2025-01-09 10:19

WARSAW/GDANSK, Jan 9 (Reuters) - Poland's oil refiner and petrol retailer Orlen (PKN.WA) , opens new tab plans to invest between 350 billion and 380 billion zlotys ($84.3 billion and $91.5 billion) by 2035, it said on Thursday as it unveiled its new strategy. That compares with 320 billion zlotys of investments over an eight-year period envisaged in the 2022 strategy. Between 270 billion and 290 billion zlotys of the planned cumulative capital expenditures are to be flexible, allowing Orlen to actively manage its investment budget, it said. Up to 85 billion zlotys will be allocated for potential equity investments, including mergers, acquisitions and partnerships, it added. As of 1200 GMT, Orlen's shares were down 1.2% after falling as much as 3.2% shortly after the strategy announcement. "At first glance, the strategy is a little bit of disappointing for us as the key strategic directions remains unchanged compared to the strategy set up by the previous management," Erste analyst Tamas Pletser said. The new strategy follows the management's audit of more than 50 projects undertaken by prior executives and the group's decision to scale back and rename its Olefins petrochemical project. Pletser added Orlen's capital expenditure target is still very high and top-headed, as it is concentrated on the period between 2025 and 2030. The company aims to meet all of Poland's domestic natural gas demand over the next decade by increasing production from 9.1 to 12 billion cubic meters (bcm) per year and boosting liquefied natural gas (LNG) contracting from 4.8 to 15 bcm annually. It plans to add 4.3 gigawatts (GW) of gas-fired power generation capacity, 1.4 GW of energy storage, and develop four offshore wind farms and at least two small modular reactors totalling 600 megawatts (MW). Orlen will increase its guaranteed dividend payout in 2025 from 4.30 to 4.50 zlotys per share, maintaining an annual increase of 0.15 zlotys thereafter, with flexibility to recommend higher payouts of up to 25% of annual operating cash flows reduced by financing costs. It targets 2025 earnings before depreciation and amortization, excluding inventory effects - known as EBITDA LIFO - of 53 billion to 58 billion zlotys, with cumulative earnings for the key metric ranging from 500 billion to 550 billion zlotys over the 10-year period. ($1 = 4.1530 zlotys) Sign up here. https://www.reuters.com/business/energy/polands-orlen-plans-invest-380-billion-zlotys-by-2035-2025-01-09/

2025-01-09 07:38

Cold weather drives winter fuel demand, buoying crude prices Ultra-low sulfur diesel futures trades at three-month high Brent futures market structure indicates tighter market Biden to announce new sanctions targeting Russia's economy HOUSTON, Jan 9 (Reuters) - Oil prices rose more than 1% on Thursday as cold weather gripped parts of the United States and Europe, boosting winter fuel demand. Brent crude futures settled up 76 cents, or 1%, at $76.92 a barrel. U.S. West Texas Intermediate crude futures settled up 60 cents, or 0.82%, to $73.92. On Wednesday, both benchmarks fell more than 1%. Thursday's rise is "definitely winter fuel demand kicking in here in the U.S.," said John Kilduff, partner at Again Capital in New York. Parts of east Texas up to west Virginia were under a winter storm warning on Thursday, according to the National Weather Service, covering large swathes of Arkansas, Tennessee and Kentucky. Ultra-low sulfur diesel futures were trading at around $2.38 a gallon, their highest since Oct. 8, according to data from LSEG. JP Morgan analysts estimate that for the United States, Europe and Japan, for every degree Fahrenheit the temperature drops below its 10-year average, there is an increase of 113,000 barrels per day (bpd) in demand for heating oil and propane "as teeth-chattering temperatures prompt consumers to crank up their heat." Extreme winter conditions can lead to disruptions in oil supplies as freezing temperatures may cause temporary freeze-offs and production cuts, JP Morgan analysts said. "Right now it appears that the ice will stay north of refinery row along the U.S. Gulf Coast, but power outages will be a concern as heavy rain and wind comes along for the ride," TACenergy's trading desk wrote on Thursday. Meanwhile, the market structure in Brent futures is indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing. The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing. U.S. President Joe Biden is expected to announce new sanctions targeting Russia's economy this week, according to a U.S. official. The administration is trying to bolster Ukraine's war effort against Russia before President-elect Donald Trump takes office on Jan. 20. A key target of sanctions so far has been Russia's oil industry. The dollar strengthened further on Thursday. Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's planned policies and fiscal stimulus from China, OANDA senior market analyst Kelvin Wong said. Sign up here. https://www.reuters.com/business/energy/oil-prices-extend-losses-rising-us-fuel-inventories-2025-01-09/

