2024-02-27 13:00

LITTLETON, Colorado, Feb 27 (Reuters) - A more than 25% slump this year in northwest Europe's benchmark natural gas price has helped push the price of gas-fired power generation below the cost of coal-fired generation, and sets the stage for fuel switching by key regional power producers. Utilities that operate networks of both gas and coal-fired plants, such as in Europe's largest economy Germany, are likely to dial up generation from gas plants and cut back output from coal plants in response to the swing in operating costs. As gas-fired generation typically emits less than half of the pollution of coal plants per unit of generated electricity, any sustained switch from coal to gas generation could result in significant cuts to power sector emissions, even if electricity output levels rise. PRICE POINTS So far in 2024 the price for natural gas futures in the Netherlands gas network - the so-called Title Transfer Facility (TTF) - has declined by 26% to around 23.8 euros per megawatt hour (MWh), according to LSEG. Above-normal gas inventories in key gas consuming markets, along with enduring weak industrial gas use due to soft consumer demand, have weighed on gas prices and sentiment. As the TTF hub is one of Europe's main gas trading and price-setting regions, gas prices throughout the rest of northwest Europe have fallen by a similar degree. Regional coal prices have fallen by only 8% to 10% so far this year, so the decline in gas prices has resulted in gas power generation costs falling below the average generation cost for producing power from coal, or the so-called coal-to-gas switching price. The coal-to-gas switching price is estimated at about 26.8 euros ($29.08) per MWh, according to LSEG, so gas-fired power producers currently have a roughly 3.4 euros/MWh cost advantage over coal-based counterparts. However, wholesale swings in regional power production from coal to gas are unlikely unless power firms have confidence that average gas-fired generation costs will remain lower than average coal-fired generation costs for an extended period of time. FORWARD GUIDANCE So far in 2024 the coal-to-gas switching price in northwest Europe has averaged 29.8 euros/MWh, compared to an average gas-fired cost of 28.3 euros/MWh this year. That difference is just under 5%, and has not been enough to generate aggressive swings in northwest Europe's power generation mix so far, LSEG data shows. However, forward prices for natural gas futures indicate that gas-fired prices will be around 11.2% below the coal-to-gas switching price for the next six months. That should provide power firms with the scope to ramp up coal-to-gas switching, especially in power systems that have the flexibility to adjust both gas and coal-fired output at short notice. In Germany, this decline in gas-fired generation costs comes just as overall wholesale power prices have declined to their lowest levels since early 2021, after dropping in seven of the past 12 months. Lower wholesale power costs have in turn spurred German power generators to deploy cost-cutting efforts in order to preserve operating margins, and should lead to increased use of cheaper gas over more expensive coal in power systems. EMISSIONS IMPACT German power sector emissions from coal-fired generation are about 12.4 million metric tons of carbon dioxide (CO2) and equivalent gases per terawatt hour (TWh) of electricity produced, data from energy think tank Ember shows. In comparison, gas-fired generation in Germany emits around 5.5 million tons of CO2 per TWh, or 44% of the volume emitted by coal plants. Given that German energy producers are already committed to reducing emissions as part of national pollution reduction efforts, the recent swing in power generation costs in favor of gas over coal could help to accelerate those efforts over the coming months. The approaching end of the peak heating season should also aid in reducing power pollution, as power firms will be able to dial down output from all power plants as heating demand is reduced during the spring. A key uncertainty is the level of power demand from German industry, which has been suffering from weak consumer interest for the past several months. New fixed power costs set to kick in this year may spur some factories to crank up output in 2024, and may result in a steady climb in total energy use by German businesses this year. But if that rise in industrial power use coincides with a decline in general heating demand, Germany's power producers should be able to keep overall power output levels largely flat and allow for a more gas-heavy fuel mix to result in a drop in power emissions. And even if recovering industrial power demand forces power generators to lift total output, the higher proportion of gas in the generation mix should help keep total emissions in check. ($1 = 0.9217 euros) https://www.reuters.com/markets/commodities/weak-gas-prices-primed-trigger-coal-to-gas-switch-germany-2024-02-27/

