2025-10-10 10:55

LONDON, Oct 10 (Reuters) - Is China's stockpiling of crude oil bearish or bullish for prices? Unfortunately there is no clear cut answer to the question, as much depends on details that are simply not available, meaning the market has to rely on very limited data, which in turn drives speculation and uncertainty. Sign up here. China does not disclose the volumes of crude it places into strategic and commercial reserves, and it also does not state what its ultimate target volume is for inventories. This means the market is forced to rely on unnamed sources within the Chinese oil sector for a drip feed of information, which, while useful, is hardly definitive on what the world's largest buyer of crude is actually doing. There are a wide variety of estimates of how much crude China has stored so far this year, but most analysts cite a figure of at least 500,000 barrels per day (bpd). That does fit in with calculations of China's surplus crude, a number that is arrived at by adding together the volume from imports and domestic output, and then subtracting the amount processed by refiners. On that basis China's surplus crude was 990,000 bpd for the first eight months of the year, but it is worth noting that not all of this surplus is likely to have been added to storage as the official data does not capture some volumes processed in small refineries or petrochemical plants. But if the assumption is that China has added at least 500,000 bpd to storage so far this year, the question becomes how has this affected the market? Global benchmark Brent futures have been quite stable since April, trading in a range around $65 a barrel, apart from a brief spike higher during the conflict between Israel and Iran. It is likely that prices would have been weaker if China's import demand had been consistently 500,000 bpd weaker than it has been. In effect, China's stockpiling has allowed the eight members of OPEC+ to unwind their voluntary cuts of about 2.5 million bpd without crashing prices. The question then becomes how much more oil China is likely to store in coming years before it reaches its target. OUTCOMES VARY There is a wide range of estimates as to how much oil China already has in both strategic and commercial storages, with the low end being 800 million barrels and the high end being around 1.4 billion. There is also considerable speculation as to how much more Chinese authorities want to stockpile, with the high end reaching around two billion barrels. And finally there is no certainty as to when they want to complete this process, but the consensus is by 2028 at the latest. This means that depending on where you actually think their reserves currently are, and where you think they want to end up, there is a wide range of possible outcomes. If China wants to add another 1 billion barrels to storages over a three-year period, this works out to around 913,000 bpd, which would be bullish for oil prices. But if you assume it already has around 1.4 billion barrels in tanks and wants to add only 600 million more, then that amounts to around 550,000 bpd over the next three years. This is a level around current storage flows, so it does provide support to oil prices, but does not necessarily drive them higher. The other factor to note is that China has a track record of being flexible in building inventories, buying more crude when it deems prices to be reasonable and pulling back when it believes prices have risen too high. A recent example of this may be seen in its September imports, which dropped to 10.83 million bpd from 11.66 million bpd in August, according to data compiled by LSEG Oil Research. September was the weakest month since February and the drop in imports came after the price spike in June, when Brent reached as high $81.40 a barrel as Israel and Iran clashed. September-arriving cargoes would largely have been arranged during this period of higher prices, and it is likely Chinese refiners decided to ease back on their imports and await a return to lower prices. In effect, China's stockpiling becomes a stabilising factor for oil prices. China will buy more crude if prices stay relatively low and stable, thus providing a floor to the market, but will pull back on imports if prices move higher, thus providing a ceiling. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn , opens new tab and X , opens new tab. The views expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/china-crude-oil-storage-conundrum-gives-price-floor-ceiling-2025-10-10/

2025-10-10 10:46

AMSTERDAM, Oct 10 (Reuters) - Lashers at the port of Rotterdam will continue their strike for an undefined period of time, labour union FNF said on Friday, after they rejected an offer for a wage increase made by the companies involved. The strike has created a growing backlog of container ships that can't be loaded or offloaded in Europe's largest port in recent days. Sign up here. https://www.reuters.com/sustainability/sustainable-finance-reporting/rotterdam-port-lashers-continue-strike-undefined-period-time-union-says-2025-10-10/

