2025-12-10 21:28

With prices low, PDVSA tries to keep export volumes high Venezuela crude's discount below Brent about double year-ago level Low prices press Maduro, who relies on oil revenue for subsidies HOUSTON/SINGAPORE, Dec 10 (Reuters) - Oil buyers in Asia are demanding deep discounts on Venezuelan crude due to a flood of sanctioned oil from Russia and Iran on offer and to heightened risk of loading in the South American country as the U.S. boosts its military presence in the Caribbean, traders and other sources said. President Donald Trump said on Wednesday that American authorities seized a tanker connected to Venezuela oil shipments. Venezuela has managed to increase oil exports this year from 2024 volumes even as Washington has ratcheted up pressure on President Nicolas Maduro. Sign up here. Prior to Wednesday's announcement, the U.S. military had not interrupted oil flows from the country, according to ship monitoring data and documents. The U.S. Navy has struck boats in the Caribbean Sea that were suspected of smuggling drugs, while Trump's administration has threatened to extend military operations to land targets. Growing export volumes reflect state-run PDVSA's effort to avoid a collapse of oil revenue. Low global crude prices have hit Venezuela's heavy crude grades harder due to quality and U.S. sanctions, according to traders and company sources. The state oil company is still struggling to fill the country's pockets. Top Asian buyer China is flooded with rival sanctioned crude. To move product, traders said, PDVSA has been forced to slash prices, with the discount below Brent crude about double year-ago levels. "PDVSA does not have much negotiation power," one of the people said. "It has been forced to agree to reduced prices because shippers involved are taking higher risks to load at Venezuelan ports, close to where the U.S. has military vessels anchored." With abundant Russian and Iranian supplies also sold at deep discounts, buyers in China in recent weeks were barely biting at offers of Venezuela's flagship Merey heavy crude at $14 per barrel below Brent, a trader involved in sales to Chinese independent refiners said. A cargo of the same Venezuelan grade was recently sold for early 2026 delivery at $15 per barrel below Brent, another trader said. Late last year, traders said, they were applying discounts of between $5 and $8 per barrel below Brent for Venezuela's heavy oil for delivery in China. Venezuela's Maduro relies on oil revenue to keep subsidies and government programs running to minimize domestic turmoil and cope with mounting U.S. political pressure after a disputed 2024 election. This year, China has been the destination of between 55% and 90% of Venezuela's oil exports, compared with 40%-60% last year. In November, the OPEC country sent 746,000 barrels per day (bpd) to China, according to ship monitoring data. PDVSA did not reply to a request for comment. Last week, Venezuela's oil minister Delcy Rodriguez said oil output , opens new tab rose to 1.17 million bpd in November, from 1.13 million bpd the previous month. CAUTIOUS WITH PORTS The country's oil exports rose slightly to some 921,000 bpd in November, the third-highest monthly average this year, while fuel imports more than doubled to some 167,000 bpd. Last month, PDVSA's partner Chevron (CVX.N) , opens new tab increased crude exports to the U.S. to some 150,000 bpd from 128,000 bpd in October, and supplied its joint ventures with naphtha to dilute their extra heavy crude output. The country's naphtha imports, including from Russia, have allowed PDVSA to keep diluent stocks high to secure stable exports of crude blends in coming months, the documents showed. Shipping contracts to transport Venezuela crude to all destinations have grown more expensive as vessel owners include "war clauses" to protect them from delays, interruptions or potential seizures by U.S. military ships near Venezuela's shores. A "war clause" in a contract allows ship owners to avoid routes and obligations when facing war risks by permitting safe discharge at alternative ports, the charge of extra freight fees and voyage cancellations in conflict zones. While the clause does not necessarily imply a significant expense for shippers covering short routes to the U.S. or the Caribbean, they can inflate freight costs for longer routes to Asia, forcing PDVSA to increase price discounts to accommodate them, the sources said. https://www.reuters.com/business/energy/venezuela-forced-double-discount-oil-asia-due-flood-sanctioned-crude-2025-12-10/

