Oil Prices Dip on Concerns About Possible Return of Iranian Supply

By Bozorgmehr Sharafedin

Brent fell 60 cents, or 0.9%, to $68.27 a barrel by 1121 GMT. U.S. West Texas Intermediate (WTI) crude fell 57 cents, or 0.9%, to $65.64 a barrel.

“Despite supportive inventory data from the United States on Wednesday, crude oil remains stuck in a sideways environment with Brent trading between $65 to $70 per barrel,” said UBS oil analyst Giovanni Staunovo.

U.S. crude stocks, gasoline and distillate inventories fell last week, the Energy Information Administration said, as a gradual lifting of coronavirus restrictions boosted road fuel demand. [EIA/S]

“Mobility data out of Europe and the U.S. benefiting from a fast vaccine rollout are price supportive, but I guess market participants want to get more clarity how nuclear talks in Vienna evolve, which caps prices,” Staunovo added.

Iran and global powers have negotiated in Vienna since April to work out steps Tehran and Washington should take to secure the lifting of sanctions on Iran, including its energy sector, in return for Iranian compliance with restrictions on its nuclear work.

Those talks will be a major issue for a June 1 meeting of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+. The producers will have to assess whether to change plans for easing production curbs against the prospect of Iranian supply returning to the market.

Analysts said any increase of supply from Iran would only be gradual, with JP Morgan estimating Iran could add 500,000 barrels per day (bpd) by the end of this year and a further 500,000 bpd by August 2022.

Japanese refiners need at least three months to resume Iranian oil imports even if nuclear talks lead to an agreement and a lifting of sanctions, said Tsutomu Sugimori, president of the Petroleum Association of Japan (PAJ).

Despite support for oil from a bigger-than-expected drawdown in U.S. oil inventories, concerns remain about demand shrinking in India, the world’s third-largest oil consumer.

A possible extension of COVID-19 emergency measures in Japan has also raised demand concerns.

Investors are awaiting U.S. jobless claims data, due later on Thursday, which will show the pace of U.S. economic recovery.

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Christopher Cushing and Bernadette Baum)

Oil Prices Dip on Concerns About Possible Return of Iranian Supply

By Sonali Paul and Koustav Samanta

Brent crude had shed 42 cents, or 0.6%, to $68.45 a barrel by 0641 GMT, erasing Wednesday’s gain of 22 cents. Brent has traded between $68 and $69 for most of this week.

U.S. West Texas Intermediate (WTI) crude fell 35 cents, or 0.5%, to $65.86 a barrel, after a rise of 14 cents on Wednesday, but still within the week’s $65 to $66 range.

“Most of the euro zone countries’ travel restrictions are lifted considering lower COVID-19 cases boosting demand. However, the rise in cases across many Asian countries including India and the tighter lockdowns have capped a price rally,” said Sunilkumar Katke, head of currencies and commodities at Axis Securities.

“Iranian oil entering in the international crude market may take some more time and hence the prices are still holding firm in the short term.”

The markets remain focused on the Iranian nuclear talks and whether sanctions on its oil exports are lifted in full, and when, Citi analysts said in a note.

That will be a big issue for the next meeting of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, on June 1, where producers will have to assess whether to change their plans for easing production curbs against the prospect of Iranian supply returning to the market.

Citi predicted OPEC+ would stick to plans to bring back 700,000 barrels per day (bpd) of oil supply in June, but the group’s plan to step up supply by a further 840,000 bpd in July “might now be in question”.

Analysts said any increase of supply from Iran would only be gradual, with JPMorgan estimating Iran could add 500,000 bpd by the end of this year and a further 500,000 bpd by August 2022.

While the market was supported on Wednesday by a bigger-than-expected drawdown in U.S. oil inventories, there are still concerns about demand shrinking in India, the world’s third-largest oil consumer. [EIA/S]

“However, we don’t think demand concerns in India will derail the narrative of global oil demand recovering,” said Vivek Dhar, commodities analyst at Commonwealth Bank.

(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Muralikumar Anantharaman and Christopher Cushing)

Oil Falls as Iranian Supply Prospect Outweighs Demand Optimism

By Bozorgmehr Sharafedin

Brent fell 40 cents, or 0.6%, to $68.25 a barrel by 1315 GMT, and U.S. West Texas Intermediate (WTI) crude was down 52 cents, or 0.8%, at $65.55 a barrel.

“The potential for a return of Iranian oil supply into the market has been keeping oil prices from gaining further,” said ING analyst Warren Patterson.

Market players are also closely watching developments in Iranian-U.S. nuclear talks which could lead to lifting sanctions on Iran’s energy industry and more Iranian oil on the market.

Iran’s government spokesman Ali Rabiei said he was optimistic Tehran would reach an agreement soon, although Iran’s top negotiator said serious issues remained.

Iran and global powers have held talks in Vienna since April to work out steps Tehran must take on nuclear activities and Washington should take on sanctions to return to full compliance with the pact Iran reached with world powers in 2015.

Russia said the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, should consider a possible increase in Iranian output when assessing further steps.

OPEC+ is bringing back 2.1 million barrels per day (bpd) of oil production through July, easing cuts to 5.8 million bpd. Their next meeting is set for June 1.

Analysts have said Iran could provide additional supply of about 1 million to 2 million bpd if a deal is struck.

