Oil steady as economic worries offset possible China demand rise

By Scott DiSavino

(Reuters) – Oil prices were little changed on Friday as worries about weaker economic growth offset expectations that crude demand could rebound in China as Shanghai lifts some coronavirus lockdowns.

Brent futures for July delivery fell 36 cents, or 0.3%, to $111.68 a barrel by 0015 GMT, while U.S. West Texas Intermediate (WTI) crude fell 36 cents, or 0.3%, to $111.85 on its last day as the front-month.

WTI futures for July, which will soon be the front-month, were down about 0.6% to $109.20 a barrel.

That put WTI on track to rise for a fourth week in a row for the first time since mid-February. Brent was up less than 1% after falling less than 1% last week.

Crude gains have been limited this week, with the Brent and U.S. benchmarks mostly trading in a range due to the uncertain path of demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.

Open interest in WTI futures, for example, fell to 1.722 million contracts on May 18, the lowest since July 2016.

“If U.S. growth data continues to sour, oil prices could get caught up in the negative stock market feedback loop,” SPI Asset Management managing director Stephen Innes said in a client note.

Wall Street ended lower after a volatile session on Thursday, while investors fretted about inflation and rising interest rates.

In China, however, oil demand could rebound as Shanghai authorities lifted some coronavirus lockdowns and residents were given the freedom to go out to shop for groceries for the first time in nearly two months. China is the world’s top crude importer.

In the United States, Americans were getting back behind the wheel, despite higher fuel prices, according to a report from the Federal Highway Administration on vehicle miles.

Automobile club AAA said gasoline and diesel prices at the pump hit record highs again on Thursday.

The U.S. House passed a bill that allows the president to issue an energy emergency declaration, making it unlawful for companies to excessively increase gasoline and home fuel prices.

The looming possibility of a European Union ban on Russian oil imports has helped support prices. This month the EU proposed a new package of sanctions against Russia over its invasion of Ukraine, which Moscow calls a “special military operation.”

Those sanctions would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary among the most vocal critics of the plan.

Iran, meanwhile, is having a tougher time selling its crude now that more Russian barrels are available.

Iran’s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.

(Reporting by Scott DiSavino; Editing by Cynthia Osterman)

Blast at S.Korea’s S-Oil refinery kills one worker, injures 9

(Reuters) -One person died in a blast at South Korea’s S-Oil Corp’s Onsan refinery in Ulsan, and nine others were injured late Thursday night, an Ulsan Fire Department official said on Friday.

S-Oil is the country’s third-largest refiner and its main shareholder is Saudi Aramco. The 669,000-barrel-per-day (bpd) refinery is located about 380 km (240 miles) southeast of Seoul.

S-Oil said in a regulatory filing that it has halted production at its No. 2 alkylation unit and related processes at its Onsan refinery due to a fire.

Fire broke out while workers were testing the facility’s alkylation processing unit following a regular maintenance procedure, Yonhap news agency reported, citing authorities at the fire department.

(Reporting by Arpan Varghese in Bengaluru, Joyce Lee and Heekyong Yang in Seoul; Editing by Angus MacSwan and Jacqueline Wong)

Norwegian oil drilling labour unions seek mediation as wage talks falter

OSLO (Reuters) – Wage talks involving around 8,000 oil drilling workers in Norway broke down on Thursday, labour unions said, raising the risk of strike action that would disrupt oil and gas exploration.

The talks between the Norwegian Shipowners’ Association (NSA) and the Safe, Industri Energi and DSO unions will resume at a later date under the leadership of a state-appointed mediator, and could end in a strike if those negotiations fail.

Any industrial action would most likely have only a marginal impact on production of oil and gas in the short-term, but could have a greater impact in the medium- to long-term as expansion projects and the start-up of new fields would be delayed.

Companies affected by the talks include Transocean, Saipem, Odfjell Drilling, Maersk Drilling, Archer, Seadrill and others.

The unions represent workers on mobile offshore units as well as platform drilling on permanent installations.

Under Norway’s tightly regulated collective bargaining system, workers are only eligible to go on strike if the mediation also fails.

(Reporting by Terje Solsvik, editing by Gwladys Fouche)

World stocks slide as growth fears persist, safe-havens gain

By Herbert Lash

NEW YORK (Reuters) – Global equities fell further on Thursday, unable to sustain a late rally on Wall Street, as investors dumped stocks on fears of sluggish growth and bought safe-haven assets such as government debt and the Swiss franc.

Supply chain woes continued to fuel inflation and growth concerns as Cisco Systems Inc warned of persistent component shortages, knocking its shares down 13.7%. The plunge made it the latest big name stock this week to post its largest decline in more than a decade.

Data showed factory output in the U.S. Mid-Atlantic region decelerated far more than expected in May with the business outlook for the six months ahead the weakest in more than 13 years, a regional Federal Reserve bank survey said.

Some megacap growth stocks that have underperformed this year posted gains but the rally fizzled. The Dow Jones Industrial Average fell 0.75%, the S&P 500 lost 0.58% and the Nasdaq Composite dropped 0.26%.

Big slides for Walmart on Tuesday and Target on Wednesday have demoralized investors who wonder about rising costs across the supply chain, said Michael James, managing director of equity trading at Wedbush Securities.

“You got a pretty severe shock to the system for portfolio managers with the combination of those two,” James said. “That type of damage is hard to repair, piled on top of the extremely challenging year that technology investors have had,” he said.

But James said there are those view market as being extremely oversold and “you’re due for some kind of a bounce.”

Traders are looking for a catalyst that will turn the market around as a near-term bottom approaches, said Rick Meckler, president of hedge fund LibertyView Capital Management LLC.

