2024-01-08 20:36

Saudi Aramco cuts price for key crude grade to Asia OPEC output rises by 70,000 bpd in Dec -Reuters survey Force majeure declared at Libyan oilfield NEW YORK, Jan 8 (Reuters) - Oil prices fell over 3% on Monday on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output that offset supply concerns generated by escalating geopolitical tension in the Middle East. Brent crude settled down $2.64, or 3.4%, at $76.12 a barrel, while U.S. West Texas Intermediate crude futures lost $3.04, or 4.1%, at $70.77 a barrel. Both contracts climbed more than 2% in the first week of 2024 as geopolitical risk in the Middle East intensified after attacks by Yemen's Houthis on ships in the Red Sea. On Sunday, rising supply and competition from rival producers prompted Saudi Arabia to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months. "That's raising concerns about demand in China and global demand as well," Price Futures Group analyst Phil Flynn said. "The stock market is off to a weak start this year and this news from Saudi Arabia has caused the bottom to fall out." A Reuters survey on Friday found that OPEC oil output rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance. The boost came ahead of further OPEC+ cuts in 2024 and as Angola exited from OPEC starting this year, factors which are set to lower January output and market share. "If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production and a lower than expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil," said IG analyst Tony Sycamore. "However, that doesn't take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside." U.S. Secretary of State Antony Blinken held more talks with Arab leaders on Monday as part of a diplomatic push to stop the war in Gaza from spreading further. The conflict has already sparked violence in the Israeli-occupied West Bank, Lebanon, Syria and Iraq, and also led to Houthi attacks on Red Sea shipping lanes. Meanwhile, the oil price slide was tempered by a force majeure by Libya's National Oil Corporation on Sunday at its Sharara oilfield, which can produce up to 300,000 barrels per day. https://www.reuters.com/markets/commodities/oil-slides-saudi-price-cuts-counter-middle-east-worries-2024-01-08/

2024-01-08 20:33

VIENNA, Va., Jan 8 (Reuters) - U.S. Treasury Secretary Janet Yellen said on Monday that she believes a top-line federal spending deal reached by congressional leaders over the weekend is consistent with last June's debt ceiling agreement and will not harm the Internal Revenue Service's modernization drive in the near term. Yellen, speaking to reporters at an event at the Financial Crimes Enforcement Network's (FinCEN) suburban Washington headquarters, said she was encouraged by the deal announced on Sunday by House of Representatives Speaker Mike Johnson, a Republican, and Senate Majority Leader Chuck Schumer, a Democrat, but could not say whether a federal government shutdown could be avoided as current funding lapses. "It's a basic responsibility of Congress, of the government to keep the government up and running," Yellen said. "Americans depend on these services and posing a threat to continue good economic performance is something that we don't need, so I'm hopeful we will not have to shut down." The deal sets a maximum spending limit for discretionary programs at $1.59 trillion for the 2024 fiscal year ending Sept. 30, but accelerates about $20 billion in cuts to Internal Revenue Service (IRS) funding to take place over one year instead of two years under the June agreement. The funds come out of an $80 billion infusion that the tax collection agency received in 2022 clean energy legislation to fund a decade worth of systems modernization, compliance and customer service investments. Yellen said she would not want to endanger the IRS's ability to make improvements, especially with an annual "tax gap" - the differences between taxes owed and collected - of as much as $160 billion. "I believe that what's been agreed in this deal is consistent with what is called the Fiscal Responsibility Act when the debt ceiling was raised and some of the revenue was taken away," Yellen said. "But in the short run, certainly medium run, the IRS would be able to continue its important work in modernizing our tax system." FROZEN RUSSIAN ASSETS Regarding deliberations by G7 countries over use of hundreds of billions of dollars in frozen Russian assets to aid Ukraine in its war against Russia, Yellen said no decisions had been made, and the allies were weighing options. Yellen last year had expressed concerns about significant legal obstacles to confiscating frozen Russian assets, but more recently has embraced exploring the idea in a tighter funding environment. Yellen was asked if she had concerns about the implications for such a move on the dollar's status or the willingness of foreign central banks to store reserves in the United States. "I think there are concerns along those lines, and it would be a question of understanding and seeing if mitigation could be put in place and seeing if the G7 could agree on international law and rationale," she said. Yellen visited FinCEN headquarters to promote a new requirement that businesses file disclosures of their beneficial ownership, as part of new laws to crack down on money laundering through shell companies. Since the registration opened a week ago, Yellen said more than 100,000 companies have registered ownership data. She added that the Treasury early this year will publish proposed rules aimed at combating money laundering risks associated with real estate and investment advisory services. https://www.reuters.com/world/us/yellen-says-top-line-federal-spending-deal-consistent-with-debt-ceiling-pact-2024-01-08/