However, prices found some support earlier in the session from lifting of coronavirus curbs and a rise of demand ahead of the northern hemisphere’s summer driving season.

U.S. crude oil and fuel inventories fell last week, two market sources said, citing American Petroleum Institute figures.

Crude stocks fell by 439,000 barrels in the week ended May 21, gasoline inventories fell by 2 million barrels and distillate stocks dropped by 5.1 million barrels, the sources said.

“In our view, the fundamental situation on the oil market remains balanced,” said Commerzbank analyst Eugen Weinberg, adding that Brent “will make a renewed bid for the $70 per barrel mark in the next few days.”

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Yuka Obayashi in Tokyo; Editing by Jason Neely, Edmund Blair and Emelia Sithole-Matarise)

Gold Surges Past $1900 in Trading Today

The two primary forces are dollar weakness and data indicating an uptick in inflation. These two factors greatly affect Treasury yields, and in turn, lower Treasury yields increase the bullish sentiment in gold. Recently the U.S. Labor Department showed that the consumer price index jumped to 4.2% in April. It is up 2.6% from the numbers revealed in March.

According to a CNBC article titled, Gold hits 4 ½ month peak as dollar, U.S. yields weaken, “Gold prices scaled a more than four-month peak on Tuesday, as the dollar and U.S. Treasury yields slipped amid expectations that the U.S. Federal Reserve will keep its monetary policy accommodative. U.S. gold futures settled up 0.7% at $1,898. Data showed a U.S. consumer confidence index for May eased to 117.2.”

CNBC’s article also quoted Edward Meir, of ED&F Man Capital Markets analyst, saying that “markets are getting a sense that inflation is more deeply embedded than what the Fed is currently expecting … this is leading to money going into inflation hedges like gold. Gold has a good chance of getting to $2,000 during the second half of this year.”

The slight decline in U.S. consumer confidence as traders and market participants become convinced that the Federal Reserve will maintain its highly accommodative monetary policy for a longer period of time. This was just the news that would fundamentally ignite gold, taking the futures contract briefly over $1900 per ounce.

As of 5:00 PM EST, the most active June 2021 Comex contract of gold futures is fixed at $1899.90 after factoring in today’s net gain of $15.40 (+0.82%). Gold traded to a high in New York of $1901.20 and at the close of trading was very near today’s high.

May 25 gold chart

Although dollar weakness contributed light tailwinds to today’s dramatic rise, it was predominantly traders and investors bidding the precious yellow metal higher. Currently, the dollar index is fixed at 89.67%, which is a decline of 18 points, or -0.20%. The dollar index has been in a defined downtrend since the end of March, which correlates directly to the second bottom of gold pricing, which occurred at the same time.

Our technical studies indicate that there is still solid support for gold between $1849 (the current fix of the 200-day moving average) and $1851, the 61.8% Fibonacci retracement. The data set used for the Fibonacci retracement begins at $1952 and ends at $1671. However, we do see a new support level coming into play which is $1879.60, based on the high trading prices achieved at the end of January 2020. It also must be noted that we did get a golden cross between the 50- and 100-day exponential moving averages. The last occurrence of a golden cross between these exponential moving averages was at the beginning of 2019. Using the same data set, the resistance we currently see occurs at $1898, which is the 78% Fibonacci retracement level. Above that is the key psychological level of $1900 per ounce.

bar chart 50 and 100 expo MA GOLD

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

 

Uk May Support Steel, but Unlikely to Nationalise Liberty

By Eric Onstad

Liberty and the rest of Sanjeev Gupta’s family conglomerate have been seeking to refinance its cash-starved web of businesses in steel, aluminium and energy after supply chain finance firm Greensill filed for insolvency in March.

Liberty Steel, which employs 3,000 people in Britain, said on Monday it planned to sell three non-core UK plants as part of a major restructuring and was still working at refinancing.

“I don’t rule anything in or out, but I think nationalisation of all the options is the least likely,” Kwarteng told a parliamentary hearing.

The Gupta Family Group Alliance (GFG) that owns Liberty has been under a cloud after Britain’s Serious Fraud Office launched an investigation into suspected fraud and money laundering in mid-May.

When asked about state aid for steel, Kwarteng said Britain had more freedom to support the industry after leaving the European Union and a task force would set up new rules on public procurement.

“We have a strategic interest in maintaining steel as every other G7 country does,” he said, adding this was because of the needs of the defence sector as well as promoting jobs and economic growth.

The government was concerned about the potential for cheap imports squeezing out domestic producers and Kwarteng said a bill would be introduced over the coming months.

“This glut and the potential for dumping steel in the UK comes from lots of different sources,” he said.

“We will have a subsidy control bill, which will set up a framework, which will give us the levers to act against this sort of steel dumping.”

(Reporting by Eric Onstad, editing by Louise Heavens and Barbara Lewis)

Global Carbon Pricing Schemes Raised $53 Billion in 2020 – World Bank

By Susanna Twidale

Many countries are using a price on carbon to help meet their climate goals in the form of a tax or under an emissions trading (ETS), or cap-and-trade, system.

The world’s seven largest advanced economies last week recognised the role carbon pricing can play in driving innovation and new technology to hit net zero emissions.

“Despite the social and economic upheaval caused by COVID-19, jurisdictions and companies have not wavered in their commitment to fighting climate change,” the report said.