2025-01-09 07:34

NEW DELHI, Jan 9 (Reuters) - India is expected to sign a preliminary agreement with Mongolia soon in the area of geology and exploration, a senior Indian government official with direct knowledge of the matter said. Landlocked Mongolia is rich in deposits of copper and coking coal, and India is mostly dependent on imports to meet rising demand for the red metal used in power, construction and electrical vehicles as well as coking coal for steelmaking. "India's cabinet has approved the MoU (memorandum of understanding) and both countries are expected to sign it soon," the source said, declining to be identified as the deliberations are not yet public. India's federal mines ministry did not respond to a Reuters email seeking comment. Mongolia's Ministry of Mining and Heavy Industry did not immediately respond to a Reuters email seeking comments. Companies such as Adani, Hindalco and Vedanta have expressed an interest in sourcing copper from Mongolia, the source said. All three companies did not respond to emails from Reuters seeking comment. Both Indian and Mongolian officials are working out supply routes for Indian companies to source copper and coking coal, with India preferring the route from Vladivostok in Russia despite the longer distance, the official said. "China is convenient but we prefer the route from Russia," the official said. Relations between Asian giants India and China were strained after a deadly military clash on their disputed border in 2020 but have been on the mend since they reached an agreement in October to pull back troops from their last two stand-off points in the western Himalaya mountains. Unlike China, India has traditionally maintained close ties with Russia. Resource-rich Mongolia can offer superior grades of coking coal, industry officials say. In November, India's JSW Steel (JSTL.NS) , opens new tab and state-run Steel Authority of India (SAIL) (SAIL.NS) , opens new tab were in talks with Mongolian authorities to import two shipments of coking coal, Reuters reported. Sign up here. https://www.reuters.com/markets/commodities/india-sign-mining-pact-with-mongolia-soon-govt-source-says-2025-01-09/

2025-01-09 07:30

Short bets on yuan highest since June 2023 Bearish bets on Singapore dollar highest since Oct 2022 S.Korean won most shorted Asian currency Jan 9 (Reuters) - Bearish bets on most Asian currencies climbed to multi-month highs as prospects of fewer U.S. interest rate cuts this year continued to boost dollar demand, while the threat of potential U.S. tariffs undermined the appeal of risky Asian assets, a Reuters poll showed on Thursday. Short bets on the Chinese yuan rose to their highest since June 2023, while those on the Malaysian ringgit and the Indonesian rupiah reached a seven-month high, according to a fortnightly poll of 13 respondents. The yuan, which has been trading near 16-year-lows against the dollar, is seen as most vulnerable to a stronger dollar and heavier tariffs under U.S. President-elect Donald Trump's administration. China is also Southeast Asia's largest trading partner and a weaker yuan could send ripples across regional currency markets. Ahead of Trump's inauguration on Jan. 20, markets have steered away from Asian assets as his policies around tax cuts, tariff hikes and tighter immigration are likely to boost U.S. prices, bond yields and the dollar. Moreover, the Federal Reserve's projection of two rate cuts for 2025, half of what it had earlier estimated, has led markets to now fully price in only one 25 basis-point (bp) rate cut in 2025, with a 60% chance of a second reduction. Higher U.S. rates and the dollar's yield advantage could spur capital outflows in emerging Asian markets and weaken their currencies. "The external environment may constraint how far Asia central banks can ease with Asia FX weakness seen since the start of the Fed cut cycle," DBS analysts said in a note. The U.S. central bank has cut rates by 100 bps since September. DBS added that there is a conflict of domestic and external priorities for Asia central banks and less export-oriented economies may see lower volatility in prices. Short positions on the Taiwan dollar were at their highest since May 2024. Bearish bets on the Indian rupee , which logged its ninth straight weekly drop last week, were the highest since July 2022. Short positions on the Singapore dollar were at their highest since October 2022. "While Singapore could be directly protected from escalation of U.S. tariffs, it would still be significantly exposed to the indirect impact via slower global growth and spillovers from a slowdown in China's exports," Citi analysts said. Citi's base case is for the Monetary Authority of Singapore (MAS) to ease policy settings in January due to recent disinflation trends and challenges to growth resilience. The South Korean won is currently the most shorted Asian currency, according to the poll. It had posted its worst annual drop in 16 years in 2024 as the government's efforts to boost the market were overshadowed by signs of a slowdown in exports and domestic political turmoil. The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs). The survey findings are provided below (positions in U.S. dollar versus each currency): Sign up here. https://www.reuters.com/markets/currencies/asian-fx-bears-firm-us-rates-trump-tariff-threats-stay-focus-2025-01-09/