But, “there’s probably still enough fear among investors to see a few more downdrafts,” he said.

Cash hoarding has reached the highest level since September 2001, indicating strong bearish sentiment, according to Louise Dudley, a portfolio manager at Federated Hermes Ltd.

Goldman Sachs estimates a 35% probability of a U.S. recession in the next two years, while Morgan Stanley sees a 25% chance of one in the next 12 months.

U.S. spot power and natural gas prices soared to their highest in over a year in some U.S. regions as Americans cranked up air conditioners during a spring heatwave.

MSCI’s gauge of stocks across the globe fell 0.65% and the pan-European STOXX 600 index lost 1.37%.

The S&P 500 is down about 18% from its record close on Jan. 3, and MSCI’s index has fallen the same since peaking on Jan. 4.

GRAPHIC: S&P 500 bear markets (https://fingfx.thomsonreuters.com/gfx/mkt/egpbkwmlgvq/Pasted%20image%201652990180837.png)

Germany’s 10-year bond yield fell below 1% and U.S. Treasury yields fell as more soft U.S. economic data stirred worries the Federal Reserve’s aggressive monetary tightening could hurt the global economy.

The yield on 10-year Treasury notes fell 3.8 basis points to 2.846%, after hitting a three-week low of 2.772%.

The dollar fell across the board, pulling back further from a two-decade high, as most other major currencies drew buyers.

The dollar index fell 0.896%, with the euro up 1.11% to $1.0582. The Japanese yen strengthened 0.35% to 127.79 per dollar.

The Swiss franc gained after Swiss National Bank president Thomas Jordan signaled on Wednesday the SNB was ready to act if inflation pressures continued.

GRAPHIC: Worst start to a year for world stocks (https://fingfx.thomsonreuters.com/gfx/mkt/byvrjdrjdve/Pasted%20image%201652952015101.png)

Central banks have been walking a tightrope, trying to regain control of decades-high inflation without causing painful recessions.

“We will have to discuss what we can do together in our respective areas of responsibility to avoid stagflation scenarios,” German finance minister Christian Lindner said as he arrived for a two-day meeting of top central bankers near Bonn.

Oil prices rebounded from two days of losses in a volatile session, bolstered by weakness in the dollar and expectations that China could ease some lockdown restrictions that could boost demand.

U.S. crude futures rose $2.62 to settle at $112.21 a barrel. Brent settled up $2.93 at $112.04 a barrel.

U.S. gold futures settled up 1.4% at $1,841.20 an ounce, as a weaker dollar and Treasury yields burnished bullion’s safe-haven appeal.

(Reporting by Herbert Lash, additional reporting by Marc Jones in London, Francesco Canepa in Koenigswinter, Germany, Stella Qiu in Beijing and Alun John in Hong Kong; Editing by Bernadette Baum, David Gregorio and Richard Pullin)

Rosneft faces foreign managers’ departures as sanctions push out EU citizens – sources

(Reuters) – Five foreign vice-presidents of Russia’s Rosneft have resigned because of European Union sanctions forbidding European citizens or Russians living in the EU to work at the Kremlin oil major, six sources familiar with the matter said.

They said the five – Didier Casimiro, Eric Liron, Zeljko Runje, Avril Conroy and Otabek Karimov – left Rosneft days ahead of fresh EU sanctions over the Russian assault on Ukraine that came into effect on May 15, the sources said.

All five joined the state-owned Russian company in 2012 or early 2013, according to the Rosneft website.

Rosneft declined to comment. Casimiro did not respond to a message. Liron, Runje, Conroy and Karimov could not be reached.

Rosneft’s boss Igor Sechin, a close ally of Russian President Vladimir Putin, has long said he wants Rosneft to rival the likes of Exxon Mobil Corp by hiring foreign managers and using the best of western technology and expertise.

The departure of executives and tightening of sanctions are widely expected by Western oil executives with Russian expertise and Russian oil insiders to slow the growth at Rosneft and make it harder to develop new deposits including the flagship Vostok Oil project in East Siberia, one of the biggest developments since the fall of the Soviet Union.

Belgian-born Casimiro, a key figure for Russian oil and products trading and supply, joined Rosneft after the company bought BP’s joint venture in Russia, TNK-BP.

French-born Liron and Irish-born Conroy also joined Rosneft from TNK-BP in 2013. They were responsible for in-house services and retail business development, respectively.

Uzbekistan-born Karimov was working closely with Didier as vice-president for trading and logistics.

Croatia-born Runje joined Rosneft from Russia’s Exxon Mobil branch in 2012 as a vice-president for oil and gas and offshore business development.

Casimiro and Runje were sanctioned as individuals by the United Kingdom at the end of March.

The European Parliament urged that former German Chancellor Gerhard Schroeder be blacklisted if he does not quit the board. Schroeder has said his ties to Putin are essential to communication with a man the world cannot afford to ignore.

(Reporting by Reuters; Editing by Howard Goller)

Oil rebounds from two days of losses in volatile trade

By David Gaffen

NEW YORK (Reuters) -Oil prices rebounded from two days of losses in a volatile session on Thursday, bolstered by weakness in the dollar and expectations that China could ease some lockdown restrictions that could boost demand.

Crude benchmarks continued their spate of wild swings, with both Brent and U.S. crude rising by nearly $5 a barrel in the span of a few hours, recovering from losses earlier in the week.

“The market has been extremely volatile,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “The market is reacting to all sorts of different headlines hour to hour, and the movement in oil markets on a day-by-day basis getting even more exaggerated.”

Brent crude futures for July settled at $112.04, a gain of $2.93 a barrel, or 2.7%. U.S. West Texas Intermediate (WTI) crude futures for June settled up $2.62, or 2.4%, to $112.21 a barrel.