There were 64 global carbon pricing instruments in operation in 2021, compared with 58 in 2020, covering more than 21% of global greenhouse gas emissions, up from 15.1% last year, the report said.

The increase in emissions covered is largely due to the launch this year of China’s national ETS – the world’s largest carbon market – initially covering about 30% of the country’s emissions, or some 4 billion tonnes of CO2, the report said.

The increase in revenues generated last year was mainly due to higher prices in the European Union’s ETS, where the cost of carbon permits rose more than 30%.

The World Bank said, however, that carbon prices in most regions of the world remained well below levels needed to drive changes to meet the 2015 Paris climate agreement.

“A majority of carbon prices still remain far below the $40–$80/tCO2e (tonnes carbon dioxide equivalent) range needed in 2020 to meet the 2 Celsius temperature goal,” the report said. “Higher prices will be needed … to reach the 1.5C target.”

Nearly 200 countries have signed the Paris agreement, which aims to limit global warming to well below 2C (3.6 Fahrenheit) above pre-industrial levels, and preferably 1.5C.

(Reporting by Susanna Twidale; Editing by David Clarke)

Oil Prices Rise On Potential Hitch In Iran Talks

By Noah Browning

Brent crude oil futures for July were 90 cents, or 1.4%, higher at $67.34 a barrel by 1215 GMT, while U.S. West Texas Intermediate for July was at $64.44 a barrel, up 86 cents, or 1.4%.

Oil prices fell almost 3% last week after Iran’s President Hassan Rouhani said the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors.

However, the speaker of Iran’s parliament said on Sunday a three-month monitoring deal between Iran and the U.N. nuclear watchdog had expired and that its access to images from inside some Iranian nuclear sites would cease.

European diplomats said last week that failure to agree an extension of the monitoring deal would plunge wider, indirect talks between Washington and Tehran on reviving the 2015 Iran nuclear deal, due to resume in Vienna this week, into crisis.

Former President Donald Trump withdrew the United States from the deal in 2018 and re-imposed sanctions.

“All in all, it seems to be only a matter of time before the sides involved put pen to paper on a new nuclear accord,” said Stephen Brennock of oil broker PVM.

“Investors are bracing for a fresh wave of what will surely be heavily discounted Iranian crude … yet for all this alarmism, an aggressive ramp-up in Iranian production and exports is unlikely to stall the drawdown in global oil stocks.”

Even with a potential restart of Iran exports, the case for higher oil prices remains intact due to a vaccine-driven increase in global demand, Goldman Sachs analysts said.

“Even aggressively assuming a restart in July, we estimate that Brent prices would still reach $80 per barrel in fourth quarter 2021,” the bank said in a note.

Its new base case for an October restart still supports an $80 per barrel forecast for this summer, it added.

(Additional reporting by Jessica Jaganathan; Editing by Richard Pullin, Jan Harvey and Bernadette Baum)

Wall St Gains 1% as Tech Shares Rally, Treasury Yields Fall

By Caroline Valetkevitch

Cryptocurrencies bounced back from their recent sharp drop, but were well off the day’s highs by afternoon New York time.

Bitcoin was most recently up 8.9% at $40,050 after plummeting to 54% below its record high, hit just over a month ago, after some of its prominent backers reiterated their support for the digital currency.

Smaller rival ether ETH=BTSP gained 15.32 to $2,811. On Wednesday, it fell 22.8%, its biggest daily fall since March 2020.

Investors also are still digesting minutes from the Fed’s meeting last month, which showed a number of officials thought that if the recovery holds up it might be appropriate to “begin discussing a plan for adjusting the pace of asset purchases.”

The S&P 500 technology index was up 2.1%.

The Dow Jones Industrial Average rose 234.46 points, or 0.69%, to 34,130.5, the S&P 500 gained 47.48 points, or 1.15%, to 4,163.16 and the Nasdaq Composite added 240.91 points, or 1.81%, to 13,540.65.

The pan-European STOXX 600 index rose 1.27% and MSCI’s gauge of stocks across the globe gained 1.07%.

The yield on benchmark 10-year Treasury notes fell 4.3 basis points to 1.640% and the breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=RR slid to 2.608%.

Market expectations of a further rise in inflation would need evidence of the economy moving past full employment very, very rapidly, said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC.

“We’ve probably already reached the peak level of economic activity, and that probably happened in March and April,” Ricchiuto added.

In the foreign exchange market, the dollar lost ground and was hovering near multi-month lows.

The dollar index fell 0.503%, with the euro up 0.44% to $1.2225.

The bounces in cryptocurrencies came after crypto backers such as Ark Invest’s Cathie Wood and Tesla’s Elon Musk indicated their support on Wednesday.

Concerns over tighter regulation in China and unease over the extent of leveraged positions in the cryptocurrency world had caused this week’s big selloff.

Outages at several major trading platforms during the maelstrom, which also set ether tumbling nearly 50%, did little to inspire confidence.

SPACs – special purpose vehicles set up and listed to buy up other firms – experienced huge growth last year, as did the ARK innovation fund that focuses on tech companies.

Oil prices dropped more than 2% after diplomats said progress was made toward a deal to lift U.S. sanctions on Iran. Brent crude fell $1.55, or 2.3%, to settle at $65.11 a barrel. West Texas Intermediate crude ended $1.31, or 2.1%, lower at $62.05 a barrel. Both contracts fell around 3% in the previous session.

