2025-01-16 06:53

SINGAPORE, Jan 16 (Reuters) - Spot premiums for Middle East crude rose to their highest in more than two years as strong demand from top importers China and India to replace sanctioned supply drove up prices, traders said. The Biden administration on Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world's No. 2 producer and tightening ship availability. That sparked a scramble among buyers in China and India, the world's top and third-largest importers, for alternative oil supplies and tankers. Reflecting latest trades, QatarEnergy more than doubled its term price for al-Shaheen crude oil loading in March to $3.81 per barrel above Dubai quotes from the previous month, after awarding two cargoes to Totsa at premiums of $3.70-$3.80, trade sources said. Totsa is the trading arm of French major TotalEnergies (TTEF.PA) , opens new tab. The March term price is at its highest level since October 2022 for cargoes loading in December that year. The deals came after premiums for Middle East benchmarks Dubai, GME Oman and IFAD Murban rallied this week to near $4 per barrel, the highest level in more than a year. In other deals, Unipec bought a March-loading Qatar Marine crude cargo in QatarEnergy's tender at a premium of just above $3 a barrel to Dubai quotes, 10 times higher than the previous month. Sinochem bought March-loading Abu Dhabi Upper Zakum cargo from Cepsa, while Indian refiner Hindustan Petroleum Corp (HPCL.NS) , opens new tab bought 1 million barrels Feb-loading Iraqi Basra Medium crude from Litasco at a premium of $1.90 per barrel above Dubai quotes in a purchase tender, trade sources said. Premiums for light grades have also risen. QatarEnergy sold a March-loading Land crude cargo at a premium of above $2 a barrel above Dubai prices to PTT, traders said. All the Qatar cargoes are of 500,000 barrels each. Companies typically do not comment on commercial deals. Prior to Friday's sanctions on Russian oil, Chinese refiners had already been seeking to replace Iranian supply on concerns that the incoming Trump administration will ramp up embargo measures on Tehran. The latest round of U.S. sanctions against Russia could significantly disrupt the country's oil supply chains, the International Energy Agency said on Wednesday, although it held off on factoring the measures into its supply forecasts for now. Sign up here. https://www.reuters.com/markets/commodities/qatar-hikes-march-al-shaheen-oil-term-price-over-2-year-high-2025-01-16/

2025-01-16 06:50

Elliott owns 5% stake in Tokyo Gas, urges it to sell real estate assets Tokyo Gas may use proceeds from asset sale for investments, shareholder returns Asset sales not limited to real estate, president says Utility targets ROE of 8% or higher in FY2025/06 TOKYO, Jan 16 (Reuters) - Tokyo Gas (9531.T) , opens new tab has identified assets, including from its vast real estate portfolio, to be sold to fund growth investments, its president said, though no decisions have been made yet on what to sell. The company is facing pressure from U.S. activist investor Elliott Management, which bought a 5.03% stake in Japan's top city gas provider last year, to divest parts of its extensive real estate portfolio to boost shareholder value. Tokyo Gas President Shinichi Sasayama said asset reviews are conducted regularly to improve capital efficiency. "We've identified assets that should be sold to fund necessary growth investments, not limited to real estate, to enhance corporate value," Sasayama told Reuters in an interview on Wednesday. The company may use the funds for growth investments or shareholder returns, he said, declining to comment when disclosures could be made. The utility typically unveils plans for the next fiscal year either in March or during its earnings announcement. Sasayama declined to comment on interactions with Elliott but emphasized that the utility is taking diverse investor feedback into account, with some seeking solid investment for growth and others advocating for improved asset efficiency. "It will be difficult to satisfy the needs of all investors, but we will do what we think we should do", he said. Shares in Tokyo Gas surged over 20% following the news Elliott became a shareholder on Nov. 19, but are now up about 9% since then. The utility aims for a return on equity (ROE) of 8% or higher in the year ending March 2026, up from around 4.8% projected for the current year, and announced a 40 billion yen ($256 million) share buyback plan in October. Elliott believes Tokyo Gas could free up capital to bolster shareholder returns and invest in growth by divesting some non-core assets, including a building housing the Park Hyatt Tokyo hotel and land in Toyosu where the city's biggest fish market is located, a source familiar with the matter said in November. Tokyo Gas's recent securities report values its real estate assets at 580 billion yen, far below Elliott's estimate of over 1 trillion yen, according to the source. Sasayama declined to comment on a Reuters report of talks with Woodside Energy (WDS.AX) , opens new tab over a stake in a Louisiana liquefied natural gas export project, but said: "We aim to connect our gas value chains in North America and link our trading operations in Japan and Asia with those in the U.S. ... We would consider investments if they align with our vision." ($1 = 156.3100 yen) Sign up here. https://www.reuters.com/markets/deals/tokyo-gas-has-identified-assets-sell-fund-investments-president-says-2025-01-16/