2025-10-10 10:37

LONDON, Oct 10 (Reuters) - By Anna Szymanski, ROI Editor-in-Charge, and the ROI team Hello Morning Bid readers! Sign up here. Warnings about a stock market bubble grew louder this week, with the Bank of England, IMF and JPMorgan boss Jamie Dimon all expressing concern about the potential economic fallout if Wall Street were to suddenly stop defying gravity. Meanwhile, another epic rally – the runup in gold above $4,000 per ounce – stalled on Thursday, likely reflecting profit-taking following the yellow metal’s more than 50% rise this year. ROI editor-at-large Mike Dolan this week took a look at the twin rallies in equities and gold, noting that investors may be eager to chase artificial intelligence stocks higher, but they are also hedging fears of a prolonged inflation burst due to lax monetary and fiscal policy in many advanced economies. If you want to understand why governments across the developed world have turned so dovish, ROI markets columnist Jamie McGeever argues you might take a look at a chart , opens new tab that IMF Managing Director Kristalina Georgieva recently spotlighted about the decline in economic mobility. Meanwhile, the U.S. government shutdown has entered its second week. One of the biggest concerns for markets has been the delay of important economic data releases, like monthly jobs figures. But Jamie McGeever argues that investors may not need official data. If they want to know how the economy is doing, they can just look at the stock market. In energy markets, oil prices rose early in the week on news that the latest OPEC+ supply increase was smaller than expected. However, ROI Energy Columnist Ron Bousso warns that – regardless of the size – the continued oil output increases are eroding OPEC+’s spare production capacity, a vital cushion that has helped to mitigate volatility in recent years. Oil prices then fell on Thursday, as a ceasefire deal was agreed to by Israel and the Palestinian militant group Hamas. Geopolitical conflict remains a serious risk to energy markets, however. Ron Bousso points out that Russia's heavy bombardment of Ukraine's natural gas infrastructure ahead of winter could have a knock-on impact on Europe's energy market. On the renewables side, ROI Energy Transition Columnist Gavin Maguire highlights the extent of China’s clean energy dominance and explains why Texas's main power generation system is on track for a rare contraction in fossil fuel-fired generation this year. And, finally, over in the metals world, ROI Metals Columnist Andy Home discusses the impact of Indonesia’s crackdown on illegal tin mining and then explores how the Democratic Republic of Congo is seeking to tame the notoriously volatile cobalt market. As we head into the weekend, check out the ROI team’s recommendations for what you should read, listen to, and watch to stay informed and ready for the week ahead. I’d love to hear from you, so please reach out to me at [email protected] , opens new tab . , opens new tab This weekend, we're reading... ANDY HOME, ROI Metals Columnist: My most interesting read this week is a Rand research paper , opens new tab on deep-sea mining, an area receiving a lot of interest as the world searches for more battery metals to power the energy transition. There are undoubtedly rich deposits below the oceans, but the problem is, who's going to process them into metal? RON BOUSSO, ROI Energy Columnist: I recommend the IEA's outlook for renewables , opens new tab, published this week. The headline growth forecast anticipates enormous expansion of renewables over the next five years, particularly in solar power. However, the report also reveals the challenges the sector faces due to U.S. President Donald Trump's hostility towards renewables and the impact of rising costs on the offshore wind sector. GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This recent Reuters analysis explains why rising tungsten prices are causing a fresh headache for U.S. oil drillers. U.S. energy firms are already feeling the sting of inflation as their overall extraction costs rise, and now Chinese export controls on this ultra-hard metal, which is used for drill bits, is making things worse, We're listening to... MIKE DOLAN, ROI Financial Markets Editor-at-Large: Brookings’s latest weekly podcast looks at why U.S. tariffs and retaliatory measures by other countries are putting pressure on the dollar’s place at the heart of world monetary system , opens new tab. ANNA SZYMANSKI, ROI Editor-in-Charge: A gaping hole in the national finances is at the heart of France’s political crisis. Can a tax on the super-rich help? In the latest episode of Reuters Econ World And we're watching... JAMIE MCGEEVER, ROI Markets Columnist: In this WealthWise vodcast , opens new tab, ⁠Bob Elliott⁠, CEO and CIO of ⁠Unlimited Funds, gives his views on the sustainability of the current market rally and how to diversify. Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website , opens new tab, and you can follow us on LinkedIn , opens new tab and X. , opens new tab Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/business/finance/global-markets-view-usa-2025-10-10/