U.S. gold futures gained 0.13% to $1,881.80 an ounce.

(Additional reporting by Marc Jones in London, Herbert Lash, Stephanie Kelly and Stephen Culp in New York; Medha Singh and Shashank Nayar in Bengaluru; Tom Westbrook in Singapore; Editing by Peter Graff, William Maclean and Will Dunham)

Oil Falls 2% on Possible Return of Iranian Supply

By Stephanie Kelly

Brent crude fell $1.55, or 2.3%, to settle at $65.11 a barrel. West Texas Intermediate crude ended $1.31, or 2.1%, lower at $62.05 a barrel. Both contracts fell around 3% in the previous session.

Iranian President Hassan Rouhani said in a televised speech that sanctions on oil, shipping, petrochemicals, insurance and the central bank had been dealt with in the talks.

“That really weighed on sentiment and that pushed us down a little bit,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There’s room in the global market for more Iranian oil but in the short term that’s what is weighing on us today.”

But European diplomats said success was not guaranteed and very difficult issues remained, while a senior Iranian official contradicted the president.

Indian refiners and at least one European refiner are re-evaluating their crude purchases to make room for Iranian oil in the second half of this year, anticipating that U.S. sanctions will be lifted, company officials and trading sources said.

“With global oil demand growth projected to be healthy for the balance of this year and in 2022, the (OPEC+) producer group is in a relatively comfortable position to deal with increasing Iranian output without undermining the oil rebalancing,” PVM analysts said.

Concerns about the demand outlook in Asia also dragged prices down. Almost two-thirds of people tested in India show exposure to the coronavirus.

Speculation that the U.S. Federal Reserve might at some point start to tighten policy weighed on the outlook for economic growth and has prompted some investors to reduce exposure to oil and other commodities.

The Organization of the Petroleum Exporting Countries said that a stark warning from International Energy Agency to stop new fossil fuel funding could lead to oil-price volatility if it is acted on.

The IEA on Tuesday said investors should not fund new oil, gas and coal supply projects if the world wants to reach net zero emissions by mid-century.

(Reporting by Stephanie Kelly in New York; Additional reporting by Shadia Nasralla and Aaron Sheldrick; Editing by Marguerita Choy and Jonathan Oatis)

China’s Industrial Commodities Slide after Beijing Warns of Market Crackdown

Prices of key steelmaking ingredients iron ore and coking coal, as well as steel products such as rebar and hot-rolled coil, all swooned more than 5% as traders offloaded supplies and speculators placed short-sided bets that Beijing’s measures will trigger a further pullback in metals markets.

China’s cabinet announced on Wednesday that it will strengthen management of commodity supply and demand to curb “unreasonable” prices and investigate behaviour that bids up commodity costs, spooking China’s hoards of metal traders.

(Graphic: China’s industrial metals get walloped after Beijing says it will step up market management: https://fingfx.thomsonreuters.com/gfx/ce/yxmvjmxllpr/ChinaIndustrialMetalsMay2021.png)

Analysts at ANZ said Steel and iron ore prices remain supported by strong seasonal demand, record high steel production, attractive steel margins and subdued supply.

“China’s measures to curb steel production and exports were not much help in containing the price rise. Falling iron ore inventories reflect strong underlying fundamentals,” ANZ said.

PANDEMIC RECOVERY

Beijing’s warning about overheated markets follows a 30%-40% climb in several critical steel and metal prices so far in 2021, fuelled by a synchronised recovery in China’s mammoth construction and manufacturing sectors from last year’s pandemic.

The world’s largest exporter of finished and semi-finished goods gobbled up record amounts of metal since late 2020 to churn out appliances, exercise equipment, shipping containers and other goods that have seen strong demand globally in recent months.

However, the broad-based rally in industrial activity – which also propelled thermal coal prices to record highs this month as power use surged – is now threatening to strangle demand from consumers and ignite inflation.

China’s factory gate prices rose at their fastest pace in three and a half years last month, raising concerns that consumer prices will follow suit if commodity costs continue to climb.

Richard Lu, senior analyst at commodity consultant CRU Group’s Beijing office, said high steel prices “will frighten some consumers at some point.”

But he said steel margins “remain good on average”, which will encourage Chinese mills to continue operating intensively unless further restrictions are rolled out.

(Reporting by Gavin Maguire in Singapore; Editing by Lincoln Feast.)

Oil Prices Fall on Rising COVID-19 Infections in Asia, Inflation Fears

By Roslan Khasawneh

Brent crude futures fell 57 cents, or 0.8%, to $68.14 a barrel at 0642 GMT. It settled 1.1% lower on Tuesday after briefly climbing above $70 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures dropped 61 cents, or 0.9%, to $64.88 a barrel, following a 1.2% fall on Tuesday.

Brent’s rise to $70 was driven by optimism over the reopening of the U.S. and European economies, among the world’s biggest oil consumers. But it later retreated on fears of slowing fuel demand in Asia as COVID-19 cases surge in India, Taiwan, Vietnam and Thailand, prompting a new wave of movement restrictions.

“Yesterday’s trade proved again that $70 signals irrational exuberance,” said Vandana Hari, energy analyst at Vanda Insights in Singapore.