2025-01-16 06:45

Dollar weakened as markets prepare for Trump inauguration Traders saw Bessent's performance as expected Yen firms vs dollar on possible BOJ rate hikes NEW YORK, Jan 16 (Reuters) - The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Bank of Japan interest-rate hike sent it tumbling to a near one-month low against the Japanese currency. Recent remarks from BOJ Governor Kazuo Ueda and his deputy Ryozo Himino have made clear that a hike will at least be discussed at next week's policy meeting. Markets see about a 79% chance of a 25-basis-point increase. Japan's annual wholesale inflation held steady at 3.8% in December on stubbornly high food costs, data showed on Thursday. The greenback was down 0.81% against the yen at 155.2, its lowest since Dec. 19. "We anticipated that there would be a nuanced U.S. dollar behavior, that [it] would likely be stronger relative to a number of currencies, but would be weaker relative to the Japanese yen," said Kristina Hooper, chief global market strategist, at Invesco U.S. "I think the general direction for JPY and the general direction for the dollar suggests that we will have a stronger yen to dollar." The dollar was weaker against the euro , which rose 0.1% to $1.03, as traders digested a slew of mixed economic news to gauge the outlook for the Federal Reserve's rate cuts this year. U.S. retail sales rose 0.4% last month after upward revisions the previous month, data from the Commerce Department's Census Bureau showed. Meanwhile, the number of Americans filing new applications for unemployment benefits increased more than expected last week, but remained at levels showing a healthy labor market. The Philadelphia Fed Business Index, which jumped to 44.3 in January, was the lone surprise as the forecast was for a reading of minus 5. That left U.S. dollar index - a measure of the value of the greenback relative to a basket of foreign currencies - down 0.05% at 108.97. Amo Sahota, director at Klarity FX in San Francisco, said Wednesday's softer consumer prices data continues to drive the markets' tone, driving expectations that the Fed would still be pushing towards two rate cuts this year. But the sign of disinflation is happening when inflation could re-escalate, depending on the incoming administration's trade policy. "The markets are generally in a slightly more upbeat mood, but in a holding pattern here until we get through Monday," said Sahota. That's when Donald Trump returns to the White House with some policies analysts expect will boost growth as well as increase price pressure. Another focus for markets on Thursday, was the nomination hearing of Trump's choice of Scott Bessent to head the Treasury Department. Bessent is expected to keep a leash on U.S. deficits and to use tariffs as a negotiating tool, mitigating the expected inflationary impact of economic policies expected from the Trump administration. "So far, he hasn't really said anything too far away from what we're kind of expecting," Sahota said. "This is a government ... which needs to resolve itself on spending. So, we're looking at government spending to come down. They really want to implement back in the tax cuts, we've seen that headline come through." Traders who have been growing more worried about inflation responded with relief to Wednesday's U.S. data, buying stocks and sending benchmark 10-year Treasury yields down more than 13 basis points. Treasury yields slipped on Thursday, after Federal Reserve Governor Christopher Waller said three or four interest cuts this year were still possible if U.S. economic data weakened further. Sterling was down 0.13% at $1.2228 against the dollar, having also earlier dropped sharply against the yen on Thursday as investors focused on monetary policy divergence after last week's selloff in gilts and the pound. China's yuan, seen on the front lines of tariff risk, was pinned near the weak end of its trading band at 7.3316. Sign up here. https://www.reuters.com/markets/currencies/us-inflation-relief-dents-dollar-yen-gains-ahead-boj-2025-01-16/

