaks and aluminum hit a record as the Russian attack on Ukraine intensified and Western sanctions disrupted air and sea transport of commodities exported by Russia.

Russian forces were attempting to subdue Ukrainian cities, seven days into an invasion that has sparked massive sanctions, pushing international companies to halt sales, cut ties and dump billions of dollars' worth of investments. 

Brent climbed above $113 a barrel to its highest since June 2014, a gain of more than 40 percent so far this year. 

"Oil has been pushing higher on growing perceptions that Russian oil is unable to be "transacted"," ED&F Man Capital Markets analyst Edward Meir.

"Although oil is not technically under sanction, traders are understandably nervous about taking delivery of Russian crude, let alone storing, shipping and ultimately selling it."

Russia accounts for about 10 percent of global oil supplies. Russia and Ukraine account for about 29 percent of wheat exports. Wheat prices hit $10.59 a bushel, the highest since March 2008.

Corn prices rose to $7.47-3/4 a bushel, the highest since Dec. 2012. 

"Global buyers of grains have been increasingly turning to the US, Europe or South America to secure supplies in the immediate term, given the ongoing conflict," ING said in a note.

"Moreover, demand for stockpiling has also increased due to current uncertainty."

Dutch gas prices hit an all-time high of 185 euros a MWh after the UK ordered its ports to deny entry to Russian-owned ships and European Union countries considered a similar ban after a halt on air traffic. 

Russia supplies the European Union with 40 percent of its gas needs. It accounts for 40 percent of global mined palladium output, 10 percent of nickel supplies and 6 percent of global aluminum production. 

Palladium prices around $2,610 an ounce were trading near the seven month peak hit on Tuesday, aluminum hit a record high at $3,552 a tonne and nickel at $25,530 a tonne, close to the 11-year high hit last week.

"Supply outages from Russia are now but a question of time," Commerzbank analysts said in a note.

"Depending on how long they last, they could cause turmoil – in which case prices would rise significantly further."

Malaysian palm oil futures rose past 7,000 ringgit a tonne to hit a record high, on the prospect of rising demand as the closure of Ukrainian ports hits supplies of sunoil from the Black Sea region. 

Newcastle coal futures jumped to records above $300 a tonne as buyers scrambled to find alternatives to supplies from Russia, the third largest exporter after Indonesia and Australia.

(Reporting by Pratima Desai; additional reporting by Nigel Hunt, Susanna Twidale and Gavin Maguire; editing by Jon Boyle)

-reuters

Saudi Aramco IPO on track for 2018 – Saudi crown prince

RIYADH – Saudi Aramco’s initial public offering is on track for next year and the national oil giant could be valued at more than $2 trillion, Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters in an interview.

The sale of around 5 percent of Aramco next year is a centerpiece of Vision 2030, an ambitious reform plan to diversify the Saudi economy beyond oil which is championed by Prince Mohammad.

Saudi officials have said domestic and international exchanges such as New York, London, Tokyo and Hong Kong have been looked at for a partial listing of the state-run firm.

A decision on which exchange would secure the offering has still not been made, fuelling market speculation that the IPO could be delayed beyond 2018 or even shelved, amid growing concerns about the feasibility of an international listing.

“We are on track in 2018… but the listing (details) are still under discussion,” Prince Mohammad told Reuters in an exclusive interview on Wednesday in Riyadh for release on Thursday. “It will be IPO-ed in 2018.”

The crown prince declined to discuss specific details of the IPO, which could be the biggest in history and is expected to raise as much as $100 billion.

Prince Mohammad, 32, has sweeping powers over defense, energy and the economy and is expected to take the final decision about Aramco’s listing venue and the other reforms.

Investors have long debated whether Aramco could be valued anywhere close to $2 trillion, the figure announced by the crown prince, who wants to raise cash through the IPO to finance investments aimed at helping wean the world’s biggest oil exporting nation off its dependency on crude.

But Prince Mohammad reiterated that Aramco’s estimated valuation would be about $2 trillion.

“I know that there has been a lot of argument around this topic but at the end of the day the right say is that of the investor. Undoubtedly the biggest IPO in the world must be accompanied by a lot of rumors,” Prince Mohammad said.

“Aramco would prove itself on the ground on the day of the IPO. Actually when I talked about the valuation, I talk about $2 trillion, it could be more than $2 trillion.”