In China, investors are closely watching plans to ease coronavirus curbs from June 1 in the most populous city of Shanghai, which could lead to a rebound in oil demand from the world’s top crude importer.

Oil markets also rebounded as the dollar weakened. The broad dollar index was down 1% on the day after recent gains. Oil benchmarks often move inversely to the dollar as most global crude transactions are handled in dollars, so a rising greenback makes crude more expensive for big importers.

Crude gains have been limited, however, with the Brent and U.S. benchmarks trading in a range due to the uncertain path of demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.

“Brent seems pinned above $100 but I think the recession risk and all of the concerns about Chinese demand are limiting the upside and will continue to do that,” said Bill Farren-Price, head of oil and gas macro research at Enverus in London.

The looming possibility of a European Union ban on Russian oil imports has been supporting prices. This month the EU proposed a new package of sanctions against Russia over its invasion of Ukraine, which Moscow calls a “special military operation.”

That would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary among the most vocal critics of the plan.

(Additional reporting by Yuka Obayashi in Tokyo and Florence Tan in SingaporeEditing by Marguerita Choy, Mark Potter and Nick Zieminski)

More Russian oil going east squeezes Iranian crude sales to China

By Bozorgmehr Sharafedin, Florence Tan and Chen Aizhu

LONDON (Reuters) -Iran’s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.

U.S. and European sanctions imposed over Moscow’s invasion of Ukraine on Feb. 24 have pushed more Russian crude east, where China has snapped it up, cutting demand for oil from Iran and Venezuela, which are also both under Western sanctions.

About 20 vessels with oil from Iran were at anchor near Singapore as of mid-May, shippers’ data showed.

    Some tankers have been anchored since February but the number storing Iranian oil climbed swiftly since April, trading and shipping sources said, as more Russian oil headed east.

    Kpler data and analytics company said it estimated the amount of Iranian oil in floating storage near Singapore rose to 37 million barrels in mid-May from 22 million barrels in early April.

    The United States banned imports of Russian oil shortly after Moscow’s invasion, while the European Union is considering a phased embargo, pushing more Russian oil cargoes towards Asia.

    “Russia can switch almost half of its exports to southeast Asia, especially China … and that is a huge potential threat for Iranian crude exports,” Hamid Hosseini, board member of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union in Tehran, told Reuters.

    Iran, whose oil industry has struggled for years under U.S. sanctions imposed over Tehran’s nuclear work, has long relied on Chinese oil purchases to keep the economy afloat.

    Iran’s exports to China were estimated at 700,000 to 900,000 barrels per day (bpd) in March, according to data and consultancy firm calculations.

    But in April those exports were estimated to have dropped by between 200,000 and 250,000 bpd, according to Iman Nasseri, managing director for the Middle East with FGE consultancy, suggesting a drop of roughly a quarter or a third.

Kpler said Iran had on average exported 930,000 bpd, mainly to China in the first quarter, while its preliminary estimate for April was 755,000 bpd, although it said that estimate could be revised because of the difficulty of tracking Iranian sales.

    TRADE UNDER SANCTIONS

    “China is now clearly buying more (Russian) Urals cargoes. Exports of Urals to China have more than tripled. That comes despite a weakening in Chinese imports,” said Homayoun Falakshahi, a senior analyst at Kpler.

    China, where total oil imports have fallen recently because of COVID-19 restrictions, is also the largest buyer of Russian ESPO Blend crude.

    Iran and Russia have been in close contact in recent weeks to discuss how to trade oil under sanctions, three sources told Reuters. One source said the Russian side wanted to learn how Iran had navigated transport, trade and banking, while the two sides also discussed creating joint companies, banks and funds.

Another of the sources said more talks were planned when Russian Deputy Prime Minister Alexander Novak visits Iran next week.

But the talks have not eased the competition to find buyers for Russian Urals and Iranian crudes, which are usually heavier with higher sulphur content, tending to make them more expensive to process than Russian oil.

“Nobody’s looking at Iranian crude anymore as Russian grades are of much better quality and at lower prices. Iranian oil sellers are under severe pressure,” said a trader with a Chinese refiner.

    He said Urals delivered to China was selling at discounts of $9 per barrel to Brent for June delivery, so Iranian barrels had to be offered at discounts of $12 to $15 to compete.

    “You can legally buy Russian oil at discount, but Iranian oil continues to be the subject of sanctions, so naturally people go for the easier option,” a European trader said, referring to the tighter U.S. sanctions on Iran’s exports.

    Russian oil and refined products are also flowing into other markets, especially India and the United Arab Emirates (UAE).

    Russian fuel oil arrivals in the UAE storage hub of Fujairah are set to climb to about 2.5 million barrels in May, about 125% higher than April levels.

    India, meanwhile, has increased purchases of Russian crude. By early June, India will have imported more than 30 million barrels in the past three months, according to Kpler, more than double the volume imported in the whole of 2021.

(Reporting by Bozorgmehr Sharafedin in London, Florence Tan and Chen Aizhu in SingaporeAdditional reporting by Rowena Edwards in LondonEditing by Edmund Blair and Mark Potter)

China in talks with Russia to buy oil for strategic reserves – Bloomberg News

(Reuters) – China is in talks with Russia to buy additional supplies of oil in order to add to its strategic crude inventories, according to a Bloomberg News report on Thursday.

The crude would be used to fill China’s strategic petroleum reserves, and talks are being conducted at a government level with little direct involvement from oil companies, Bloomberg reported, citing one person with knowledge of the plan.

The United States banned imports of Russian oil shortly after Moscow’s invasion, while the European Union is considering a phased embargo, pushing more Russian oil cargoes towards Asia.