2025-01-09 07:19

LONDON, Jan 9 (Reuters) - Extreme bond market agitation has put the Federal Reserve in a bind. It can either cool long-term inflation fears or acquiesce to President-elect Donald Trump's complaints about interest rates being "far too high." It can't do both and will likely opt to tackle the former, potentially setting up a running verbal battle with the White House over the coming year. The surge in U.S. Treasury borrowing rates in the first weeks of 2025 can no longer be dismissed as just natural ebb and flow around the latest economic updates. The market is signaling that we're in alarming new territory that requires caution from the central bank and government alike. Chief among those red flags is the reappearance of a substantial risk premium being demanded by investors to hold longer-dated U.S. government debt. This gap is typically measured as the extra compensation demanded to lock into a long-term bond to maturity over a strategy of simply buying much shorter-dated debt and rolling it over as events unfold. The so-called term premium has largely been absent from the market for over a decade. But the New York Fed's estimate of the 10-year term premium has climbed sharply this year, topping half a percentage point for the first time since 2014. A 50-basis-point risk premium may not be excessive by historical standards, but it's 50 bps above the average of the past 10 years. The term premium's direction of travel indicates a level of investor uncertainty about longer-term inflation, debt accumulation and fiscal policy that hasn't been seen for many years. This is almost certainly due to the mix of historically high budget deficits and a still-hot economy with the incoming president's pledges of tax cuts, immigration curbs and tariff rises. This uncertainty is showing up in other debt metrics that are increasingly moving independently of the Fed's policy steer. The Fed has cut its policy rate by a full percentage point since September, yet the 10-year Treasury yield has risen 100 basis points since then. And 30-year yields are rising even faster, threatening to hit 5% for the first time in over a year - just a quarter point from levels since just before the banking crash of 2008. While the two-year yield , which most closely reflects Fed policy, has barely moved over the past few months, the two-to-30-year yield curve gap has expanded to its widest since the Fed began tightening policy almost three years ago. Long-term inflation expectations captured by the inflation-protected Treasury securities market and the swaps market stopped falling in September and have risen back close to 2.5% - about a half point above the Fed's stated goal. HAWKISH TURN FOR FED? If the Fed is losing control of the long end of the bond market, it may be forced to take a more hawkish turn to reassert its commitment to achieving its 2% inflation target on a sustained basis. This means that, barring a sharp cooling of the economy or a significant U-turn on many of Trump's stated policy promises, it's entirely possible the Fed may not cut again in this cycle. That's not apt to please a new president who has already expressed antagonism toward the Fed and questioned the need for its independence. 'NO IDEA' Fed Governor Christopher Waller tried to play the middle ground on Wednesday by saying policy remains historically tight, though not enough to force a recession, and that one-off price hits from Trump tariff hikes wouldn't change the Fed view. But he also made clear that the Fed - like most bond investors - is now essentially in a guessing game. While Waller said he doubted the most "draconian" of the new administration's proposed policies would be implemented, he added that coming up with a forecast for the Fed's December economic projections was "a very difficult problem." "I have no idea what is coming," he concluded. He's clearly not alone. If top Fed officials have no idea what to expect from Trump, then your average bond investors certainly don't either. Two scenarios thus seem plausible. If the Fed were to accelerate rate cuts in line with what Trump appears to want, without a significant shift in economic fundamentals to justify this move, then bond investors would reasonably assume the central bank is not overly concerned about hitting its 2% target. Bond investors would likely continue to price that risk, "de-anchoring" inflation expectations, as policy wonks say. But the Fed has routinely stated that containing inflation expectations is one of its primary roles, so it's hard to imagine it ignoring that development. And even if Trump's threatened tariffs do not change the inflation calculus per se, Trump's plan to roll over tax cuts and tighten labor markets via immigration crackdowns and deportations certainly crank up already-aggravated inflation risks. If Trump is successful in slashing government spending and federal jobs, he might make some headway in squaring this circle. But few expect this to be either a quick or easy task, especially given that he may not have the votes in Congress to actually pass large parts of his agenda. Perhaps the incoming president could help the Fed - and himself - by making it clear that the borrowing rates he deems "far too high" are long-term bond yields. That way he could allow the Fed do its job and potentially give himself more wiggle room. But less than two weeks from the inauguration, speculation around what may or may not be coming can and likely will cause considerable market disruption. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/us/fed-can-soothe-trump-or-treasuries-not-both-mike-dolan-2025-01-09/

2025-01-09 06:49

Jan 9 (Reuters) - Global energy major BP (BP.L) , opens new tab has pledged to lift oil production by 44% and gas output by 89% from India's largest field off its west coast, under a decade-long contract, according to block operator Oil and Natural Gas Corp (ONGC.NS) , opens new tab on Thursday. ONGC named BP as its technical service provider on Wednesday to assist in boosting output from a baseline crude production of 45.47 million metric tons and 70.40 billion cubic metres (BCM) of gas. Energy major Shell (SHEL.L) , opens new tab also participated in the tender, which sought advanced recovery technologies and expertise in managing complex mature reservoirs to boost production, ONGC said in an exchange filing. BP projected an increase in oil production by 44% to 65.41 million tons and gas output by 89% to 112.63 BCM from the Mumbai High field, which was discovered in 1974. India, the world's third-biggest oil importer and consumer, aims to rapidly increase its oil and gas production, which has remained stagnant for years. The increase in production is expected to begin in the next fiscal year starting April 1, with full-scale visibility anticipated by 2027-28, ONGC said in the filing. The incremental production is expected to generate additional oil and gas revenue for the country of up to $10.30 billion, and contributions from royalty, cess and other levies amounting to as much as $5 billion, the explorer said. In return, BP will receive a fixed fee for the first two years, followed by a service fee based on a percentage share of the revenue from net incremental production, after recovering incremental costs, according to ONGC. The field reached peak production of 471,000 barrels per day of oil in March 1985, and its output had declined to about 134,000 bpd in April 2024, a tender document showed last year. Sign up here. https://www.reuters.com/business/energy/bp-projects-44-jump-oil-output-indias-largest-field-ongc-says-2025-01-09/