2025-12-10 21:03

MEXICO CITY, Dec 10 (Reuters) - Mexico's economy is solid and resilient, central bank chief Victoria Rodriguez said in a financial stability report on Wednesday, even as domestic financial risks increased. The banking system of Latin America's second-largest economy continues to have levels of liquidity and capitalization above regulatory minimums, the central bank said, adding that stress tests confirmed banks could confront adverse situations. Sign up here. "Everything increased compared to the last survey regarding internal financial risks," Rodriguez said in a presentation. "The most notable was a deterioration in expectations for the national economy, followed by higher-than-expected inflation and the deterioration of public finances." Last month, Mexico's central bank cut its economic growth forecast to near zero and raised its short-term inflation forecasts as the economy continues to navigate global trade uncertainty. Regarding money laundering accusations against three Mexican financial institutions, Rodriguez said money laundering prevention mechanisms were being modernized and there were no signs of ripple effects in the wider banking system. "These institutions have a low share of the financial system and do not pose a systemic risk to the stability of the system," she said. INFLATION CONCERNS PERSIST Rodriguez said that while inflation has broadly eased, challenges remain in bringing overall inflation to levels compatible with the central bank's target of 3% plus or minus one percentage point. The central bank last month affirmed its forecast that inflation will hit that target by the second half of next year. But it slightly raised its forecasts for average annual core inflation for late 2025 and early 2026, as well as for general inflation in early 2026. On Tuesday, official data showed that inflation accelerated to 3.8% in November, slightly above expectations. But Rodriguez said policymakers will consider cutting the benchmark rate in their next policy decision, taking into account factors such as inflation. The central bank has cut its benchmark rate by four percentage points since early last year. On November 6, its board made its eleventh consecutive cut, bringing the benchmark rate down 25 basis points to 7.25%, the lowest level since May 2022. Deputy Governor Jonathan Heath, the only member to vote against the cuts for four straight meetings, has cast doubt on the reliability of the central bank's long-term inflation forecast. In justifying the cuts, a majority of board members have cited falling headline inflation - now within one percentage point of the target - and economic weakness. https://www.reuters.com/world/americas/mexicos-economy-solid-resilient-domestic-risks-rise-cenbank-says-2025-12-10/

2025-12-10 21:02

Indexes close higher: Dow 1.05%, S&P 500 0.67%, Nasdaq x 0.33% Federal Reserve cuts rates by 25 basis points, cites labor weakness GE Vernova surges after bullish 2026 revenue forecast Dec 10 (Reuters) - Wall Street ended higher on Wednesday, after the Federal Reserve cut interest rates by a quarter percentage point as expected and investors bet on further easing down the road even as the central bank signaled that it will put further cuts on pause for now. The central bank said that before its next policy change it would look ahead for clearer signals about the direction of the job market and inflation that "remains somewhat elevated." Sign up here. But projections after the Fed's two-day meeting showed median expectations for another quarter-point cut in 2026, in line with expectations at the September meeting. And policymakers raised estimates for 2026 GDP growth to 2.3% from 1.8% and maintained expectations for a 4.4% unemployment rate at the end of next year. In his press conference Fed Chair Jerome Powell declined to provide guidance on whether there will be another rate cut in the near future. However, investors garnered some hope for easing from his comments that the labor market has significant downside risks and that the central bank doesn't want its policy to push down on job creation. "The market may have found some solace in the Powell's downbeat labor market discussion - a bad news is good news situation, to support more cuts next year," said Lindsey Bell, chief investment strategist at 248 Ventures in Charlotte, North Carolina adding that U.S. Treasury yields "lost some steam as Powell spoke, which helps support stock upside." The market had been muted ahead of the statement as investors, while widely expecting a cut, were concerned the Fed would take a more hawkish tone on the policy outlook. And even before Powell's comments some investors were eyeing more potential for rate cuts due to labor market concerns. "The statement emphasized weakness in the labor market as the principal rationale for the 25 basis point cut, and this detail is what the market has picked up on, suggesting the Fed could continue easing policy, even though the expectations for easing in 2026 haven’t changed with one 25 basis point priced in," said Michael Rosen, chief investment officer, Angeles Investments. The S&P 500 (.SPX) , opens new tab closed up 46.17 points, or 0.67%, at 6,886.68, eyeing a return to its October 28 record closing high but ultimately falling short at the end of trading. The Dow Jones Industrial Average (.DJI) , opens new tab rose 497.46 points, or 1.05%, to 48,057.75 while the Nasdaq Composite (.IXIC) , opens new tab gained 77.67 points, or 0.33%, to 23,654.16. The rate-sensitive small cap Russell 2000 index (.RUT) , opens new tab outperformed large caps with a 1.3% gain for a record closing high. Among the S&P 500's 11 major industry sectors, all but two showed gains. Industrials (.SLRCI) , opens new tab made the biggest advance, ending up 1.8%. Its biggest boost was from energy equipment manufacturer GE Vernova , which surged 15.6% after forecasting higher revenue in 2026, signaling strong demand for its AI-related infrastructure. On the other side of the spectrum, defensive utilities (.SPLRCU) , opens new tab was the biggest laggard, falling just 0.1% while consumer staples (.SPLRCS) , opens new tab was barely lower. Advancing issues outnumbered decliners by a 2.86-to-1 ratio on the NYSE where there were 496 new highs and 51 new lows. On the Nasdaq, 3,164 stocks rose and 1,642 fell as advancing issues outnumbered decliners by a 1.93-to-1 ratio. The S&P 500 posted 45 new 52-week highs and seven new lows while the Nasdaq Composite recorded 185 new highs and 77 new lows. On U.S. exchanges 16.91 billion shares changed hands compared with the 17.41 billion moving average for the last 20 sessions. https://www.reuters.com/business/wall-st-futures-slip-ahead-fed-meeting-2026-cuts-doubt-2025-12-10/