The timing of the IPO will depend on getting legal and regulatory approval from the jurisdictions it opts to list in, industry sources had said. It could also be influenced by the oil price – currently below $60 per barrel – a price Saudi officials have identified as a good level.

Asked whether the rift with Gulf OPEC producer Qatar has dented investors’ sentiment, ahead of the Aramco IPO, Prince Mohammad dismissed the impact of the political impasse. “Qatar is a very, very, very small issue,” he said.

Saudi Arabia and three other Arab states have cut ties with Qatar, accusing it of supporting terrorism. Doha denies the accusations.

OPEC kingpin Saudi Arabia is leading OPEC and other oil producers such as Russia to restrict oil supplies under a global oil pact to drain global inventories and boost oil prices.

“We are committed to work with all producers, OPEC and non-OPEC countries, we have a great and historic deal… We will support anything to stabilize the oil demand and supply,” Prince Mohammad said when asked whether the kingdom would support extending the agreement until the end of 2018. The current pact expires in March.

“I think now the oil market swallowed the shale oil supply, now we are regaining things again.”

On Tuesday, Saudi Arabia’s Energy Minister Khalid al-Falih told Reuters that the kingdom is determined to reduce inventories further through an OPEC-led deal to cut crude output and raised the prospect of prolonged restraint once the pact ends to prevent a build up in excess supplies.

source: interaksyon.com

World oil prices edge higher on OPEC remarks

LONDON - The oil market drifted higher Thursday as investors digested an upbeat demand forecast from the head of the OPEC crude producers' cartel.

Brent North Sea crude for delivery in November added seven cents to stand at $51.40 per barrel just after midday in London.

US benchmark West Texas Intermediate for delivery in November won eight cents to $47.89 per barrel compared with Wednesday's close.

"Oil prices are... recouping some of the losses they suffered yesterday," said Commerzbank analyst Carsten Fritsch.

"The optimistic remarks made about oil demand by OPEC Secretary General El-Badri still appear to be having after-effects," he added.

Traders were mulling remarks by Abdalla Salem El-Badri, secretary-general of the Organization of the Petroleum Exporting Countries, who stated that demand will rise more than projected this year.

"World oil demand is estimated to increase by 1.5 million barrels per day in 2015, higher than the initial projection," El-Badri said in a statement to the International Monetary Fund (IMF).

"In 2016, improvement in global economic activities is anticipated to support world oil demand to grow by 1.3 million barrels per day."

Prices had tumbled Wednesday after a US Department of Energy report showed commercial crude stockpiles rose more than expected in the week ending October 2, indicating softer demand in the world's top oil consuming nation.

Stockpiles rose by 3.1 million barrels, more than the market estimate of 2.25 million barrels. That brought inventories to 461.0 million barrels, more than 27 percent higher than a year ago.

US production, which had fallen by 40,000 barrels per day in the previous week, unexpectedly surged by 76,000 barrels per day, dousing hopes of an easing in the global crude oversupply.

Sanjeev Gupta, who heads the Asia Pacific oil and gas practice at professional services firm EY, added that traders were waiting for Thursday's release of minutes of the last meeting of the Federal Reserve for further clues on the health of the US economy.

source: interaksyon.com

Oil prices rise ahead of US jobs report

SINGAPORE, October 3, 2014 (AFP) - The cost of oil rose in Asia Friday ahead of the latest US jobs report and after hitting multi-month lows a day earlier in response to key exporter Saudi Arabia cutting prices.

US benchmark West Texas Intermediate (WTI) for November delivery rose 16 cents to $91.17 while Brent crude for November gained 11 cents to $93.53 in mid-morning trade.

Singapore's United Overseas Bank (UOB) said investors are keenly eyeing the release of the September US jobs report later Friday.

"For the September non-farm payrolls, markets are looking at a job creation of 215,000, up from 142,000 in August, while unemployment is expected to stay unchanged at 6.1 percent," UOB said.

US jobs figures are closely watched by crude investors for clues on the state of economic recovery and demand in the world's top oil consumer.

The gains on Friday come after WTI prices tumbled below $90 in New York intra-day trade following Riyadh's announcement of lower prices for the fourth straight month.

WTI retreated to $88.18 -- a level last seen on April 23, 2013 -- before recovering to $91.01.

In London, Brent dropped to $91.55 a barrel, last hit in June 2012, but later rebounded to $93.42 at the close.

Analysts say the move by Saudi Arabia, OPEC's biggest producer, signals its focus on maintaining market share amid a broader increase in production by rivals.

source: interaksyon.com