“Assessing the global demand picture remains challenging as reopenings and restrictions across the world are probably the most diverse since the start of the pandemic,” said Hari.

Uncertainties over inflation also prompted investors to reduce exposure to riskier assets like oil.

“There is a wider risk-off play that’s going on,” said Westpac senior economist Justin Smirk.

Smirk said speculation that the Federal Reserve might raise rates because of inflation fears weighed on the outlook for growth and in turn on commodities demand.

“The Fed’s very serious (about holding rates low), but the market’s speculating about earlier movement,” he said.

The Fed has indicated that interest rates will stay at their current low levels through 2023 though futures markets show investors believe rates may start to be raised by September 2022.

The lower oil prices came despite a weaker U.S. dollar which was at a 4-1/2 low against a basket of currencies. A weaker dollar makes oil cheaper for holders of other currencies and supports crude prices.

Investors will also be watching out for the latest U.S. crude and products stocks data from the U.S. Energy Information Administration due on Wednesday.

Data from the American Petroleum Institute on Tuesday showed crude inventories rose by 620,000 barrels in the week ended May 14, while gasoline inventories fell by 2.8 million barrels and distillate stocks fell by 2.6 million barrels, according to two market sources.

The rise in crude stocks was less than the 1.6 million barrel rise analysts had estimated, on average, in a Reuters poll, while the declines in gasoline and distillate stocks were bigger than anticipated.

(Reporting by Sonali Paul in Melbourne and Roslan Khasawneh in Singapore; Editing by Christian Schmollinger and Christopher Cushing)

Oil Hits Two-Month High as Europe and U.S. Reopen Economies

By Alex Lawler

Britain further eased coronavirus restrictions on Monday and Europe is starting to reopen cities and beaches. New cases in the United States continued to fall and New York lifted the mask requirement for vaccinated people.

Brent crude topped $70 for the first time since March 15 and by 1340 GMT was up 10 cents, or 0.1%, at $69.56 a barrel. U.S. West Texas Intermediate (WTI) crude eased 24 cents, or 0.4%, to $66.03.

“Economies are again switching a gear higher,” said Tamas Varga of broker PVM. “The euphoria is reflected in the general belief that the economic revival will soon be coupled with oil demand recovery.”

The latest gain to $70 brings Brent’s rally this year to 35%, supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies. This could lead to a further advance, some analysts said.

“A rise through $70 should trigger more systematic buying and see it advance to $71.50 a barrel quite quickly,” said Jeffrey Halley, analyst at brokerage OANDA.

European and U.S. progress in the battle against the pandemic contrasts with the situation in Asia, which is limiting oil’s rally.

Singapore and Taiwan have reinstated lockdown measures and India has experienced a plunge in fuel demand after imposing restrictions to curb infections.

Also limiting oil’s upside is the prospect of a revival of Iran’s nuclear deal, which would allow the OPEC producer to restart exports fully.

In focus later will be this week’s U.S. supply reports, expected to show a 1.7 million barrel rise in crude inventories. The American Petroleum Institute’s report is due at 2030 GMT. [EIA/S]

(Additional reporting by Yuka ObayashiEditing by David Evans and David Goodman)

Asian Shares Push Higher, Dollar Eases

By Paulina Duran

Equities in Europe and the United States looked set to follow. FTSE futures rose 0.76% and EuroSTOXX 50 futures traded 0.68% higher, while S&P 500 futures were up 0.33%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.56% after a mixed session on Monday, still not recouping losses of the last few weeks amid new clusters of COVID-19 cases that are prompting some economies to impose fresh anti-virus restrictions.

Shares in Taiwan, which is seeing a spike in cases, jumped 4.77% as lawmakers said it was in talks with the United States for a share of the vaccine doses President Joe Biden plans to send abroad. That trimmed the index losses in May to 8.4% so far.

Japan’s Nikkei rose as much as 2.3% on solid earnings reports and bargain hunting, while Hong Kong’s stocks were up 1.3%. China’s blue-chip CSI300 index was 0.08% lower.

“This is a bit of a reversal from the pullback last week post the big inflation numbers,” said Chad Padowitz, chief investment officer at Talaria Capital in Melbourne.

“Time will tell whether inflation will be transitory or more pervasive but I think that now that U.S. yields have stabilised, that’s allowed the market to digest some of that,” he said.

“But the reality is we have moved into a higher volatility regime, and because of that we expect to see larger daily movements than in recent years.”

Spot gold traded around $1,869.06 an ounce, near a three-and-a-half month high, after the Empire State Manufacturing Survey, produced by the New York Fed, showed the highest prices paid since the series began in 2001. [GOL/]

“Investors seem to take the view that what matters is that the US economy is recovering, rather than worry too much about the precise strength of the recovery at any particular moment in time,” BofA rates strategists said in a note.

Dallas Federal Reserve President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year, helping to reassure markets that the Fed will not tighten early.

But markets are waiting on Wednesday’s release of the minutes from the Federal Reserve’s policy meeting last month, which could shed more light on the policymakers’ outlook on inflation and an economic rebound.

In Australia, minutes of the central bank’s May policy meeting showed it believed wages would likely need to expand “sustainably above 3%” to generate inflation, underscoring how long rates could remain near zero. Wage growth is currently running at just 1.4%.

Australia’s benchmark rose 0.73%, while Singapore stocks gained 1.8% after falling 4.5% last week as the country tightened Covid-19 restrictions in response to a rise in the number of community infections.