(Reporting by Ashitha Shivaprasad; Editing by Edmund Blair)

Crude Oil Price Forecast – Crude Oil Markets Continue Volatile Behavior

WTI Crude Oil Technical Analysis

The West Texas Intermediate Crude Oil market has gone back and forth during the trading session on Thursday, bouncing from the 50 day EMA at one point, as we continue to see a lot of noise in this market. Ultimately, I think we have got a situation where we need to pay close attention to the channel that we have been in, as it does seem to be holding. It is also worth noting that the 50 day EMA has been the beginning of some rather impressive support that extends down to that previous uptrend line. Because of this, a bounce makes more sense than anything else, but if we were to break down below the $100 level one would have to think that at the very negative sign.

Crude Oil Prices Forecast Video 20.05.22

Brent Crude Oil Technical Analysis

Brent has also fallen to the 50 day EMA, only to show signs of life again. By doing so, this market looks as if it is ready to bounce again, and therefore I think is going to follow WTI higher. If we can break above the highs of the day, then it would confirm that we have more momentum jumping in and is likely that Brent will go looking to reach the $115 level. Given enough time, I anticipate we will probably do that, but if we turn around a break down below the uptrend line, all bets are off and we would have to assume that Brent would fall right along to the 200 Day EMA rather quickly. Obviously, this would be a very negative turn of events, perhaps due to a slowing global economy.

For a look at all of today’s economic events, check out our economic calendar.

Marketmind: Which earnings to the rescue?

A look at the day ahead from Danilo Masoni.

Traders have sold the latest rally, and savagely, tipping world equities back on the brink of confirming a bear market pattern. And the fear behind the rout is that the support which strong earnings have provided so far against pressure from rising rates is starting to dwindle.

Big-box retailers on Wall Street showed the world how painful inflation and supply chain problems can be, while adding to concerns that the American consumer who powers the world’s top economy might not be in as strong shape as thought. That sent investors rushing for the exit.

The S&P 500 fell 4% in its biggest drop since June 2020 as retail giant Target tanked 25% after warning of a bigger margin hit due to rising fuel and freight costs. The day before rival Walmart trimmed its profit forecast.

The sour mood spilled over to Asia and Europe too looks set to extend Wednesday’s losses, although the safe-haven dollar eased and riskier currencies like the Aussie jumped as Shanghai set out plans to end a COVID lockdown.

Meantime, early signs of “capitulation” among retail traders have emerged, according to Vanda Research, which cited put option trading near record highs and Charles Schwab net assets suffering outflows for the first time since 2020.

Against this backdrop energy and commodities feature amongst the rare safe harbours. Brent crude is rising 1% back above $110, and Europe’s energy index struck a fresh three-year high on Wednesday, escaping the stock market battering.

Key developments that should provide more direction to markets on Thursday:

* Japan’s exports extended double-digit gains for a thirdstraight month in April. * Speaker’s corner: BoE’s head of Financial MarketsInfrastructure, Christina Segal-Knowles, ECB Vice-president Luisde Guindos * Central bank meetings: South Africa, Egypt, Philippines * U.S. initial jobless claims/Philly Fed index * US 10-year TIPS auction * Earnings: Generali, Investec, Royal Mail, Kohl’s

(The story refiles to fix chart.)

(Reporting by Danilo Masoni)

U.S imports of Latam oil soar as refiners replace Russian barrels

By Arathy Somasekhar

HOUSTON (Reuters) – U.S. refiners imported about 1.3 million barrels per day (bpd) of crude and fuel oil from Latin America in April, the highest in seven months according to U.S. Customs data, as buyers began replacing Russian supplies.

The United States in March banned imports of Russian crude and refined products over its invasion of Ukraine, setting April 22 as end date for purchases. Treasury Secretary Janet Yellen urged companies to adopt “friend-shoring” supply networks, or buying from trusted countries.

Russia supplied about 135,000 bpd, or 5.5% of total U.S. crude imports last year, and 155,350 bpd, or 29%, of fuel oil imports, according to Customs data on Refinitiv Eikon. Russian crude imports touched a record high in 2021 after hurricanes disrupted production, data from Energy Information Administration.

Imports of fuel oil from Latin America averaged some 200,000 bpd in March and April, 49% higher than in the previous 12 months. Mexico’s share of U.S. fuel oil imports climbed to about 27% in March and April, from 19% a year earlier, the data showed.

About 15 vessels discharged 159,000 bpd of Mexican fuel oil in Louisiana, California, Texas and Florida, supplying Exxon Mobil Corp , Chevron Corp and Marathon Petroleum Corp, among others.

“The really interesting storyline has been Mexico’s ability to capture market share from Russia,” said energy strategist Clay Seigle. “The U.S. market for Russian fuel oil has been permanently destroyed.”

<<For an interactive graphic on U.S. crude and fuel oil imports from Latin America, click here https://tmsnrt.rs/3yG3gIX>>

CRUDE SIDE

U.S. imports of Latin American crude also climbed in April, to 1.34 million bpd, its highest in six months. Purchases from Argentina rose to a four-year high while imports from Colombia reaching their highest since September 2020.

Cargoes of Argentina’s light sweet Medanito arrived at Valero Energy Corp’s Benicia refinery in California and Phillips 66’s Ferndale refinery in Washington. About 1 million barrels of Argentina’s medium Escalante crude also discharged at Par Hawaii Refining’s Honolulu plant.

Par Hawaii President Eric Wright said oil from North and South America was meeting Hawaii’s crude processing requirements. Historically, the company had sourced 20%-25% of its oil from Russia.