2025-12-10 20:52

Move is first known tanker seizure since US build-up began Signals new effort to go after Venezuela's main revenue source Impact on global oil supply unclear WASHINGTON, Dec 10 (Reuters) - The U.S. has seized a sanctioned oil tanker off the coast of Venezuela, President Donald Trump said on Wednesday, a move that sent oil prices higher and sharply escalated tensions between Washington and Caracas. "We've just seized a tanker on the coast of Venezuela, large tanker, very large, largest one ever, actually, and other things are happening," said Trump, who has been pressuring Venezuelan President Nicolas Maduro to step down. Sign up here. Asked what would happen with the oil, Trump said: "We keep it, I guess." In response, the Venezuelan government in a statement accused the U.S. of "blatant theft" and described the seizure as "an act of international piracy". It said it would denounce the incident before international bodies. Trump has repeatedly raised the possibility of U.S. military intervention in Venezuela. The seizure is the first of a Venezuelan oil cargo amid U.S. sanctions that have been in force since 2019. It is also the Trump administration's first known action against a Venezuela-related tanker since he ordered a massive military buildup in the region. The U.S. has already carried out several strikes against suspected drug vessels, which has raised concerns among lawmakers and legal experts. U.S. Attorney General Pam Bondi posted on X that the FBI, Homeland Security and Coast Guard, along with support from the U.S. military, carried out a seizure warrant for a crude tanker used to transport sanctioned oil from Venezuela and Iran. A 45-second video posted by Bondi showed two helicopters approaching a vessel and armed individuals in camouflage rappelling onto it. Iran's embassy in Caracas condemned the action as a "grave violation of international laws and norms" in a post on X on Thursday. Trump administration officials did not name the vessel or disclose its location at the time of the seizure. British maritime risk management group Vanguard said the very large crude carrier (VLCC) Skipper was believed to have been seized off Venezuela early on Wednesday. The U.S. has imposed sanctions on the tanker for what it says was involvement in Iranian oil trading when the vessel was called the Adisa. The Skipper left Venezuela's main oil port of Jose between December 4 and 5 after loading some 1.8 million barrels of Venezuela's Merey heavy crude. It transferred about 200,000 barrels near Curacao to the Panama-flagged Neptune 6 bound for Cuba before the seizure, according to satellite information analyzed by TankerTrackers.com and internal data from Venezuelan state oil company PDVSA. Guyana's maritime authority said Skipper was falsely flying the country's flag. The vessel had transported Venezuelan oil to Asia between 2021 and 2022, the PDVSA data showed. Oil futures rose following news of the seizure. After trading in negative territory, Brent crude futures rose 27 cents, or 0.4%, to settle at $62.21 a barrel, while U.S. West Texas Intermediate crude futures gained 21 cents, also 0.4%, to close at $58.46 per barrel. Maduro on Wednesday spoke at a march, without addressing reports of the seizure. IMPACT ON OIL? Venezuela exported more than 900,000 barrels per day (bpd) of oil last month, the third-highest monthly average so far this year, as PDVSA imported more naphtha to dilute its extra-heavy oil output. Even as Washington increased pressure on Maduro, Trump's administration had not previously moved to interfere with oil flows. Venezuela has had to deeply discount its crude to its main buyer China, due to growing competition with sanctioned oil from Russia and Iran. "This is just yet another geopolitical/sanctions headwind hammering spot supply availability," Rory Johnston, an analyst with Commodity Context, said. "Seizing this tanker further inflames those prompt supply concerns but also doesn't immediately change the situation fundamentally because these barrels were already going to be floating around for a while," Johnston said. Chevron (CVX.N) , opens new tab, which partners with PDVSA, said its operations in the country were normal and continuing without disruption. The U.S. oil major, responsible for all Venezuelan crude exports to the United States, last month increased those shipments to 150,000 bpd from 128,000 bpd in October. INCREASING PRESSURE ON MADURO Maduro has alleged that the U.S. military build-up is aimed at overthrowing him and gaining control of the OPEC nation's oil resources, which are the world's largest crude reserves. Since early September, the Trump administration has carried out more than 20 strikes against suspected drug vessels in the Caribbean and Pacific, killing more than 80 people. Experts say the strikes may be illegal. There has been little or no proof made public that the boats are carrying drugs or that it was necessary to blow them out of the water rather than stop them, seize their cargo and question those on board. Concerns about the attacks on the boats increased this month after reports that the commander overseeing one of the operations ordered a second strike that killed two survivors. A Reuters/Ipsos poll published on Wednesday found that a broad swath of Americans oppose the U.S. military's campaign of deadly strikes on the boats, including about one-fifth of Trump's Republicans. In a sweeping strategy document published last week, Trump said his administration's foreign policy focus would be on reasserting its dominance in the Western Hemisphere. https://www.reuters.com/world/americas/trump-administration-seizes-oil-tanker-off-venezuela-coast-us-officials-say-2025-12-10/

