2025-01-08 12:25

LONDON, Jan 8 (Reuters) - The structure of the benchmark Brent crude oil futures market on Wednesday reached its widest since August 2024, reflecting concern of tightening supply and expectations of a revival in Chinese demand. The premium of the first-month Brent contract to the six-month contract widened to $3.05 a barrel on Wednesday, the most since late August. The premium has risen by more than 50% so far this year. Oil output from the Organization of the Petroleum Exporting Countries fell in December, partly due to losses in Iran, a Reuters survey showed. Concern of tighter supply from Iran and Russia due to sanctions is also boosting prices, analysts said. "It looks as though sanctions might be working and the combination of declining Russian and Iranian exports supports the structure," said Tamas Varga of oil broker PVM. A widening of the premium, a structure called backwardation, generally indicates a perception of tighter prompt supply. The opposite structure, where prices for nearby delivery are cheaper, suggests ample supply and is called contango. "The tighter crude market is unmistakenly mirrored in the deepening Brent backwardation," Varga added. In a further indication of tightness, the premium of the first-month Brent contract to the second month has almost doubled this year, rising from 40 cents a barrel on Dec. 31 to as much as 75 cents on Wednesday. Sign up here. https://www.reuters.com/business/energy/brent-oil-market-structure-tightens-supply-concerns-2025-01-08/

2025-01-08 12:09

BERLIN, Jan 8 (Reuters) - German gas imports fell slightly in 2024 compared with the year before, with Norway the largest supplier, while exports more than halved, the country's network regulator said on Wednesday. According to preliminary figures from the Bundesnetzagentur regulator, German gas imports fell to 865 terawatt hours (TWh) in 2024 from 968 TWh in 2023. The largest gas suppliers were Norway, at 48%, followed by the Netherlands at 25% and Belgium at 18%, it said. Exports from Germany, on the other hand, dropped to 89 TWh in 2024 from 187 TWh the year before, with the Netherlands, the Czech Republic and Austria among its most important customers. In total, Germany consumed 844 TWh of gas last year, 3.5% more than in 2023, with 39% attributable to household and business consumption and 61% used by industrial customers. Germany scrambled to cut its dependence on Russian gas after the 2022 invasion of Ukraine, with the resulting high prices stoking inflation and raising the cost of living across Europe. Sign up here. https://www.reuters.com/business/energy/german-gas-imports-drop-slightly-2024-2025-01-08/

2025-01-08 11:53

Jan 8 (Reuters) - Sterling slid for a second day on Wednesday against a generally firmer U.S. dollar, despite British borrowing costs sitting at around their highest in 27 years. Solid U.S. data on Tuesday confirmed investors' view that U.S. interest rates will stay higher for longer, pushing up Treasury yields and boosting the dollar against most major currencies. "Political risks aside, there is little reason to be bearish on the US dollar - even if current levels look a little overdone," said Michael Pfister, FX analyst at Commerzbank. The pound was last down 1% at $1.2350, after sliding 0.34% on Tuesday. It was also weaker against the euro, which was last up 0.6% at 83.35 pence. That fall came even as yields on British government bonds, known as gilts, spiked higher, rising more than U.S. Treasury yields on Wednesday. Britain's long-term government borrowing costs are at their highest since 1998, with 30-year gilt yields last up 8 basis points (bps) on the day at 5.33%. The 10-year yield was also up 8 bps at 4.78%. "The way Gilts are trading would suggest that participants are becoming increasingly concerned over the perilous UK fiscal outlook," said Michael Brown, strategist at Pepperstone. Investors expect the Bank of England to cut interest rates by only about half a percentage point this year, with inflation likely to hover above the central bank's 2% target. Markets will be looking for signals of what is to come from Bank of England Deputy Governor Sarah Breeden when she speaks about the outlook for UK inflation and monetary policy in Edinburgh on Thursday. So far, higher yields have offered the pound little support against the dominant dollar, with sterling trading close to the April low of $1.2352 it hit last week. Compared to a resilient U.S. economy, where Tuesday's data showed that job openings unexpectedly rose in November and layoffs were low, Britain's economy lost momentum in the second half of 2024. The British Retail Consortium said on Tuesday that sales in the final quarter of 2024 proved disappointing. "Stagflation remains the 'mot du jour'," said Pepperstone's Brown. Sign up here. https://www.reuters.com/markets/currencies/sterling-tumbles-second-day-against-firmer-dollar-even-gilt-yields-rise-2025-01-08/

