2024-05-02 11:43

May 2 (Reuters) - U.S. oil producer ConocoPhillips (COP.N) New Tab, opens new tab missed Wall Street bets for first-quarter profit on Thursday, as lower natural gas prices and increased costs offset higher oil production volumes. A milder-than-expected winter hurt demand for the heating fuel in the quarter and pulled down U.S. natural gas prices to a three-and-a-half-year low in February, also affecting earnings of U.S. oil majors Exxon Mobil (XOM.N) New Tab, opens new tab and Chevron (CVX.N) New Tab, opens new tab. The Houston, Texas-based company's net profit dropped 10% from a year ago to $2.6 billion in the quarter. Adjusted earnings fell to $2.4 billion, or $2.03 per share, from $2.38 per share a year earlier, missing analysts' average estimate of $2.04 per share, according to LSEG data. ConocoPhillips' total average realized price fell 7% to $56.60 per barrel of oil equivalent (boe) in the first quarter, from $60.86 per boe a year earlier. Most of the hit came from a 46% drop in realized natural gas prices in the first quarter. Almost half of the company's production volumes are of natural gas or natural gas liquids. ConocoPhillips said it expects continued volatility in the second quarter coming from its operations in the Permian Basin, the main U.S. shale basin, due to pipeline maintenance and third-party offtake constraints. Meanwhile, U.S. oil production is on the rise with advancements in fracking technology in the United States offsetting declining well productivity. Production at ConocoPhillips rose to 1.9 million barrels of oil equivalent per day (boepd) from 1.79 million boepd in the year-ago quarter. Its second-quarter production is expected to rise even more to 1.91 to 1.95 million boepd, the company said. Sign up here. https://www.reuters.com/business/energy/conocophillips-misses-quarterly-profit-estimates-2024-05-02/

2024-05-02 11:17

OPEC+ meets on June 1 Voluntary cuts of 2.2 mln bpd are in place until end-June ‘Good chance’ OPEC+ will extend, Energy Aspects says LONDON/MOSCOW, May 2 (Reuters) - OPEC and its allies have yet to begin formal talks on extending voluntary oil output cuts of 2.2 million barrels per day beyond June, but three sources from OPEC+ producers said they could keep their cuts if demand fails to pick up. OPEC+ has implemented a series of output cuts since late 2022 amid rising output from the United States and other non-member producers, and worries over demand as major economies grapple with high interest rates. OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers, next meets on June 1 in Vienna to set output policy. OPEC did not respond to a request for comment. The OPEC+ group is currently cutting output by 5.86 million bpd, equal to about 5.7% of global demand. The cuts include 3.66 million bpd by OPEC+ members valid through to the end of 2024, and 2.2 million bpd of voluntary cuts by some members expiring at the end of June. Oil prices have found support this year from the conflict in the Middle East, although concern about economic growth and high interest rates has weighed. Brent crude hit a seven-week low on Wednesday and settled at $83.44 a barrel. The three sources from countries which have made voluntary supply cuts said an extension was likely. The cuts could be extended until year-end, said one source, while another said it would take a surprise jump in demand for OPEC+ to make any changes. Two other OPEC+ sources said formal talks had yet to take place, and one of those said OPEC+ was not yet leaning one way or the other on extending cuts. The countries which have made voluntary cuts that are deeper than those agreed with the wider group are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates. "We think there's a good chance that OPEC+ will extend beyond June - but we aren't yet putting a firm view because we don't think they've actually got into the real period of discussion and decision-making," said Richard Bronze of Energy Aspects. Another option would be for some or all of the 2.2 million bpd of cuts to be unwound after June, analysts say. OPEC has said it expects another year of relatively strong oil demand growth of 2.25 million bpd, while the International Energy Agency expects much slower growth of 1.2 million bpd. Sign up here. https://www.reuters.com/business/energy/opec-could-extend-oil-cuts-formal-talks-yet-start-sources-say-2024-05-02/