MSCI’s gauge of stocks across the globe was pushed 0.34% higher at 700.83.

The dollar teetered near multi-month lows against European currencies as Treasury yields stalled in the wake of Kaplan’s comments.

U.S. Treasury yields traded a third of a basis point wider to 1.6437%, while the two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 0.1551% compared with a U.S. close of 0.153%.

The dollar index was down 0.096%, with the euro 0.10% higher at $1.2165.

Bitcoin rose 7%, paring some of its steep losses since Tesla boss Elon Musk said would stop taking bitcoin as payment due to environmental concerns about energy used to process transactions. Ether jumped 7.6%.

Oil prices rose, with Brent crude and West Texas Intermediate (WTI) crude both up around 0.4% in Asian trade on expectations of stronger fuel demand as the U.S. and European economies reopen.

(Reporting by Paulina Duran; editing by Richard Pullin and Kim Coghill)

Oil Prices Rise as U.S., Europe Reopen Economies

By Yuka Obayashi

Brent crude oil futures were up 33 cents, or 0.5%, at $69.79 a barrel by 0644 GMT, while West Texas Intermediate (WTI) was up 30 cents, or 0.5%, at $66.57 a barrel.

Both contracts rose more than 1% on Monday.

“Behind the gain is growing optimism of strong recovery in gasoline and other fuels in the United States and Europe in light of easing of various pandemic-related restrictions,” said

Chiyoki Chen, chief analyst at Sunward Trading.

“There are concerns about spreading infection cases in Asia, but it will be solved in a matter of time as the vaccine spreads,” he added, predicting that Brent prices will be headed toward $75 a barrel later this month.

U.S. President Joe Biden will send at least 20 million more COVID-19 vaccine doses abroad by the end of June, marking the first time the United States is sharing vaccines authorized for domestic use.

The British economy reopened on Monday, giving 65 million people a measure of freedom after a four-month COVID-19 lockdown. And with accelerating vaccination rates, France and Spain have relaxed restrictions, and Portugal and the Netherlands have opened up travel.

In the United States, New York state will no longer require masks in most public spaces for people fully vaccinated against COVID-19 as of Wednesday, and other regions are opening up their economies as well.

In Asia in contrast, Singapore reported the highest number of local infections in months and Taiwan saw a spike in cases, and both countries have reinstituted lockdown measures.

In India, the second-hardest hit by the pandemic, domestic sales of gasoline and diesel by state refiners plunged by a fifth in the first half of May from a month earlier as pandemic lockdowns hit industrial activities and consumption, preliminary data showed on Monday.

“Some expectations that negotiations between Iran and the United States may lead to a resumption of Iranian oil exports is limiting the upside of oil prices,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

With regard to the Iran-U.S. talks, as the United States tries to reinstate the 2015 Iran nuclear deal, it is tiptoeing through a minefield of sanctions put down by former U.S. President Donald Trump after he abandoned the deal three years ago.

(Reporting by Yuka Obayashi; Editing by Kim Coghill and Christian Schmollinger)

Fuel Shortages Worsen on Sixth Day of Top U.S. Fuel Pipeline Outage

By Stephanie Kelly

A ransomware attack on the Colonial Pipeline last week halted 2.5 million barrels per day of fuel shipments in the most disruptive cyberattack on U.S. energy infrastructure. The pipeline stretches 5,500 miles (8,850 km) from U.S. Gulf Coast oil refineries to consumers in Mid-Atlantic and Southeast states.

In Washington, D.C., top Biden administration officials met late Tuesday to discuss the incident and were considering ways to alleviate gasoline supply shortages, the White House said. Congressional committee members have asked that a White House interagency task force provide a formal briefing to discuss the federal response to the cyberattack.

Colonial’s chief executive has indicated that by the end of the day Wednesday the company will be able to decide whether it can make a full restart, Energy Secretary Jennifer Granholm said Tuesday during a White House briefing. But she added the restart could take days to complete.

Privately owned Colonial Pipeline manually opened portions of the line to release needed supplies in Georgia, Maryland, New Jersey and the Carolinas. It has accepted 2 million barrels of fuel to begin a restart that would “substantially” restore operations by week’s end, the company said.

The supply crunch, amid panic buying by motorists, has brought long lines and high prices at gas stations ahead of the Memorial Day holiday weekend at the end of this month, which traditionally marks the start of the peak summer driving season.

The average national gasoline price rose to above $3.00 a gallon on Wednesday, the highest since October 2014, the American Automobile Association said.

Nearly 60% of gas stations in metro Atlanta were without gasoline on Wednesday, tracking firm GasBuddy said. More than 70% of stations were out in metro Charlotte and Raleigh, North Carolina, and Pensacola, Florida. The states of Virginia and South Carolina also saw relatively high outages.

LONG LINES

Stevenson Rosslow, 47, was filling up his Lexus with regular gas at a BP station in south Atlanta on Wednesday morning.

“This takes premium, but they’re out,” said Rosslow, the owner of the Wrecking Bar Brewpub in Atlanta’s Reynoldstown neighborhood. “Even at that, the price jumped to what, $3.39?”

The gas station Rosslow stopped at was the fourth he had tried. “I think we’re having a problem here because of hoarding,” he said.