2025-01-08 11:23

Eagle S tanker found with 32 deficiencies, Finland says Finnish police suspect tanker damaged undersea cables Finland believes vessel part of 'shadow fleet' to bypass Russian oil sanctions HELSINKI, Jan 8 (Reuters) - Finland's public transport agency said on Wednesday that an oil tanker suspected of damaging undersea cables in the Baltic Sea was found to have serious deficiencies and will not be allowed to operate until repairs have been made. Baltic Sea nations are on high alert after a string of power cable, telecom link and gas pipeline outages since Russia invaded Ukraine in 2022. The NATO military alliance has said it will boost its presence in the region. Finnish police on Dec. 26 seized the Eagle S tanker carrying Russian oil and said they suspected the vessel had damaged the Finnish-Estonian Estlink 2 power line and four telecoms cables by dragging its anchor across the seabed. While the police investigation is ongoing, authorities also checked the vessel's condition in a port state inspection, and said on Wednesday they found 32 errors, including in the fire safety, navigation equipment and pump room ventilation. "Operating the ship is forbidden until the deficiencies have been rectified," Director of Maritime Affairs Sanna Sonninen at Finnish Transport and Communications Agency Traficom said in a statement. Correcting the deficiencies will require outside assistance and will take time, she added. Finnish lawyer Herman Ljungberg, who represents the ship's owner, United Arab Emirates-based Caravella LLC FZ, said the inspector's findings should have first been delivered to the company and the vessel before being shared in public. The lawyer has said that the ship's alleged damage to undersea equipment happened outside of Finland's territorial waters and that the country lacked jurisdiction to intervene. A Finnish court last week denied a request for the vessel's release. Finnish police have said they ordered a travel ban for eight crew members as part of the investigation. Finland's customs service has said it believes the Eagle S is part of a shadow fleet of tankers used to circumvent sanctions on Russian oil, and has impounded its cargo. Moscow has said Finland's seizure of the ship is not a matter for Russia. Sign up here. https://www.reuters.com/world/europe/finland-says-oil-tanker-linked-subsea-cable-damage-has-serious-deficiencies-2025-01-08/