2024-01-08 20:29

HOUSTON, Jan 8 (Reuters) - A U.S. judge on Monday granted a large group of Venezuela-linked creditors rights to participate and receive proceeds from a coming auction of shares in the parent of Houston-based refiner Citgo Petroleum. A precedent-setting lawsuit by Canadian miner Crystallex Corp formally tied Venezuela-owned Citgo to the South American country's debts and opened the door to some $24 billion in claims being applied to the refining firm through an auction of shares in a Citgo parent whose only asset is the oil refiner. The decision still requires the group, formed by 10 companies, to comply with a Jan. 12 dateline to have writs of attachments issued against shares in Citgo's parent, PDV Holding. No extra time was granted, and a new auction schedule issued on Monday is not planned to be modified, the court in Delaware said. The U.S. Treasury also has reserved the right to rule on any winning bid. O-I Glass (OI.N), Huntington Ingalls (HII.N), ACL1 Investments, Rusoro Mining (RML.V), Koch Industries and Gold Reserve (GRZ.V) can have claims considered as additional judgments. Another group of four creditors including Siemens Energy (ENR1n.DE) that had filed a similar motion to be designated additional creditors was also green-lit, U.S. Judge Leonard Stark ruled. The companies had sought to participate "with full force and effect" in the event two of the largest creditors in the long-running case - Crystallex and oil firm ConocoPhillips (COP.N) - reach settlements with Venezuela that could end the lawsuit. Talks have been on and off for months with holders of billions of dollars due for asset expropriations and defaulted Venezuelan bonds seeking to settle their claims. The additional creditors had argued they needed to have equal status to protect their interests in event of a deal and to organize credit bids, using their claims against Venezuela as currency in any court sale. Credit bids are routine in bankruptcy sales. LAST-MINUTE SETTLEMENTS Settlement talks between Venezuela, Crystallex and Conoco appear to have sparked a flurry of court filings by companies hoping to improve their chances of receiving proceeds from asset sales involving Citgo. Citgo declined to comment on settlement talks. A representative for Crystallex and a board supervising Citgo did not reply to requests. "We remain committed to pursuing all available legal avenues to protect our rights and obtain a full and fair recovery," a Conoco spokesperson said in response to questions about the talks. The U.S. Supreme Court separately on Monday rejected Venezuela's move to limit the number of companies that could participate in the auction. Both Monday decisions open a window for any additional creditors to get a slice of the auction's proceeds, especially if the largest creditors settle with Venezuela, leaving room for others. "In the event that any of the sale process parties proposes to settle its differences with any of the Venezuela parties, the six creditors, the four more creditors and any other interested entity will have an opportunity to be heard on whether the court should approve such a settlement and, if it does, on how the potential resolution or settlement might affect the sale process," Stark wrote in his order. Last week, the court official designated for the case, Robert Pincus, said claims should not be expedited or given additional priority ahead of the deadline. To do so "would disrupt a process carefully considered ... and months-ago approved by order of the court," Pincus wrote. The rush to win approvals would allow claims to be considered in first-round bids for the shares due ten days later. Companies could use their higher status to organize credit bids for the Citgo parent's shares and "approach the market with proposals that commercial parties are comfortable with," wrote hedge fund Pharo Management, which seeks $1.78 billion in claims. Judge Stark has given priority to Crystallex's $970 million and Conoco's nearly $10 billion in claims. If they are fully paid, it could leave little for others. Citgo has been valued at between $11 billion and $13 billion in the past. Bondholders seeking about $1.9 billion are pursuing Venezuela in a case separate from the Delaware court and have protested they could be shut out of proceeds. https://www.reuters.com/business/energy/us-judge-clears-way-more-venezuela-creditors-join-citgo-auction-2024-01-08/