2025-10-10 09:58

ECB simulates adverse and baseline scenarios Flight to safety would see 13 banks out of cash Baseline scenario shows modest impact FRANKFURT, Oct 10 (Reuters) - A digital euro could drain up to 700 billion euros ($810.88 billion) in deposits during a run on commercial banks, pushing around a dozen euro zone lenders into a liquidity squeeze, a European Central Bank simulation showed on Friday. The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, essentially an electronic wallet guaranteed by the ECB, would pose to the banking sector under different scenarios, including a hypothetical "flight to safety". Sign up here. The ECB has presented the digital currency as an alternative to U.S.-dominated means of payment, but bankers and some lawmakers fear it may empty banks' coffers. The ECB's study found that, were there to be an unprecedented run on commercial banks, depositors would withdraw 699 billion euros from euro zone banks to park them in digital euros if a limit on individual holdings was set at 3,000 euros each. This is equal to 8.2% of all retail sight deposits, although the impact would be greater for small market lenders and retail banks, the ECB said. Under this scenario, which the ECB described as highly unlikely, 13 of the 2,025 banks in the analysis would deplete their mandatory cash buffer, as measured by the Liquidity Coverage Ratio. These figures may be an overestimation as they don't consider the fact that some depositors have more than one bank account, the ECB said. Under the ECB's "business as usual scenario", in which depositors don't make full use of their digital euro allowance, just over 100 billion euros would flee banks' coffers, leaving the sector well within liquidity requirements, the study found. And even this outflow could be more than offset by an ongoing trend out of cash and into electronic means of payment, which should add to banks' deposits, the ECB added. The ECB also simulated individual holding limits of 500 euros, 1,000 euros and 2,000 euros, obtaining lower outflow estimates. "The analysis confirms that holding limits effectively restrict deposit outflows from the banking sector to levels that safeguard the stability of the financial system and support the correct formulation and implementation of monetary policy," the ECB said. It also found that a 3,000 euro holding limit would reduce banks' return on equity by an average 30 basis points, although the impact differs country by country. EU finance ministers agreed last month a roadmap for launching the digital euro but retained a say on its eventual introduction and on the holding limit. ($1 = 0.8633 euros) https://www.reuters.com/business/finance/digital-euro-could-drain-up-700-billion-euros-deposits-bank-run-ecb-says-2025-10-10/