2024-05-02 11:15

LONDON, May 2 (Reuters) - India's Reliance has made its first foray into trading a type of U.S. crude oil that underpins the global Brent benchmark in a process run by oil-index publisher S&P Global Commodity Insights, the publisher said. Reliance Industries (RELI.NS) New Tab, opens new tab, operator of the world's biggest refining complex, on Wednesday offered a cargo of WTI Midland in the Platts Market on Close process, known as the Platts window. It was Reliance's first time offering WTI in the window, Platts spokesperson Kathleen Tanzy told Reuters. A Reliance spokesperson did not immediately respond to a Reuters request for comment. India, the world's third-biggest oil importer and consumer, is looking to diversify its oil supplies as fresh U.S. sanctions on Moscow threaten to dent Russian oil sales to India, the biggest buyer of Russian seaborne crude. India was the top buyer of Russian oil last year after other groups retreated from purchases following Western sanctions on Moscow for its full-scale invasion of Ukraine in February 2022. Reliance made its first oil purchase from Canada's new Trans Mountain pipeline last month, trade sources said. More players have become involved in trading crude that can set the Brent price in the Platts window since Platts added WTI to the benchmark last year. Saudi Aramco, the world's largest oil firm, made its first purchases of WTI in the window in February and has participated regularly since. U.S. WTI Midland is one of six crude oil grades assessed by Platts that can set the value of dated Brent, part of the wider Brent complex used to price more than three-quarters of the world's traded oil. The price of dated Brent is set by the cheapest of the six crudes and Midland, by far the largest of the six crude streams, often plays a role in setting its value. The other five are North Sea crudes. Sign up here. https://www.reuters.com/world/india/indias-reliance-starts-trading-us-oil-setting-brent-oil-benchmark-2024-05-02/

2024-05-02 11:11

HOUSTON, May 2 (Reuters) - Venezuelan oil exports declined 38% in April after tanker owners and customers pulled several vessels waiting to load out of the country's waters as a reimposition of U.S. sanctions approached, according to shipping data and documents. The U.S. Treasury Department last month said it would not renew a six-month license extended to Venezuela's oil sector last year, and gave companies until the end of May to wind down pending transactions. A total of 37 vessels departed from Venezuela's ports in April. Exports averaged 545,000 barrels per day (bpd) of crude and fuel, below a peak of 873,500 bpd shipped in March and 703,000 bpd exported in the same month a year-ago, according to data from financial firm LSEG based on tanker movements. About six supertankers have left Venezuela empty in recent weeks after waiting for months to load crude at ports operated by state oil company PDVSA (PDVSA.UL). Loading delays and customer fears the wind-down period granted by Washington would not be enough to complete the sales were behind the departures, the data and company documents showed. At least two of the tankers that left without loading had been chartered by Polish state-controlled refiner Orlen (PKN.WA) New Tab, opens new tab and were expected to sail to Asia, according to the data and documents. The Polish government is investigating the loss of about $400 million by Orlen's Switzerland-based trading unit in prepayments for Venezuelan oil cargoes the company did not receive. The missed deliveries hit PDVSA's exports to Asia in April, which fell 64% to 206,000 bpd. Shipments to the United States rose 34% to 238,000 bpd, driven by larger output and exports from joint ventures between the state firm and Chevron (CVX.N) New Tab, opens new tab, the data showed. Venezuela also exported 236,000 metric tons of oil byproducts and petrochemicals, below the 463,000 tons shipped in March, and slightly increased fuel imports to some 57,000 bpd from 53,000 bpd the previous month. Sign up here. https://www.reuters.com/markets/commodities/venezuelan-oil-exports-fall-us-sanctions-lower-sales-asia-2024-05-02/

2024-05-02 10:36

LONDON, May 2 (Reuters) - The British pound slipped against the dollar, having risen the day before after the Federal Reserve's policy meeting, while investors were playing down the impact UK local elections on Thursday might have on the currency. The pound was last down 0.1% against the dollar at $1.2509, having risen 0.3% the day before after Fed Chair Jerome Powell ruled out hiking interest rates, which weighed on the U.S. dollar. "The Fed will be data dependent and if data were to show another boost to inflation then you can't completely rule out another rate hike," said Jane Foley, head of forex strategy at Rabobank. "But it does seem the Fed believes the possibility of that is very small right now." While the Fed signalled that U.S. interest rates would be held at higher levels for longer, investors are looking to the Bank of England's meeting next week for clues on when its policy easing could begin. The BoE is widely expected to keep interest rates unchanged when it announces policy on Thursday, but with inflation slipping back towards target, a rate cut at the following meeting might be put on the table. "We expect the May MPC meeting to set the stage for a June rate cut," Deutsche Bank senior economist Sanjay Raja said in a note. Elsewhere, analysts were watching the results of local elections taking place in the UK on Thursday, but were not expecting financial markets to take much notice of the results, even with a general election likely before the end of the year. "Politics is not really a factor for sterling at the moment," said Francesco Pesole, FX strategist at ING. "It's going to take quite a lot to convince investors that Labour are not going to win the election, so I don't think this will have an impact on financial markets at all." Labour holds a lead over the ruling Conservative Party of around 20 points in most recent opinion polls, putting the opposition party on track to gain a majority in the House of Commons for the first time since 2005. The pound was little changed at 85.53 pence per euro . Sign up here. https://www.reuters.com/markets/currencies/sterling-gives-back-some-fed-inspired-gains-eyes-local-elections-2024-05-02/