About 1.8 million barrels of Colombian oil were supplied to processors, including PBF Energy Inc’s Delaware City and Valero’s St Charles refineries.

Colombia last week said it could increase oil exports to the United States by about 40,000 bpd by year-end.

Marathon, Exxon and Phillips 66 declined to comment. Chevron, Valero and PBF did not respond to a comment request.

Valero and PBF last month said they would ramp up imports from Latin America as they warned of a shortage of feedstocks.

(Reporting by Arathy Somasekhar in Houston; Editing by Marguerita Choy)

Oil falls 2% on Powell comments, hopes for Venezuela supply

By Stephanie Kelly

NEW YORK (Reuters) – After hitting seven-week highs, oil prices slumped 2% on Tuesday as Reuters reported that the United States could ease some restrictions on Venezuela’s government, raising hopes that the market could see some additional supplies.

Prices also fell after Federal Reserve Chairman Jerome Powell warned the economy could be hurt by attempts to reduce inflation.

Brent crude fell $2.31, or 2%, to settle at $111.93 a barrel, and U.S. West Texas Intermediate (WTI) crude fell $1.8, or 1.6%, to settle at $112.40 a barrel.

Powell suggested there could be some economic pain involved in bringing inflation down. The U.S. central bank will “keep pushing” to tighten U.S. monetary policy until it is clear that inflation is declining, he said.

“Some of those comments tempered buying enthusiasm on the oil side,” said Phil Flynn, an analyst at Price Futures Group.

U.S. President Joe Biden’s administration will authorize U.S. oil company Chevron Corp to negotiate with Venezuelan President Nicolas Maduro’s government as soon as Tuesday, Reuters reported, citing sources. There is no final U.S. decision yet on renewing Chevron’s current limited license to operate in Venezuela, the source said.

Oil prices have generally been rising as Russian supply is squeezed by bans from several countries and an economic downturn due to broad sanctions on Moscow imposed by the United States and allies.

Russia’s production dropped by 9% in April, and the country, part of the OPEC+ group, produced far below levels required under a deal to gradually ease record output cuts made during the worst of the pandemic in 2020.

This month, non-Russian deliveries into the Polish port of Gdansk hit the highest in at least seven years, as refiners in eastern Germany and Poland switched.

“Ultimately, this is a supply-side story,” said Fawad Razaqzada, analyst at City Index. “Unless OPEC and its allies ramp up production and fast, it is difficult to see how prices can go down meaningfully.”

EU foreign ministers failed on Monday in their effort to pressure Hungary to lift its veto on the proposed oil embargo. But some diplomats now point to a May 30-31 summit as the moment for agreement on a phased ban on Russian oil.

U.S. crude and gasoline stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday. U.S. government data is due on Wednesday. [API/S] [EIA/S]

(The story corrects to remove bullet and paragraph on Brent discount to WTI as first-month Brent crude futures are for July while first-month WTI futures are for June.)

(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler in London, Isabel Kua in Singapore and Yuka Obayashi in Tokyo; Editing by Marguerita Choy, Louise Heavens, David Gregorio and Cynthia Osterman)

Alberta premier Jason Kenney resigns after party leadership review

By Nia Williams

(Reuters) -Alberta Premier Jason Kenney stepped down as leader of the United Conservative Party (UCP) on Wednesday after receiving only a slim majority in a leadership review, surprising many who had expected him to remain in power despite his increasing unpopularity.

Kenney, the premier of Canada’s main oil-producing province, received 51.4% of the vote from party members. He had previously vowed to remain leader even if he received a simple majority of only 50% plus one.

“While 51% of the vote passes the constitutional threshold of a majority, it clearly is not adequate support to continue on as leader and that is why tonight, I’ve informed the president of the party of my intention to step down as leader of the United Conservative Party,” Kenney told party members in Calgary.

Kenney called the leadership review to stave off a caucus revolt following months of intense criticism of his handling of the COVID-19 pandemic and uncompromising leadership style.

His decision means the ruling UCP will now choose an interim leader and premier, and launch a leadership race. The caucus meets on Thursday morning.

Kenney, a former federal Conservative minister who came to power in Alberta in 2019, had slumped in public opinion polls over the course of the pandemic and faced open revolt from party members.

Kenney’s approach to tackling COVID-19 upset those who thought the public health measures imposed were too strict, as well as those who said the government delayed too long to implement restrictions, allowing hospitals to be overrun.

Even so, he was seen as a tenacious and combative leader and political analysts were surprised by his move.

“I don’t think anybody was ready for him to step back,” said Lori Williams, a political science professor at Calgary’s Mount Royal University.

Some UCP members also criticised the leadership review process itself. There was a late surge in new party membership applications, and a last-minute switch from an in-person vote in Red Deer, central Alberta, in early April, to a mail-in ballot lasting five weeks.

Alberta will hold a provincial election in spring 2023 and the UCP leadership race will likely take several months. The main opposition is the New Democratic Party led by Rachel Notley.

The UCP was formed in 2017 by a merger of Alberta’s two largest right-wing parties, the Progressive Conservatives and the Wildrose party. Williams said the leadership race could expose old divisions within the province’s conservative movement.

“If the leadership vote happens and people say they are not being represented, this could split the (conservative) right open again,” she added.

(Reporting by Nia Williams and Eric Beech; Editing by Kenneth Maxwell and Richard Pullin)

Oil falls 2.5% as U.S. refiners ramp up output, equities retreat

By Arathy Somasekhar

HOUSTON (Reuters) – Oil prices fell 2.5% on Wednesday, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output, and as crude futures followed Wall Street lower.

Brent crude futures for July settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. West Texas Intermediate (WTI) crude for June fell $2.81, or 2.5%, to $109.59 a barrel.