2025-01-08 11:12

City hit from both sides as upscale Pacific Palisades, hills above Pasadena on fire New fires breaks out in Hollywood Hills, Studio City Hundreds of homes destroyed and 100,000 people evacuated Strong winds hinder firefighting efforts, water supplies run low Biden declares major disaster, cancels trip to Italy LOS ANGELES, Jan 8 (Reuters) - Raging wildfires surrounding Los Angeles spread to the Hollywood Hills on Wednesday, after other fires in the area killed at least five people, destroyed hundreds of homes and stretched firefighting resources and water supplies to the limit. More than 100,000 people were ordered to evacuate as dry, hurricane-force winds hindered firefighting operations and spread the fires, which have burned thousands of acres (hectares) since they began on Tuesday. "This firestorm is the big one," Los Angeles Mayor Karen Bass told a press conference after rushing back to the city, cutting short an official trip to Ghana. A new fire broke out in the parched Hollywood Hills on Wednesday evening, Fire Chief Kristin Crowley told a press conference, forcing more evacuations and raising the number of wildfires burning in Los Angeles County to at least six. Four of them were 0% contained according to state officials, including a pair of major conflagrations on the eastern and western flanks of the city that continued to grow as night fell on Wednesday. In between, the so-called Sunset Fire in Hollywood Hills scorched 50 acres (20 hectares) on Wednesday, Cal Fire said. Helicopter crews and ground teams appeared to be making progress impeding its rapid advance. The L.A. Fire Department issued an evacuation order for people in an area within Hollywood Boulevard to the south, Mulholland Drive to the north, the 101 Freeway to the east and Laurel Canyon Boulevard to the west - all iconic addresses for the entertainment industry. Within that area is the Dolby Theater, where the Oscars are held. Next week's Oscar nominations announcement was already postponed by two days because of the fire, organizers said. Though relatively small, the Sunset Fire burned just above Hollywood Boulevard and its Walk of Fame. It would need to cross the 101 Freeway to endanger the Hollywood sign and Griffith Observatory further up in the hills. Nearby, a structure fire claimed at least two homes and spread to brush in Studio City, live television footage showed. More than 50 firefighters extinguished the fire with no injuries reported, the L.A. Fire Department said. SMOLDERING RUINS On the west side of Los Angeles, the Palisades Fire consumed 15,832 acres (6,406 hectares) and hundreds of structures in the hills between Santa Monica and Malibu, racing down Topanga Canyon until reaching the Pacific Ocean on Tuesday. A home reportedly belonging to Hollywood actors Leighton Meester and Adam Brody was one of the buildings destroyed. Aerial video by KTLA television showed block after block of smoldering homes in Pacific Palisades, the smoky grid occasionally punctuated by the orange blaze of another home still on fire. To the east, in the foothills of the San Gabriel Mountains, the Eaton Fire claimed another 10,600 acres (4,289 hectares), another 1,000 structures, and killed at least five people, officials said. Three people had been arrested for looting, law enforcement officials said. Private forecaster AccuWeather estimated initial damage and economic loss at more than $50 billion. "We're facing a historic natural disaster. And I think that can't be stated strong enough," Kevin McGowan, director of emergency management for Los Angeles County, told a press conference. Even though forecasters said winds would subside briefly on Wednesday night, so-called red flag conditions were expected to remain until Friday. Horses and other large animals found shelter from the wildfires at a college equestrian center that opened its doors to horses, alpacas, llamas and even pigs, whose owners were under evacuation orders. "I think they sense the fire and so I really had to lead them in a way that they understood that they were being taken somewhere safe," said Jaye Riedinger, 37, a creative director from Topanga, who left her home with her mustang horses. Nearly 300,000 homes and businesses lost power in Los Angeles County, down from nearly 1 million earlier on Wednesday, according to PowerOutage.us. School was canceled throughout Los Angeles County at least through Thursday. WATER WOES The scale and spread of the blazes stretched exhausted firefighting crews beyond their capacity. Firefighters from six other states were being rushed to California, while an additional 250 engine companies with 1,000 personnel were being moved from Northern California to Southern California, Los Angeles County Fire Chief Anthony Marrone told a press conference. Water shortages caused some hydrants to run dry in upscale Pacific Palisades, officials said. "We pushed the system to the extreme. We're fighting a wildfire with urban water systems," Janisse Quinones, chief executive of the Los Angeles Department of Water and Power, told a press conference. Pacific Palisades relies on three tanks that hold about a million gallons (3.78 million liters) each, and the demand for water to fight fires at lower elevations was making it difficult to refill water tanks at higher elevations, she said. By Wednesday afternoon, all three of those tanks and all 114 reservoirs throughout the city were refilled, Quinones said in a later press conference. The fires struck at an especially vulnerable time for Southern California, which has not seen significant rainfall for months. Then came the powerful Santa Ana winds, bringing dry desert air from the east toward the coastal mountains, fanning wildfires while blowing over the hilltops and down through the canyons. President Joe Biden, who declared the fires a major disaster, joined California Governor Gavin Newsom at a Santa Monica fire station to get a briefing on firefighting efforts. In his final days as president before handing off to President-elect Donald Trump on Jan. 20, Biden canceled an upcoming trip to Italy in order to focus on directing the federal response to the fires, the White House said. Sign up here. https://www.reuters.com/business/environment/tens-thousands-flee-wildfires-tear-through-los-angeles-area-2025-01-08/