2025-01-16 06:34

MUMBAI, Jan 16 (Reuters) - Dollar-rupee forward premiums declined on Thursday after India's central bank said it would infuse rupees into the banking system daily, which bankers said would reduce the need to conduct dollar-rupee buy/sell swaps. The Reserve Bank of India on Wednesday said it will conduct variable rate repo auctions, through which it lends funds to banks, on all working days until further notice. WHY IT'S IMPORTANT Forward premium levels are an important factor that companies consider when managing their forex risks. The level of the near-maturity premiums impacts the behavior of speculators when they wager on moves in the dollar/rupee pair. CONTEXT The RBI has been conducting buy/sell swaps in the forward market to negate the impact that their regular dollar-selling interventions have on domestic liquidity. With the central bank now injecting rupee liquidity, the quantum of buy/sell swaps that it needs to conduct to manage liquidity will reduce, which in turn pushes down premiums. MARKET REACTION The 1-year dollar-rupee implied yield declined 3 basis points to an over-two-week low of 2.40% on Thursday while the 1-month forward premium declined to 21 paisa from 23 paisa in the previous session. Rupee liquidity in the country's banking system stood at a deficit of 2.2 trillion rupees ($25.43 billion) on Jan. 15, after hitting an over-7-month high of 2.5 trillion rupees on Monday. GRAPHIC: KEY QUOTES: The repo auctions will help ease the dollar-rupee overnight swap rate, which will have an impact across the forward premium curve, a senior trader at a state-run bank said. ($1 = 86.4950 Indian rupees) Sign up here. https://www.reuters.com/markets/currencies/dollar-rupee-forward-premiums-dip-after-india-central-banks-liquidity-infusion-2025-01-16/

2025-01-16 06:23

Gold hits its highest level since Dec. 12 Israel and Hamas reach a ceasefire deal in Gaza Progress in disinflation could prompt FOMC to ease monetary policy - analyst Jan 16 (Reuters) - Gold prices were steady on Thursday after hitting over one-month highs, as softer U.S. core inflation data lifted expectations that more rate cuts were still on the table, although news of a ceasefire accord between Israel and Hamas capped further gains. Spot gold held its ground at $2,693.93 per ounce, as of 0603 GMT, after hitting its highest since Dec. 12 earlier in the session. U.S. gold futures gained 0.2% to $2,723.70. "Easing underlying inflation in the U.S. renewed hopes of a less-restrictive Fed policy this year. The core inflation unexpectedly slowed, while headline consumer prices showed no significant upside surprises," said Jigar Trivedi, senior analyst at Reliance Securities. "That supported bullion demand as progress in disinflation could prompt the FOMC to ease monetary policy, reducing the opportunity cost of holding non-yielding assets." The prospect of more Fed rate cuts this year heightened following the data, and interest rate futures traders on Wednesday were pricing in near-even odds that the U.S. central bank would reduce rates twice by the end of this year, with the first reduction to come in June. Central bank officials said the data showed U.S. inflation was continuing to ease even as they noted heightened uncertainty in the coming months, as they await a first glimpse of the incoming Trump administration's policies. Potential tariffs from U.S. President-elect Donald Trump's incoming administration could further exacerbate inflationary pressures. The dollar slipped to stand just off recent peaks as cooling U.S. inflation data knocked down bond yields, further supporting bullion prices. Meanwhile, the Israel and Hamas reached a ceasefire and hostage agreement, reducing some safety appeal of the metal, Trivedi said. Gold hit multiple records last year as Middle East tensions fuelled its safe-haven appeal along with anticipation of more easing by major central banks including the U.S. Fed. Spot silver was flat at $30.66 per ounce and palladium dropped 1% to $951 and platinum shed 0.2% at $936.45. Sign up here. https://www.reuters.com/markets/commodities/gold-prices-hover-near-1-month-peak-renewed-rate-cut-hopes-2025-01-16/