Four southeastern states – Florida, North Carolina, Virginia and Georgia – joined federal regulators in relaxing driver and fuel restrictions to speed deliveries of supplies. Georgia suspended sales tax on gasoline until Saturday.

The FBI has accused a shadowy criminal gang called DarkSide of the ransomware attack. DarkSide is believed to be based in Russia or Eastern Europe.

Russia’s embassy in the United States rejected speculation that Moscow was behind the attack. President Joe Biden on Monday said there was no evidence so far that Russia was responsible.

REFINERS, AIRLINES REACT

It is unknown how much money the hackers are seeking, and Colonial has not commented on whether it would pay.

Gulf Coast refiners that rely on the Colonial Pipeline to move fuel to market have cut processing. Total SE trimmed gasoline production at its Port Arthur, Texas, refinery, and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant.

Citgo said it was moving products from its Lake Charles refinery and “exploring alternate supply methods into other impacted markets.” Marathon Petroleum, another large refiner, said it was “making adjustments” to its operations due to the pipeline shutdown.

Colonial also serves major U.S. airports, including Atlanta’s Hartsfield-Jackson Airport, the world’s busiest by passenger traffic.

Airlines with large operations out of the East Coast have been transporting fuel by truck or fueling planes at their destination rather than their East Coast origin due to the outage. American Airlines has made changes to two long-haul flights out of Charlotte, North Carolina – one of its hub airports – through Friday.

(Reporting by Stephanie Kelly in New York; Additional reporting by Rich McKay in Atlanta and Tracy Rucinski in Chicago; Editing by Leslie Adler and Steve Orlofsky)

Oil Falls on India COVID Crisis, Easing of Pipeline Outage Fears

By Shu Zhang

U.S. West Texas Intermediate (WTI) crude futures fell 45 cents, or 0.69%, to $64.47 a barrel at 0654 GMT, after gaining 2 cents on Monday.

Brent crude futures dropped 43 cents, or 0.63%, to $67.89 a barrel, after climbing 4 cents on Monday.

Oil was retreating amid weak sentiment as Asian stocks suffered a tech-led selloff and the market shrugged off concerns about a temporary shutdown of the Colonial Pipeline, said DailyFX strategist Margaret Yang.

Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said on Monday it was working on restarting in phases with “the goal of substantially restoring operational service by the end of the week.”

It has begun manually operating its 700,000-barrel-per-day multi-product fuel line between Greensboro, North Carolina, and Maryland for a limited time using existing inventories.

“The rally in oil prices was short-lived as the Colonial Pipeline disruption seems it will not have a prolonged impact,” Edward Moya, senior market analyst at OANDA, said in a Tuesday note.

The U.S. gasoline futures contract and U.S. heating oil futures, which spiked after the outage, have retreated to pre-Friday levels on the prospect of the restart.

Meanwhile, sentiment is weighed down by the rapid spread of coronavirus infections in India, which has increased calls for the government of Prime Minister Narendra Modi to lock down the world’s second-most populous country.

The World Health Organization has classified the coronavirus variant first identified in India last year as one of global concern, with some preliminary studies showing that it spreads more easily.

On the positive side for crude, analysts are expecting data to show U.S. crude inventories fell by about 2.3 million barrels in the week to May 7, following an 8 million-barrel drop the previous week, according to a Reuters poll.

Gasoline stocks are expected to have fallen by about 400,000 barrels, six analysts estimated on average ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

OPEC is also expected to publish its monthly oil market report on Tuesday, which will include April production numbers.

(Reporting by Shu Zhang and Sonali Paul; Editing by Tom Hogue and Gerry Doyle)

BP Says It Will Stick with Top U.S. Oil Lobby After Climate Shift

By Ron Bousso

BP, which plans to sharply cut its oil output and boost its renewable energy capacity over the next decade, said in a report that despite “uneven progress”, the API was “heading in the right direction”.

The API has faced growing pressure from member companies and activist groups to change its policies relating to climate change and drilling regulations.

The trade group started to shift some of its positions as the climate-focused Biden administration came to power this year. In March it said it supports a carbon price as one measure to mitigate climate change risk.

BP said it was “encouraged” by the API’s support for federal regulation on limiting emissions of methane, a potent greenhouse gas and its support for carbon pricing as well as improving its transparency.

“API’s progress has been uneven at times but, on the whole, the organization has moved considerably over the past year and is heading in the right direction,” BP said in the report.

“We will continue to make our case – as members – to influence API on climate and many other areas relevant to our business in the US.”

London-based BP, led by CEO Bernard Looney, last year quit the main U.S. refining lobby and two other trade groups but stuck with the API despite saying it was only “partially aligned” with its policies.

BP will publish a comprehensive review of its membership of the API and other associations next year.

France’s Total in January became the first major global energy company to quit the API due to disagreements over its climate policies and support for easing drilling rules, saying it would not renew its 2021 membership.

Total’s stance put pressure on other European oil majors that have set out strategies to sharply reduce carbon emissions.

Royal Dutch Shell also chose to extend its API membership despite “some misalignment” with its climate stance.

BP’s interim report also reviewed its participation in four other associations which were partly aligned with its policies including the Australian Institute of Petroleum and the Canadian Association of Petroleum Producers.

BP said it was encouraged by progress made by all four groups over their climate stances.