Both benchmarks gave up early gains of $2-$3 a barrel following a change in risk sentiment as equity markets fell, said UBS analyst Giovanni Staunovo.

U.S. crude inventories fell by 3.4 million barrels last week, government data showed, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced U.S. diesel and gasoline prices to record levels. [EIA/S]

U.S. gasoline prices fell 5%, two days after touching a record high.

Capacity use on both the East Coast and Gulf Coast was above 95%, putting those refineries close to their highest possible running rates.

“While on the face of it, the report was extraordinarily bullish, they (refiners) are racing to put more refined product on the market… there’s obviously a refiners response,” said John Kilduff, a partner at Again Capital LLC.

The dollar strengthened and global stocks retreated on concerns about economic growth and rising inflation.

Bearish sentiment also followed reports that the United States is planning to relax sanctions against Venezuela and allow Chevron Corp to negotiate oil licenses with state producer PDVSA.

“The perception that we could see some more supply coming Venezuela coming into the market, along with the equity markets, it’s causing some profit taking in a much-needed technical correction in the crude,” said Dennis Kissler, senior vice president for trading at BOK Financial.

The European Union’s failure to persuade Hungary to lift its veto on a proposed embargo on Russian oil was adding price pressure, although some diplomats expect agreement on a phased ban at a summit at the end of May.

Ongoing supply concerns remained supportive. Russian crude output in April fell by nearly 9% from the previous month, an internal OPEC+ report showed on Tuesday, as Western sanctions on Moscow curbed exports.

On the demand side, hopes of further lockdown easing in China boosted expectations of a recovery. Authorities allowed 864 of Shanghai’s financial institutions to resume work, sources said, and China has relaxed some COVID test rules for U.S. and other travelers.

(The story corrects to remove paragraph on Brent discount to WTI as first-month Brent crude futures are for July while first-month WTI futures are for June.)

(Additional reporting by Rowena Edwards in London, Isabel Kua in Singapore; Editing by Marguerita Choy, Jason Neely and David Gregorio)

Stocks Sink in a Vicious Sea of Red; Oil Bulls Are Blindsided by Stagflation Fear, Rates Down Trigger Demand for JPY, Leaving Gold in No Man’s Land

Global Macro and Stock Markets Analysis

US equities fell sharply Wednesday, S&P down 4%, the most significant daily decline since June 2020. The weakness came as Target’s quarterly earnings added fuel to the recession risk narrative, while the drop of US10 year yields down 10bps to 2.88% offered little support. And Oil settled at 2.3% lower on the day.

Equities continue to be at the mercy of broader macro themes, with more hawkish comments from Fed Chair Jay Powell leading to a further move higher in front-end rates, which continues to prove problematic for risk.

Medium-term, the Fed is likely to respond to any easing in financial conditions by ratcheting up the hawkish noises and, in effect, acting as a lid on the markets. And this should keep active money on the sidelines.

The relief rally trap door sprung when the S& P 500 4000 pins snapped after Target‘s earnings results exacerbated some recession fears that continued the theme of rising inventories detailed by Walmart on Tuesday. And the broad-based sell-off absolutely hammered tech.

Indeed, contagion from bellwether consumer earnings prints is sending stagflationary shockwaves through the market, and equities suffered another massive bout of indigestion after yesterday’s Alka Seltzer moment.

While rising inventories and higher inventory/sales ratios are not new, the big boxes now confirm recessionary worries and catalyze the severity of the sum of all stagflationary fears.

Oil Fundamental Analysis

The China reopening trade got blindsided by intense global recessionary impulses.

It is a very volatile market, but there are enough reasons to suggest why traders are looking to sell in the current environment.

An actual recession is likely one of the few antagonists that can contain oil prices with a supply deficit. And as the procession to recession shortens, oil prices could continue to fall due to demand concerns.

In addition to Venezuela barrels possibly coming to market offsetting the ongoing political fractious Libyan supply disruption, the EU sanctions package currently under discussion would likely legalize Russian supplies’ status quo at least through the year and take pressure off the prompt contract.

FOREX Fundamental Analysis

It was another busy day in G-10 FX with broad-based dollar demand across the spectrum, driven by a hawkish FED and safe-haven demand, which are two primary supportive channels for King Dollar.

Investors continue to evaluate the diverging approaches taken by central banks amid an inflation crisis. Federal Reserve Chair Jay Powell issued some hawkish comments on Tuesday about the possibility of raising the Fed Funds above neutral. At the same time, the Bank of England seems to have fallen behind the curve with its dovish approach, despite rampant inflation data emerging earlier Tuesday.

But folks that trade for a living, not analyze currencies as a job, are looking to buy JPY, which suggests the worm is turning on USDJPY.

Japanyese Yen

Local investor interest in buying USDJPY in the Asian session saw the pair touch a high in the 129.50/60 zone, coinciding with highs in various JPY crosses.

Since then, the pair has been heavy on rallies and opened the North America session near 129.00/10. This morning we open the Asia session at 128.30 as safe-haven demand is kicking in.

The JPY looks attractive with the global economy on the precipice of recession. JPY is interesting as the rise in USDJPY YTD has opened an enormous value gap for what is typically perceived as a safe-haven currency. Historically FX hedges for massive risk-off scenarios suggest that the YEN provides an excellent firebreak to the recessionary flames, especially against a “stock down rates down” seismic shock or a market backdrop consistent with recessionary pricing.

British Pound

Besides the Brexit risk and the BoE as a reluctant rate hiker, domestic political risk never seems to leave the GBP spectrum. “Red Wall” Conservative members of parliament are planning to ask Chancellor Rishi Sunak to remove Andrew Bailey as governor of the Bank of England. It seems nigh on impossible this would succeed, but it reflects the political pressure being heaped on the BoE.