2024-02-27 12:58

Feb 27 (Reuters) - Norwegian Cruise Line Holdings (NCLH.N) , opens new tab forecast a first-quarter profit on Tuesday betting on higher ticket prices and steady demand in the U.S. for cruises to the Caribbean and Europe, sending the company's shares up 6.3% in premarket trading. Cruise operators are experiencing record levels of bookings in 2024 as travelers look to spend on novel experiences and are choosing cruises over land-based alternatives such as hotels or theme parks. This has given companies including Carnival Corp (CCL.N) , opens new tab and Royal Caribbean (RCL.N) , opens new tab more room to hike prices on their itineraries and offset still-high labor and fuel costs. "We are determined to capitalize on our recent achievements and take advantage of the positive momentum and strong demand for cruise which resulted in turning the year at all-time highs in both our booked position and pricing," Norwegian Cruise CEO Harry Sommer said. The company's advance ticket sales ended 2023 at a year-end record of $3.2 billion, about 56% higher when compared with the end of 2019. Norwegian Cruise forecast an adjusted profit of 12 cents per share for the first quarter, compared with analysts' estimates of a loss of 20 cents per share, according to LSEG data. The company's fourth-quarter revenue rose to $1.99 billion from $1.52 billion a year earlier. Analysts had expected $1.97 billion. Norwegian, which owns the Oceania Cruises and Regent Seven Seas Cruises brands, said it returned to full-year profitability for the first time since 2019. The company's shares were trading at $16.93 before the bell. https://www.reuters.com/business/autos-transportation/norwegian-cruise-forecasts-upbeat-first-quarter-profit-robust-demand-2024-02-27/

2024-02-27 12:56

MOSCOW, Feb 27 (Reuters) - Russian lawmakers on Tuesday approved draft legislation allowing digital financial assets (DFAs) to be used in international settlements, a move that may enable Moscow to shield some cross-border money flows from international scrutiny. The green light from lawmakers comes as the West, led by the United States, threatens banks in countries such as Turkey and China with secondary sanctions for facilitating trade with Russia. The legislation requires approval in Russia's upper house of parliament and from President Vladimir Putin before it becomes law. "Today, all settlements between our organisations and foreign ones go through the banking system, and accordingly, these settlements and interactions are visible, including to our enemies," said Anatoly Aksakov, head of the financial committee in Russia's lower house of parliament, the State Duma. "They are putting pressure on banks, including those from friendly countries, so that these banks do not help Russian companies settle accounts with foreign organisations." Russia describes countries that have imposed sanctions over what Moscow calls a "special military operation" in Ukraine as 'unfriendly'. The legislation, Aksakov said, would allow for the banking system to be bypassed in transactions, reducing external influence, including from "enemies". A U.S. threat to hit financial firms doing business with Russia with sanctions has chilled Turkish-Russian trade, disrupting or slowing some payments for both imported oil and Turkish exports, seven sources told Reuters earlier this month. Meanwhile, Russian business people in January drew attention to problems with settlements with Chinese banks. https://www.reuters.com/business/finance/russian-lawmakers-approve-use-digital-assets-international-transactions-2024-02-27/

2024-02-27 12:53

Feb 27 (Reuters) - Social media websites and services including Alphabet's (GOOGL.O) , opens new tab YouTube, Telegram and VKontakte suffered temporary outages in Russia on Tuesday, internet users and the digital ministry said. The monitoring centre for Russia's public communications network said on Tuesday its specialists had recorded a "massive failure" of Telegram, Russia's most popular messaging tool. Telegram did not immediately reply to a request for comment. Reuters correspondents in Moscow noted outages of Telegram, YouTube and Vkontakte for around 90 minutes. "The work of Telegram messenger and a number of other services in Russia is already being restored," Russia's digital ministry said in a statement, adding that there had also been failures of the app outside Russia. "Together with Roskomnadzor, we are working to establish the cause of the incident," it said. Communications regulator Roskomnadzor has moved to block many foreign tech companies from operating in the country since the start of the war in Ukraine, including Meta Platforms' (META.O) , opens new tab Facebook and Instagram. Moscow has long sought to improve its domestic internet infrastructure, or Runet, even disconnecting itself from the global internet for tests. Anton Gorelkin, deputy head of the State Duma parliamentary committee on information policy, said it was unclear what had caused the Telegram outages, but that immediately blaming the Russian state was a mistake, noting "conspiracy theories" that Russia was trying to block foreign resources prior to a March presidential election. "There have been, and will be, such incidents for a variety of reasons: from human error to hacker attack," he said. "Much more important is how long it takes to eliminate the failure; the scale of damage to the Russian economy depends on this." https://www.reuters.com/technology/russia-reports-temporary-internet-outages-affecting-social-media-sites-2024-02-27/