2025-12-10 20:42

Fed cuts rates, but signals pause in January Fed's Powell says rate hike not base case for policymakers New Fed rate forecasts see just one rate cut in 2026 Rate futures still price in two cuts next year NEW YORK, Dec 10 (Reuters) - The U.S. dollar fell against major peers including the euro, Swiss franc, and Japanese yen on Wednesday after the Federal Reserve lowered interest rates in a widely-expected move, but indicated it will likely pause its easing cycle at the next policy meeting in January. The greenback was further weighed down by comments Fed Chair Jerome Powell in a press briefing after the rate decision, saying that the U.S. central bank's next move is unlikely to be a rate hike. He added that a rate increase is not the base case reflected in new projections from policymakers. Sign up here. The Fed's decision to lower the benchmark policy rate by a quarter of a percentage point to the 3.50%-3.75% range drew three dissents. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid argued that the policy rate should be left unchanged, while Fed Governor Stephen Miran again advocated for a larger half-percentage-point reduction. In addition, new projections issued after the U.S. central bank's 25 basis-point rate reduction, showed the median policymaker sees just one quarter-percentage-point cut in 2026, the same outlook as in September. "In considering the extent and timing of additional adjustments to the target range for the federal funds rates, the Committee will carefully assess incoming data," the Federal Open Market Committee said in a statement, a language that in the past has been used to signal a pause in policy actions. The greenback lost ground against peer currencies immediately after the Fed's announcement. In afternoon trading, the dollar fell 0.8% against the Swiss franc to 0.8000 franc and was last down 0.6% at 155.92 against the Japanese yen . The euro last changed hands at $1.1691, up 0.6%, while the dollar index , which measures the greenback against a basket of currencies including the yen and the euro, slid 0.6% to 98.66. "Although the market entered the day fully priced for a rate cut, the dollar's whipsaw reaction following the expected decision underscores the data gaps and shifting narratives driving markets today," said Uto Shinohara, senior investment strategist, at Mesirow Currency Management in Chicago. "While Powell indicated that the Fed is well-positioned to wait, growing labor concerns and a tariff-induced view on inflation brought the dollar under pressure." Futures on the fed funds rate, which measure the cost of unsecured overnight loans between banks, raised the odds on Wednesday that the Fed will pause its easing cycle at the next policy meeting in January. The market has priced in a 78% chance that the Fed will hold interest rates steady next month, compared with a 70% probability just before the rate cut announcement. But even though the rate forecast from the Fed was for one rate decline next year, the rate futures market still priced in two cuts in 2026 or a fed funds rate of 3.0%. "The statement emphasized weakness in the labor market as the principal rationale for the 25-basis-point cut, and this detail is what the market has picked up on, suggesting the Fed could continue easing policy, even though the expectations for easing in 2026 haven't changed with one 25 basis point priced in," said Michael Rosen, chief investment officer at Angeles Investments, in Santa Monica, California. Market participants continued to price out U.S. recession risk given the recent run of data that showed the economy, while exhibiting pockets of weakness in the labor and manufacturing sectors, is not necessarily falling off a cliff. Data on Tuesday showed U.S. job openings increased marginally in October after surging in September, suggesting the labor market is cooling. White House economic adviser Kevin Hassett, the front-runner to be the Federal Reserve's next chair, told the WSJ CEO Council on Tuesday there was "plenty of room" to cut interest rates further, though he added that if inflation rose the calculation might change. https://www.reuters.com/world/africa/us-dollar-slides-after-fed-cuts-rates-expected-2025-12-10/

2025-12-10 20:17

Dec 10 (Reuters) - Federal Reserve Chair Jerome Powell said Wednesday that the current overshooting of the central bank's 2% inflation target is mostly the result of President Donald Trump's import tax hikes. "It's really tariffs that are causing the most of the inflation overshoot," Powell said after the latest Fed meeting, reiterating his expectation the tariff impact on inflation is likely to be a "one-time price increase." Sign up here. https://www.reuters.com/business/feds-powell-says-inflation-overshoot-caused-by-trump-tariffs-2025-12-10/