(Reporting by Ron Bousso; Editing by Alexander Smith)

Oil Slips as Asia Pandemic Fears Counter U.S. Pipeline Cyberattack

By Alex Lawler

Colonial Pipeline said on Sunday its main fuel lines remained offline after the attack that shut the system on Friday, but some smaller lines between terminals and delivery points were now operational.

“The bullish developments in the U.S. are hiding a worrying COVID-19 trend in Asia,” said Louise Dickson, analyst at Rystad Energy. “If the pipelines come back online quickly this week, the market may be in for a price correction that will make the impact of the pandemic’s spread in Asia more visible.”

Brent crude was down by 37 cents, or 0.5%, at $67.91 a barrel by 1410 GMT. U.S. West Texas Intermediate (WTI) crude CLc1> slipped by 18 cents, or 0.3%, to $64.72. Both benchmarks rose more than 1% last week, their second consecutive weekly gain.

“If the pipelines were to remain out of action for any length of time, this would have far-reaching effects on the oil market not only in the U.S., but also in Europe,” said Commerzbank analyst Carsten Fritsch.

“That said, it is currently assumed that the disruption to the pipelines will be resolved in a matter of days, so the impact should be limited.”

The White House was working closely with Colonial to help it to recover. Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration.

Brent crude has risen more than 30% this year due to supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and easing coronavirus movement restrictions in the United States and Europe.

But the worsening pandemic developments in Asia have weighed. Indian coronavirus infections and deaths held close to record daily highs on Monday.

(Additional reporting by Aaron Sheldrick in Tokyo and Florence Tan in Singapore; Editing by Steve Orlofsky and Pravin Char)

Traders Book Tankers in Europe to Ship Gasoline Across Atlantic After Colonial Shutdown

By Ahmad Ghaddar and Ron Bousso

The attack forced the Colonial Pipeline to shut down its entire system on Friday, stoking expectations of gasoline shortages along the U.S. East Coast.

Some smaller lines were restarted Sunday, but Colonial has given no timeline for the restart of its main pipelines.

Two European gasoline traders said the market was taking a cautious approach to see how long the shutdown would last.

“I haven’t seen any big pick up but it would be normal for people to preemptively take vessels on subs,” one trader said. Subs is a term used in the oil market to describe a provisional booking for a tanker.

A second trader said that rallying freight rates amid a flurry of bookings into New York Harbour may have weighed on arbitrage economics from Europe.

European Ebob barge refining margins reached $10.38 a barrel on Monday, up from $9.35 on Friday, according to Reuters calculations.

“Should the … network remain down for more than a few days, the nation’s East Coast and Southeastern markets will start to see supply hiccups and related price spikes, while Gulf Coast refining centres will scramble to place cargoes alternatively,” oil analytics firm Vortexa said in a note.

Vortexa said a potential waiver of Jones Act rules would have a big impact on trade dynamics as it provide a much bigger availability of tankers to transport fuels between U.S. ports.

The act was implemented in 1920 to support jobs in the maritime industry. It requires goods moved between U.S. ports to be carried by ships built domestically and staffed by U.S. crews.

Vortexa said that tankers already in transit could be diverted to other ports.

The firm has seen the Litasco-chartered Tavrichesky Bridge, carrying 370,000 barrels of gasoline, diverted away from New York toward a new destination of Yorktown, Virginia, near the Colonial-supplied cities of Richmond and Norfolk.

(Editing by Jan Harvey and Louise Heavens)

Oil Prices Rise on Drawdown in U.S. Crude Inventory

By Jessica Jaganathan

Brent crude oil futures rose by 17 cents, or 0.3%, to $69.13 a barrel by 0643 GMT, and U.S. West Texas Intermediate (WTI) crude futures gained by 9 cents, or 0.1%, to $65.72 a barrel.

Both benchmarks hit their highest since mid-March on Wednesday, before retreating to end little changed following two days of gains.

Easing coronavirus restrictions in Europe have led to a pick-up in fuel demand, analysts from Citi said in a note.

“As the roll-out of vaccines continues and a pent-up summer driving season continues to manifest, this trend should accelerate, keeping demand for motor fuels robust and boosting market confidence in the recovery story,” they said.

U.S. crude stocks fell more than expected last week as refining output rose and exports surged, the Energy Information Administration said on Wednesday. [S/EIA]

Crude inventories fell by 8 million barrels in the week to April 30 to 485.1 million barrels, compared with expectations in a Reuters poll for a 2.3 million-barrel drop.

U.S. gasoline stocks rose by 737,000 barrels in the week, the EIA said, against a forecast for a 652,000-barrel draw.

“We think U.S. demand is strong,” said analysts from Commonwealth Bank of Australia. “The U.S. refinery utilisation rate is now above the five-year average.”

U.S. jet fuel demand is expected to surge by 30% in the second quarter compared with the first quarter on increased domestic travel, they added.

Pandemic-related restrictions in the United States and parts of Europe are easing, but infections are still on the rise in major crude oil importers India and Japan, capping price gains.

Meanwhile, militants using bombs attacked two oil wells at an oilfield close to the northern Iraqi city of Kirkuk on Wednesday, killing at least one policeman and setting off fires, the country’s oil ministry said.

Industry sources said the attack had not affected output. An oil ministry statement did not comment on production.

(Reporting by Jessica Jaganathan; Editing by Tom Hogue and Richard Pullin)