2025-01-16 05:51

Bessent makes Senate debut as Trump's economic point man Hedge fund manager a vocal advocate for Trump's tariff agenda Bessent says US needs stronger sanctions on Russian oil High debt curbs US crisis-fighting fiscal capacity, Bessent says Bessent vows to maintain dollar reserve currency status WASHINGTON, Jan 16 (Reuters) - President-elect Donald Trump's pick for Treasury secretary, Scott Bessent, said on Thursday that the dollar should remain the world's reserve currency, the Federal Reserve should stay independent and that he is ready to impose tougher sanctions on Russia's oil sector. Bessent, testifying at a Senate Finance Committee confirmation hearing, underscored an urgent need to extend Trump's 2017 individual tax cuts, saying that allowing them to expire at the end of this year would unleash a $4 trillion tax hike that could crush the U.S. economy. "If we do not renew and extend, then we will be facing an economic calamity," Bessent said. "We will see a gigantic middle class tax increase." Bessent, a hedge fund manager and founder of Key Square Capital Management, voiced support for Trump's plans to impose steep tariffs, saying they would combat unfair trade practices, raise revenues and increase U.S. negotiating leverage, including on non-trade issues. In prepared remarks he said pro-growth tax, investment, trade and energy policies would usher in a "a new economic golden age" of prosperity. RUSSIAN OIL SANCTIONS Bessent said that U.S. sanctions against Russia's oil sector have been too weak, partly because the Biden administration was too concerned about increasing prices at the same time it was constraining U.S. oil output. Increased U.S. oil production would allow for tougher sanctions on Russian oil majors, he said. "I think if any officials in the Russian Federation are watching this confirmation hearing, they should know that if I'm confirmed, and if President Trump requests as part of his strategy to end the Ukraine war, that I will be 100% on board with taking sanctions up - especially on the Russian oil majors - to levels that would bring the Russian Federation to the table," Bessent said. He also had harsh words for China, calling it "the most imbalanced, unbalanced economy in the history of the world," one that was trying to export its way out of a "severe recession/depression" and the U.S. could not allow China to flood U.S. or world markets with cheap goods. NO DRAMA If confirmed by the Senate, Bessent would be the first openly gay Treasury secretary and confirmed cabinet member of a Republican administration. The South Carolina native's husband, former New York City prosecutor John Freeman, and their two children, Cole and Caroline, sat behind him. In a hearing marked by few testy exchanges, Bessent coolly fielded questions ranging from child tax credits to tariff impacts on farmers and did not stray from answers consistent with previous Republican Treasury nominees, but without contradicting Trump's policy plans. He said that U.S. spending on President Joe Biden's clean energy tax credit was "wildly out of control" and that high deficits in recent years were due to a "spending problem." Asked if a 100% tax credit for business research and development needed to be restored, he said his "inclination" would be to support that. Democrats chided Bessent for taking advantage of a tax loophole, the legality of which has been disputed by the Internal Revenue Service, to reduce the Medicare taxes paid by his hedge fund by $910,000 over three years. "This is exactly the kind of abusive scheme that leaves Americans feeling disgusted with our tax system," said Senator Ron Wyden, the panel's top Democrat. Bessent said that he would set aside funds to pay any taxes owing once the case is decided. He has pledged to shutter Key Square to avoid conflicts of interest if his nomination is confirmed. FED INDEPENDENCE Markets were expected to scrutinize Bessent's comments on keeping the Federal Reserve independent for clues as to whether Trump would try to exert control over the U.S. central bank given the president-elect's frequent complaints over Fed interest rate decisions. But Bessent came down firmly on the side of Fed monetary policy independence, adding that Trump would still make his views known. "I think on monetary policy decisions, the FOMC should be independent," he said, referring to the Fed's rate-setting panel, the Federal Open Market Committee. Although some economists have said that Trump's plans to impose tariffs, cut taxes and curb immigration would be inflationary, Bessent disagreed, saying Trump's plans, including increased energy production, would lower inflation to the Fed's 2% target while increasing wages. Despite Trump's longstanding complaints about a strong dollar hurting U.S. exports, Bessent said: "Critically - critically - we must ensure that the dollar remains the world's reserve currency." Bessent also rejected the idea of a central bank digital currency for the Fed, saying that the dollar's wide use and security made this unnecessary. He said he was open to the idea of creating a U.S. sovereign wealth fund, but said the U.S. needed to get control over short-term deficit growth first. HIGH DEBT, LESS CAPACITY Bessent vowed that there would be no debt default on U.S. Treasury debt under his watch. Asked whether Congress should abandon the federal debt ceiling, Bessent said that if Trump requested that, he would work with Congress to make it happen. The high debt level means that there is less capacity to borrow heavily to combat a crisis, Bessent said, citing examples of the 1930s Great Depression, World War Two and the recent COVID-19 pandemic. "Treasury – along with the whole of government and Congress - has used its borrowing capacity to save the union, save the world, and save the American people," Bessent said. "What we currently have now, we would be hard pressed to do the same." Sign up here. https://www.reuters.com/world/us/trump-treasury-pick-bessent-faces-senate-grilling-taxes-trade-deficits-2025-01-16/