2024-05-02 10:09

A look at the day ahead in U.S. and global markets from Mike Dolan Anxious bond traders seem to have taken solace from the Federal Reserve's surprisingly sharp brake on its "quantitative tightening" process on Wednesday, while the yen capitalized on an easier dollar after what seemed like the second bout of Japanese intervention this week. It may be thin gruel after a predictably hawkish Fed meeting that showed little inclination toward interest rate cuts any time soon, but the widely predicted Fed slowing of its balance sheet runoff was bigger than many had bargained for and may nod to its sensitivity to bond market angst and banking liquidity. The U.S. central bank said it would scale back the pace of QT starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion. Helped additionally by Fed chair Jerome Powell batting away any idea that further rate rises were on the table again, Treasury yields have fallen back from the year's highs. Futures markets nudged up the full-year Fed easing expectations to 35 basis points, though a first cut is still not fully priced until after November's election. Two-year Treasury yields recoiled from 5% - hovering just under 4.94% on Thursday - and 10-year yields slipped to 4.60%. Grappling with a heavy earnings season and some outsize price drops in artificial intelligence stocks such as Super Micro Computers and AMD, Wall Street stock indexes have been in two minds over the Fed reaction - ending in the red on Wednesday but with futures back up smartly ahead of the bell. Apple (AAPL.O) New Tab, opens new tab tops another blizzard of corporate updates on Thursday. The dollar took its cue directly from Treasury yields and the DXY index (.DXY) New Tab, opens new tab turned tail from six-month highs. And just as it started to fall back, the Bank of Japan appears to have struck for the second time this week - sparking a peak-to-trough drop of almost 5 yen, or 3%, on Wednesday. Much like Monday's $35 billion sale of dollars for yen, there was no immediate confirmation of the action - but traders noted the change of tactics from the authorities in selling the dollar as it was already softening rather than stalling its rise at the 34-year high just above 160 yen earlier this week. Bank of Japan data suggested on Thursday indicated that they spent between $21 billion and $24 billion on Wednesday to pull the yen low - bringing the total for the week close to $60 billion, the amount it spent during a three-day salvo in late 2022. But despite the action, the yen continues to widen on the huge U.S.-Japan interest rate gap and dollar/yen was back above 155 on Thursday - suggesting Tokyo may be in for a protracted battle that could quickly use up its estimated $155 billion of dollar deposits. Atsushi Takeuchi, who headed the Bank of Japan's foreign exchange division during intervention rounds in 2010-2012, said Japan would likely keep intervening to prop up the yen until the risk of speculators triggering a free fall in the currency has been eliminated. LABOR MARKET Back on Wall St, attention will quickly switch from the Fed meeting to the labor market and the April payrolls report on Friday. And on that score, there were some indications on Wednesday that the jobs market is cooling a bit. Although private sector payroll creation appeared to stay strong last month, other data showed U.S. job openings fell to a three-year low in March and the number of people quitting their jobs declined - signs of easing labor market conditions that over time could aid the Fed's fight against inflation. An ongoing retreat in oil prices back below $80 per barrel will also help take the edge off bond market nerves. But global forecasters remain in little doubt about the fundamental strength of the U.S. economy. Showing some significant divergence with other major economies, the OECD's last world outlook said lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6% this year from a previous estimate of 2.1%. In single stock moves in Europe, Danish drugmaker Novo Nordisk (NOVOb.CO) New Tab, opens new tab lost 2.5% despite a first-quarter beat and outlook hike, with analysts pointing to slower underlying growth and weakness in obesity drug sales. But Standard Chartered (STAN.L) New Tab, opens new tab jumped 7% to a six-month high as the emerging markets-focused lender posted a 5.5% rise in first-quarter pretax profit that beat estimates. Key diary items that may provide direction to U.S. markets later on Thursday: * U.S. Q1 productivity and unit labor costs, weekly jobless claims, March international trade balance, March factory goods orders * U.S. corporate earnings: Apple, Amgen, Conocophillips, Expedia, Moderna, Consolidated Edison, Moody's, Ingersoll Rand, Motorola Solutions, Southern, Intercontinental Exchange, Linde, Regeneron Pharmaceuticals, Cigna, Zimmer Biomet, Dominion Energy, Alliant Energy, Coterra Energy, Stanley Black & Decker, Xylem, Howmet Aerospace, Vulcan Materials, Pioneer Natural Resources, WestRock, Borgwarner, Camden Property, Federal Realty, Digital Realty, Kimco Realty, IQVIA, Teleflex, EOG, Fortinet, Ameren, DaVita, Parker-Hannifin, Pinnacle West, Cummins, Regency Centers, Live Nation, AES, Hologic, Illumina, AMETEK etc * Bank of Canada governor Tiff Macklem speaks, European Central Bank chief economist Philip Lane speaks * OECD Ministerial Council Meeting in Paris, Economic Outlook released * French President Emmanuel Macron meets Japan's Prime Minister Fumio Kishida in Paris * U.S. Treasury sells 4-week bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-05-02/