2025-10-10 09:26

SINGAPORE, Oct 10 (Reuters) - Japan's ruling coalition broke up on Friday, with junior partner Komeito rebelling against the Liberal Democratic Party's new hardline leader Sanae Takaichi in a move that cast doubt over her premiership bid. Market reaction was mixed as traders attempted to make sense of what the split meant for the political landscape and economic outlook. Sign up here. The yen, which was trading near an eight-month low, strengthened as much as 0.5% to 152.38 per dollar after the fracture of the 26-year political partnership. It was last at 152.73. The yield on the two-year Japanese government bond (JGB), the tenor most sensitive to expectations for central bank rates, slid 2 basis points (bps) to 0.905%. The 30-year JGB yield jumped 5 bps to 3.225%. Here are some comments from market analysts: SHOKI OMORI, CHIEF DESK STRATEGIST, MIZUHO SECURITIES, TOKYO: "If Takaichi cannot become PM, and say a fiscal austerity-style, pro-BOJ tightening candidate emerges from another party, unwinding of the 'Takaichi trade' would probably kick in. That's not the main scenario as opposition parties are not unified in their views, but the market may start to price in the 'risk' of a reversal. This would push USD/JPY back down. That said, the yen is likely to remain a funding/carry currency, so I don’t think USD/JPY will go down below 140 in the near term just on this." BART WAKABAYASHI, BRANCH MANAGER, STATE STREET, TOKYO: "Based on what Takaichi-san has been saying through her campaign, the yen was sold pretty aggressively ... the market will have to react if there doesn't seem to be a consensus to approve her as prime minister, as opposed to the very definitive market reaction that occurred when she was confirmed." "This was some fuel to the fire, with expectations of a BOJ hike being kicked down the road a bit that added to the yen selling ... Takaichi-san isn't a supporter of hikes. Maybe there's some wiggle room there. The market largely expects the BOJ is doing nothing this month, I don't see that as a done deal." NAKA MATSUZAWA, CHIEF MACRO STRATEGIST, NOMURA SECURITIES, TOKYO: "The knee-jerk reaction is an unwinding of some of these Takaichi trades. There are basically two scenarios from here: The LDP retains a solo cabinet, or it can go for a coalition with the DPP. Part of the chatter about backdoor dealing was that Aso wanted to get rid of Komeito and bring in the DPP, because Aso is close with the DPP." "In either of those scenarios, the Takaichi trades will be back, and maybe stronger than ever, because the DPP also supports fiscal expansion. If, for example, Tamaki became finance minister, that could really shock the market." ALEX LOO, MACRO STRATEGIST, TD SECURITIES, SINGAPORE: "The absence of a big JPY reaction probably reflects investors’ view that Takaichi would still be able to push her reflationary policies through the Diet eventually with the help of smaller opposition parties such as DPP." "It’s still early days and Takaichi will engage with talks with Komeito again next week. We could see some concessions from both parties to reach an agreement given the LDP-Komeito long standing partnership." KAZUNORI TATEBE, CHIEF STRATEGIST AT DAIWA ASSET MANAGEMENT, TOKYO: "Japanese shares rose sharply after Takaichi’s win at the LDP election. The market priced in her policies into stocks, so if the market sees that she would struggle to carry out her plans, the shares will fall. But the decline is not significant, and they will probably fall around 1% to 2%. "There are investors who were not able to catch up with the latest rally, so there is a demand for buying when the market falls, supported by non-political cues such as corporate governance, inflation and AI growth." https://www.reuters.com/world/asia-pacific/market-analysts-reaction-japans-ruling-coalition-split-2025-10-10/

2025-10-10 07:56

ATHENS, Oct 10 (Reuters) - Greece is working hard to finalise a contract with U.S. oil major Chevron (CVX.N) , opens new tab and its Greek partner Helleniq Energy (HEPr.AT) , opens new tab for energy exploration offshore Greece by the end of the year, the country's energy minister said on Friday. Chevron and Greece's biggest oil refiner Helleniq submitted a joint bid in a Greek tender this year to look for gas in four deep-sea blocks off the Peloponnese peninsula and the island of Crete. Sign up here. "We are working intensively with the U.S. company and Helleniq Energy to meet the timetables and conclude the contract within 2025," Energy Minister Stavros Papastavrou told Greek television Action24. Greece, which produces very small volumes of oil and relies on hefty gas imports for power generation and domestic consumption, has been keen to explore for gas and bolster its role as a gas transit route as part of a European Union push to move away from Russian energy after Moscow invaded Ukraine. Once the contract with Chevron is finalised, it needs approval from a Greek court of auditors and the parliament before the company can start seismic research in 2026 and it has up to five years to locate potential recoverable deposits, Papastavrou said. Any eventual test drilling would not come before the 2030-2032 period, he added. https://www.reuters.com/business/energy/greece-seeks-finalise-chevron-gas-exploration-contract-this-year-says-minister-2025-10-10/