Bailey is just two years into an eight-year term. Bailey has not helped himself, with comments such as predicting an “apocalyptic” rise in food prices earning him opprobrium from all corners.

Questioning the ability of your top central banker cannot be suitable for the currency.

Swiss Franc

USDCHF and CHF crosses continue to trade heavily, with little bounces, after SNB Chairman Jordan said the central bank is “ready to act if inflation strengthens.”

There is no relief in the crosses after disappointing quarterly results from major retailers weighed on the broader markets.

Gold Fundamentals

Gold is caught in the tug of war between recessionary safe-haven demand and do not fight the fed mode.

It is a tough market for gold investors, with stocks tanking and the street moving into a capitulatory sell-all frame of mind. And even lower bond yields are offering little support leaving bullion investors adrift in no man’s land.

For a look at all of today’s economic events, check out our economic calendar.

U.S. extends application deadline for nuclear power rescue program

WASHINGTON (Reuters) -The U.S. Department of Energy said on Wednesday it has extended a deadline by 47 days, to July 5 for nuclear power plants to apply for federal funding to keep them running.

The first stage of the program is aimed at saving two plants in California and Michigan. The Biden administration wants to keep nuclear plants online because the industry generates more than half the country’s carbon-free electricity.

The DOE’s move came two days after two industry trade groups, Edison Electric Institute and Nuclear Energy Institute, sent a letter to Energy Secretary Jennifer Granholm requesting the extension on behalf of their members.

“We received a request to extend the application period, which could keep at-risk reactors online, delivering much needed clean energy to the grid,” DOE’s assistant secretary for nuclear energy, Kathryn Huff, said.

Under the plan, called the Civilian Nuclear Credit (CNC) program, owners of nuclear reactors that are scheduled to retire would get priority for the first portion of $6 billion in funding. CNC funding comes from last year’s bipartisan infrastructure law.

Entergy Corp’s Palisades plant in Michigan, which may be eligible, is due to shut down on May 31.

Entergy said in an email it was committed to shutting the plant after its Chief Executive Leo Denault said in an earnings call in April that there are “significant technical and commercial hurdles to changing course at this point.”

However, Denault said then that Entergy would work with “any qualified party that wants to explore acquiring the plant and obtaining federal funding.”

The Diablo Canyon facility in California, owned by PG&E Corp, is scheduled to fully shut in 2025. A company spokesperson said on Tuesday the utility had not yet decided whether to apply for the funds.

Environmental Working Group President Ken Cook complained that CNC was a “waste of scarce resources” and delays moving the country and California toward renewable electricity.

(Reporting by Timothy Gardner; additional reporting by Nichola Groom, editing by Jonathan Oatis and Marguerita Choy)

Stocks pummeled by growth worries, U.S. dollar climbs

By Herbert Lash and Chuck Mikolajczak

NEW YORK (Reuters) – Global stocks plunged and the dollar strengthened for the first time in four sessions on Wednesday as concerns about rising inflation on economic growth soured sentiment.

The mood was underscored by a 9% surge in British consumer prices and a faster-than-expected acceleration in inflation in Canada.

British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices, Statistics Canada data showed.

British inflation is now the highest among major economies in Europe, but prices are rapidly rising worldwide, forcing central banks around the globe to hike interest rates and tamp down growth as suggested by a modest decline in U.S. homebuilding in April.

Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be built, indicating a decline in homebuilding potentially might be marginal.

Adding to the gloom caused by inflation were earnings results from Target Corp, whose quarterly profit halved as it warned of a bigger margin hit this year due to rising fuel and freight costs.

Target shares plummeted 24.88%, its biggest one-day percentage drop since the “Black Monday” stock market crash on Oct. 19, 1987, a day after Walmart Inc warned of similar margin squeezes and saw its stock drop 11.4% for its biggest one-day percentage fall since Oct. 16, 1987.

“It was Walmart yesterday and everybody thought it was a one-off,” said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas. “Now that Target misses earning a lot more than Walmart even did, they’re scared that consumer is not as strong as everybody think it is.”

MSCI’s gauge of stocks across the globe shed 2.74%, while in Europe, the pan-regional STOXX 600 index closed down 1.14%.

On Wall Street, the Dow Jones Industrial Average fell 3.56%, the S&P 500 lost 4.03% and the Nasdaq Composite dropped 4.73%.

The declines for the S&P 500 and Dow marked their biggest one-day percentage declines since June 11, 2020.

Few analysts are willing to predict the end to selling after a bruising first five months of the year for risk assets given the magnitude of macroeconomic uncertainty, with many anticipating market volatility will be the norm for some time.

The U.S. dollar gained ground as the sell-off in risk assets boosted the safe-haven appeal of the greenback, which was on pace to snap a three-session losing streak, a day after Fed Chair Jerome Powell pledged the U.S. central bank would ratchet up rates as high as needed to combat rising inflation.

The dollar index rose 0.581%, with the euro down 0.8% to $1.0463. The Japanese yen strengthened 0.92% to 128.23 per dollar.

Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell’s hawkish comments.

The yield fell 8.1 basis points to 2.890% on Wednesday after a soft U.S. housing starts number.

The German two-year government bond yield shot to 0.444%, its highest since November 2011 after more hawkish central banker comments, and last was up 1.6 basis points at 0.386%. The European Central Bank’s Klaas Knot said on Tuesday that a 50-basis-point rate hike in July was possible if inflation broadens.

Gold prices were little changed despite the risk-off environment as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal’s shine.

Spot gold was up 0.1% at $1,816.06 an ounce.