2024-01-08 19:57

Jan 8 (Reuters) - U.S. banks are expected to dominate corporate bond issuance following several major players' earnings on Friday and early next week, according to bond investors and analysts. January has historically served as the largest bond issuing month for banks when compared to the rest of the year. The last seven Januarys saw an average $22.58 billion in issuance from the "Big Six" banks, according to Informa Global Markets data. "Bank issuance will likely be the main driver for primary volumes in the latter half of this week and all of next week as the sector clears earnings and the issuance window opens up for them," said Blair Shwedo, head of fixed income sales and trading at US Bank. On Friday, a long list of global systemically important banks (GSIBs) including Bank of America (BAC.N), BNY Mellon (BK.N), Citigroup (C.N), JPMorgan (JPM.N) and Wells Fargo (WFC.N) will report fourth quarter earnings. Goldman Sachs (GS.N) and Morgan Stanley (MS.N) report the following Wednesday. A large portion of the debt is expected from these large U.S. banks as they look to get ahead of regulatory requirements for more capital reserves. "While the size certainly varies, for the GSIBs, the size is generally in the ($5 billion per-issue) range," said Guy LeBas, chief fixed income strategist at asset manager Janney Montgomery Scott. "And January is usually the largest of the year," he added. The expected strong issuance from banks this and next week follows a lackluster January 2023, which saw only $9 billion raised by the "Big Six" banks, according to Informa Global Markets data. Only two members of this group chose to tap the market then: Bank of America raised $3 billion, while Morgan Stanley sold $6 billion in bonds. Expectations of sizeable bank debt sales this and next week follow a strong start to the New Year overall for the investment-grade primary market. Last week saw $57.9 billion in total high-grade primary issuance volume, above the upper range of market forecasts. The largest offering was UBS Group's (UBSG.S) $4 billion two-part senior note deal. Twelve offerings are expected to come to market on Monday, according to IFR data, as issuers get ahead of important economic data releases including Thursday's consumer price inflation report for December. https://www.reuters.com/markets/us/big-us-banks-headline-corporate-bond-calendar-after-earnings-2024-01-08/

2024-01-08 19:53

Jan 8 (Reuters) - Johnson & Johnson and Merck on Monday announced plans to buy cancer therapy developers on the first day of a major U.S. healthcare conference, igniting what industry participants hope will be a strong year for deals after a solid end to 2023. Deals announced on Monday had a combined equity value of more than $6 billion, including one by medical device maker Boston Scientific (BSX.N) for Axonics Inc (AXNX.O). That follows roughly $25 billion worth of U.S.-listed biotech deals last month, according to data provider LSEG Deals Intelligence. Meanwhile, over 8,000 people are gathering at the JPMorgan healthcare conference in San Franscisco, in another sign of a return to business as usual after the COVID-19 pandemic. Global pharma companies' efforts to replace revenue from older drugs with promising new ones were largely stymied in 2023, but looming patent expirations and easing financing costs are setting up 2024 well, industry sources say. On Monday, J&J (JNJ.N) said it would buy Ambrx Biopharma (AMAM.O) for $2 billion to gain promising targeted cancer therapies known as antibody drug conjugates (ADC). The deal gets "the ball rolling on what seems to be a strong start for M&A in 2024", said Citi analyst Joanne Wuensch. Interest in these drugs has spiked and several related companies have been acquired in recent months, including ImmunoGen (IMGN.O) by AbbVie (ABBV.N) and Seagen by Pfizer (PFE.N). Separately, Merck (MRK.N) said it would buy cancer drug developer Harpoon Therapeutics (HARP.O) for about $680 million, gaining access to early-stage immunotherapies being tested for lung cancer and multiple myeloma. Boston Scientific's $3.7 billion deal for deal for Axonics helps it enter the market for a type of minimally invasive procedure used in the treatment of overactive bladder and fecal incontinence. Centerview Partners advised both Harpoon and Ambrx on the deals. Ambrx's financial advisers also included Cantor Fitzgerald. Evercore Group was Merck's financial adviser, while J.P. Morgan Securities LLC was the adviser to Axonics. https://www.reuters.com/business/healthcare-pharmaceuticals/johnson-johnson-buy-ambrx-biopharma-2-bln-2024-01-08/

2024-01-08 19:50

ATLANTA, Georgia, Jan 8 (Reuters) - Atlanta Federal Reserve President Raphael Bostic said on Monday that with inflation still above the central bank's 2% target, his bias is for monetary policy to remain tight even though overall risks in the economy have become balanced between those posed by rising prices and those posed by slower employment growth. "I've got a natural bias to be tighter," Bostic said in comments at a lunch event with the Rotary Club of Atlanta. "I want to make sure we are really, really there" in terms of returning inflation to the Fed's 2% target before beginning to cut rates. His comments push against market expectations of rate cuts beginning as soon as March. Bostic repeated his earlier stated view that he does anticipate rate reductions later this year, with two quarter percentage point cuts likely needed by the end of 2024 and an initial one coming some time in the third quarter. But he also downplayed the risk of any imminent need to start lowering rates in order to nurse along an economy that still seems to have momentum of its own. Minutes of the Fed's Dec. 12-13 meeting indicated some policymakers felt the central bank may be approaching a point where further progress on controlling the pace of price increases may only come at the expense of markedly higher unemployment. "I don't think that's where we are today," Bostic said. But he also felt that "the risk of that possibility has definitely gone up," and said he is trying to watch ever more closely for signs that the job market's strength is eroding. "We have to be sensitive to the pace of change," said Bostic, and he is focusing his conversations with business leaders on issues like whether any are planning layoffs. "We are not seeing that now," he said. https://www.reuters.com/markets/us/atlanta-feds-bostic-says-bias-remains-policy-stay-tight-2024-01-08/