2024-02-27 12:41

Risks to global outlook more balanced - finance draft communique Likelihood of global soft landing increasing - draft communique Mention of 'wars' in brackets, suggesting no consensus yet Yellen calls on G7 to unlock value of frozen Russian assets SAO PAULO, Feb 27 (Reuters) - Group of 20 finance leaders meeting in Brazil this week are expected to make only a passing reference in their closing statement to regional conflicts, according to a draft version seen by Reuters, due to deep divisions over wars in Gaza and Ukraine. The draft communique, far shorter than previous years as host nation Brazil works to sidestep geopolitical controversies, also said the likelihood of a soft landing in the global economy has increased, but uncertainty remains high. "Risks to the global economic outlook are more balanced," with faster-than-expected disinflation and more growth-friendly fiscal consolidation underpinning growth, the draft said. Kristalina Georgieva, head of the International Monetary Fund said the overall impact of wars was always negative, and the Israel-Gaza war was clearly adding to uncertainty for the global economy at a time of sluggish growth. But she said it was still crucial for G20 finance officials to gather, noting that the recent agreement on digital services at the World Trade Organization showed cooperation still worked. "Nobody wants any further deterioration in economic relations," she told Reuters in an interview. "Talking with each other is the only way we can steer the world to a better performance." Last week's gathering of foreign ministers in Rio de Janeiro exposed deep divisions over Russia's invasion of Ukraine and Israel's bombardment of Gaza. After that meeting, G20 finance officials are expected to set aside geopolitics and focus on global economic issues as they gather in Sao Paulo this week. The draft communique being fine-tuned by deputy finance ministers reflects a delicate effort to acknowledge regional conflicts while maintaining consensus, which Brazil has emphasized during its presidency of the G20 major economies. "Among the downside risks to the global economy are [wars and] escalating conflicts, geoeconomic fragmentation, rising protectionism and trade routes disruptions," the draft communique said. The reference to "wars" in brackets reflects efforts to reach a consensus on the final language, said a person familiar with the matter. Brazil's coordinator of the finance track at G20, Tatiana Rosito, said on Tuesday that the group is moving towards a short communique that reflects Brazilian priorities. While wars in Ukraine and Gaza may get no direct mention in the joint communique and less emphasis in plenary sessions, they were boiling over on the sidelines. U.S. Treasury Secretary Janet Yellen on Tuesday called on allies to move forward urgently to unlock the value of frozen Russian sovereign assets to help Ukraine, prompting an angry response from Russian officials. Canada threw its support behind the U.S. idea with Finance Minister Chrystia Freeland saying on Tuesday the two countries agreed on the urgent need to move forward with confiscating frozen Russian sovereign assets to help Ukraine. She and G7 peers are expected to discuss the matter during a separate meeting on Wednesday morning. But Russian Finance Minister Anton Siluanov warned that Yellen's proposal, if realized, would lead to a response that could escalate tensions. "We believe this proposal to be deeply fallacious and also destructive because it undermines the very foundation and pillars of the world financial system," he told reporters. On the conflict in Gaza, Yellen said Israel has agreed to resume tax revenue transfers to the Palestinian Authority to fund basic services and bolster the West Bank economy. She called on Israel to allow commerce to resume there for the sake of its own economy and that of the Palestinians. SMOOTH PROGRESS Progress on Brazil's proposed communique is advancing smoothly into the home stretch, a German government representative said on Tuesday. "The whole thing is progressing very well," the official told a press briefing in Germany, adding that the final document would highlight global economic resilience, while noting issues such as inequality between countries and excessive debt. Brazil's President Luiz Inacio Lula da Silva is pushing to give developing nations of the Global South more voice in G20 meetings during Brazil's presidency, reflected in the draft communique's focus on addressing hunger, poverty and inequality. Finance officials and central bankers from the G20 are meeting at a time of lingering global economic uncertainties, increasing strains of record debt burdens, and worries that inflation may not yet be tamed. In the draft communique, the G20 finance leaders gave an optimistic view on the outlook for price pressures. Inflation has receded in most economies, they said, thanks in part to "appropriate" monetary policies, easing supply chain bottlenecks and moderating commodity prices. The draft also said the G20 group reaffirms their existing exchange-rate commitment, which warns against excess volatility and volatile currency moves as undesirable for economic growth. https://www.reuters.com/world/g20-finance-heads-see-regional-conflicts-global-challenge-draft-communique-2024-02-27/

2024-02-27 12:38

Feb 27 (Reuters) - Unity Software (U.N) , opens new tab shares sank 15% in premarket trading on Tuesday after the videogame software provider's 2024 forecasts came in below Wall Street estimates, a sign that its turnaround was taking longer than expected. The company, which makes a toolkit used by videogame developers including the maker of the popular "Pokemon Go" mobile game, in November announced a "reset" after an attempt to impose a new "runtime fee" pricing sparked a developer revolt. The so-called "company reset" includes workforce reduction in the first phase while the second phase focuses on reviving revenue growth, expected to accelerate in the second half of 2024. Still, the San Francisco-based company forecast full-year 2024 revenue between $1.76 billion and $1.80 billion, below estimates of $2.31 billion, per LSEG data. "The top-line continued to be pressured by the ongoing portfolio reset, as well as competitive pressure within the Grow segment," said analysts at Piper Sandler. The company said its Grow business, which allows customers the ability to grow and commercialize their content, was facing a more competitive environment. Restrictions in China were also impacting growth in its Create segment as the business mostly consists of customers developing games in the country. Unity said in January it would cut about 1,800 jobs in what would be its largest layoffs ever and fourth round since July 2022. The company estimated roughly $195 million in employee separation costs to be recognized in the first quarter. https://www.reuters.com/technology/unity-software-tumbles-gloomy-forecast-signals-turnaround-taking-time-2024-02-27/