Oil prices dipped in volatile trade, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output.

U.S. crude settled down 2.5% at $109.59 per barrel and Brent settled at $109.11, down 2.52% on the day.

GRAPHIC: MSCI World equity index (https://fingfx.thomsonreuters.com/gfx/mkt/movanzkkopa/world%20stocks.PNG)

(Reporting by Herbert Lash and Chuck Mikolajczak; additional reporting by Devik Jain in Bengaluru; editing by Jonathan Oatis)

Crude Oil Price Forecast- Crude Oil Markets Pull Back Slightly

WTI Crude Oil Technical Analysis

The West Texas Intermediate Crude Oil market initially tried to rally during the trading session on Wednesday but gave back gains to fall towards the $108 level. By doing so, the market is likely to continue to see volatility, but I also think there is only a matter of time before we would see buyers jump in and pick this market up. The 50 Day EMA sits at the $103 level. The $103 level is an area where we had seen buyers previously, and therefore I think that what we have is a “buy on the dips” scenario. As long as that is the case, I have no interest in trying to short this market, especially as energy has been extraordinarily bullish.

Crude Oil Prices Forecast Video 19.05.22

Brent Crude Oil Technical Analysis

Brent markets also have pulled back a bit during Wednesday trading, testing the top of the previous triangle. Ultimately, this is a market that I think will try to find buyers as well, and if you look at both charts, you can make an argument for a bit of a channel. A little bit of a pullback would make sense in this scenario, as we have progressively seen buyers jump in and take advantage of value every time it appears.

On the other hand, if we break above the $116 level, it would show that the market is currently ready to break out and continue going higher. I do not expect that to be the case, because of the way the market has behaved over the last several weeks. Ultimately, this is a market that I think will continue to attract a certain amount of inflow as long as we are well above the $100 level.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Venezuela Supply Worries Offsetting Renewed China Demand Hopes

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Wednesday shortly before the release of the weekly government inventories report.

New concerns that the United States could ease some restrictions on Venezuela’s government are making longs nervous about new supply. Furthermore, this is offsetting demand hopes tied to China’s possible loosening of COVID restrictions.

At 14:05 GMT, July WTI crude oil is at $110.11, up $0.48 or +0.44%. July Brent crude oil is trading $112.15, up $0.22 or +0.20% and the United States Oil Fund ETF (USO) is at $81.51, up $0.40 or +0.49%.

Additional Supply from Venezuela?

U.S. officials and others familiar with the matter are expecting Venezuelan President Nicolas Maduro and the country’s opposition to announce a resumption of talks as Washington eases some sanctions to help smooth the way for the negotiations.

U.S. President Joe Biden’s administration authorized U.S. oil company Chevron Corp to open talks with Maduro’s government, temporarily lifting a ban on such discussions, senior administration officials said on Tuesday.

Washington has not made a final decision on renewing Chevron’s current limited license to operate in Venezuela, several sources told Reuters. Chevron is the last U.S. oil producer to maintain a presence in Venezuela, home to the world’s largest crude reserves.

Traders Shrug Off Mixed API Report

The American Petroleum Institute (API) reported a draw this week for crude oil of 2.445 million barrels, compared to analyst estimates of a 1.533 million barrel build. The draw comes even as the Department of Energy released 5 million barrels from the Strategic Petroleum Reserves the week-ending May 13.

The API also reported a draw in gasoline inventories of 5.102 million barrels for the week ending May 13. Last week, it reported an 823,000 barrel build.

Distillate stocks saw a build in inventories of 1.075 million barrels for the week ending May 13. This compares to last week’s 662,000 barrel increase.

Daily Forecast

Today’s U.S. Energy Information Administration (EIA) weekly inventories report is expected to show a 2.1 million barrel increase. However, the focus is likely to be on gasoline and distillate inventories.

Earlier in the week, U.S. gasoline prices soared to record highs. Prices could move even higher if supply remains low at the start of the U.S. summer driving season. It begins on May 31.

For a look at all of today’s economic events, check out our economic calendar.

Marketmind: Extreme fear? Seriously?

A look at the day ahead in markets from Julien Ponthus.

One might think that with CNN’s popular gauge of investor sentiment stuck on ‘extreme fear’, it would take some seriously good news to lift up markets these days.

But all it took yesterday was a whiff of COVID-19 optimism from China and decent U.S. retail data to send global equity markets back into a jolly bullish risk-on mode.

Tech and growth stocks that many investors would no longer touch with a barge pole outperformed with Microsoft, Apple Tesla and Amazon lifting the S&P 500 and the Nasdaq higher.

The upbeat mood was hard to reconcile with BofA’s self-described “extremely bearish” monthly survey which showed fund managers had not been as underweight on stocks since May 2020.

Supposedly weary traders were also more than happy to knock the dollar further away from last week’s two-decade high and dash into riskier currency bets across Oceania, Asia, Europe and even cyberspace with bitcoin claiming back $30k.

Adding to the upward thrust enjoyed by the dollar’s rivals were fast rising bond yields displaying confidence central banks would be able to carry on monetary tightening despite lingering recession fears and Citi’s economic surprise index falling in negative territory.

Even U.S. Federal Reserve Chair Jerome Powell insisting interest rates would go as high as needed to tame inflation didn’t deter the buy-the-dip crowd.

As it stands this morning in Europe though, the latest batch of data might have the bulls hesitate before seeking to pursue this tentative bounce any further.

Consider this: in the last few hours Japan announced its economy shrank in the January-March period, China said new-home prices in April fell and Britain just unveiled its highest inflation reading since the 1980s with a whopping 9% in April.

(Reporting by Julien Ponthus; Editing by Saikat Chatterjee)