2025-01-08 11:08

A look at the day ahead in U.S. and global markets from Mike Dolan Dragging up government borrowing costs across the world, the new year spike in long-term U.S. Treasury yields is flashing red as a long-absent risk premium in debt markets re-builds alarmingly amid fiscal policy and interest rate fears. The New York Federal Reserve's estimate of the 10-year 'term premium' - seen as the compensation investors seek for holding long-term Treasuries to maturity instead of rolling over short-term debt holdings - topped 50 basis points this week for the first time since 2014. Partly reflecting uncertainty about long-term inflation expectations and debt supply and an incoming U.S. administration intent on tax cuts, immigration curbs and tariff rises, the 30-year Treasury yield hit its highest since 2023 on Tuesday and 10-year yields hit their highest in almost 9 months. At almost 64bps, the 2-to-30 year yield curve gap on Wednesday reached its widest since the Fed started raising interest rates in March 2022. With this week's latest heavy Treasury debt sales frontloaded due to Thursday's market holiday and high seasonal corporate bond issuance in the background, $22 billion of 30-year 'long bonds' go under the hammer later today. The more immediate cause of bond market anxiety - which sideswiped stock markets (.SPX) , opens new tab, (.IXIC) , opens new tab again on Tuesday - comes from the week's persistently 'hot' economic releases - adding concern about future Fed rate cuts as President-elect Donald Trump's economic policies are parsed. ISM's December survey of U.S. services sector businesses showed activity accelerated in December, while a measure of prices paid for inputs surged to near a two-year high. And in a big week for U.S. labor market updates, data showed job openings in November grew to 8.098 million, exceeding forecasts for a 7.7 million rise, and higher than October's numbers of 7.839 million. ADP's private sector job reading for last month and the latest weekly jobless claims numbers are due later on Wednesday ahead of Friday's national employment report. Markets and government offices are closed Thursday for former President Jimmy Carter's funeral. 'HIGHLY UNUSUAL' The brisk growth and inflation readouts are pushing back expectations for Fed easing, with futures not seeing another quarter point cut until June and doubting any more this year. Only 38bps of Fed easing is now priced for the whole of 2025. Minutes from the Fed's latest policy meeting, where policymakers indicated just 50bps of additional rate cuts for this year, are due for release later on Wednesday. But even given that recalibration, the movement of bond yields - where 10-year yields have risen 100bps since September as the Fed has cut 100bps over the same period - is "highly unusual", according to Apollo Chief Economist Torsten Slok. "The market is telling us something, and it is very important for investors to have a view on why long rates are going up when the Fed is cutting," Slok told clients, positing fiscal worries, less bond demand from abroad or unjustified Fed cuts as possible reasons. Rising Treasury yields, meantime, have lifted the dollar anew (.DXY) , opens new tab and also boosted long-term borrowing costs in other G7 economies in the slipstream. Most notably on Tuesday, 30-year British 'gilt' yields hit their highest since 1998. While 10 and 30-year Treasury yields ticked back a touch early Wednesday, they have retained the bulk of the week's sharp rise. Adding to the bond market tension, oil prices rose again on Wednesday as supplies from Russia and OPEC members tightened while U.S. crude oil stocks fell last week, market sources said, citing American Petroleum Institute figures. At 5%, the year-on-year rise in U.S. crude is at its highest since July. U.S. stock futures recovered a fraction of Tuesday's heavy tech-led losses early today, although Japanese (.N225) , opens new tab and Chinese (.CSI300) , opens new tab bourses fell again alongside a 0.8% drop in emerging markets indexes (.MSCIEF) , opens new tab. Chinese stock losses were narrowed in late trading there as markets digested Beijing's latest measures to expand the scope of consumer trade-ins. But leading the decline onshore, shares of semiconductor firms (.CSI931865) , opens new tab fell 0.7% as the U.S. Defense Department expanded the list of firms allegedly aiding Beijing's military. Back stateside, uncertainties around the policies of the Trump administration were heightened by the President-elect's refusal to rule out using military or economic action to pursue acquisition of the Panama Canal and Greenland, part of a broader expansionist agenda he has promoted since winning election. Trump also criticized American spending on Canadian goods and military support for Canada, saying the U.S. derives no benefits from doing so, and called the border between the two countries an "artificially drawn line." With a domestic political hiatus following Canadian Prime Minister Justin Trudeau's decision to stand down as Liberal Party leader, the Canadian dollar remained calm. In Europe, stocks seemed to buck the wider global nerves and hit three-week highs. European shares (.STOXX) , opens new tab advanced on Wednesday, led by heavyweight financial stocks and as defence firms got a boost after Trump called for higher spending from NATO allies. Trump said he believes European members of NATO should spend 5% of their GDP on the alliance's defense. Key developments that should provide more direction to U.S. markets later on Wednesday: * US December ADP private sector payrolls, weekly jobless claims, November consumer credit * Federal Reserve's Federal Open Market Committee releases minutes of latest meeting * Federal Reserve Board Governor Christopher Waller speaks * US Treasury sells $22 billion of 30-year bonds Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2025-01-08/