2024-01-03 21:01

WINNIPEG, Manitoba, Jan 3 (Reuters) - Trans Mountain Corp (TMC.UL) plans to begin line fill in March or May on its long-delayed Canadian oil pipeline expansion, depending on the diameter of pipe it uses and assuming no new problems, the Canadian government-owned company said in a filing on Wednesday. The company is awaiting a regulatory decision on its request for a construction change. Line fill is a final step before the expanded Alberta-to-British Columbia pipeline begins service, providing crucial additional access for Canadian oil to refineries on the U.S. West Coast and in Asia. The project will nearly triple the pipeline's shipments to 890,000 barrels per day. Trans Mountain said the new schedules assume that it faces no delays caused by challenges drilling into hard rock, such as tool damage. Trans Mountain continues to target the end of the first quarter to begin shipping crude and is developing contingency plans to address any challenges to that schedule, a spokesperson said in an email. Trans Mountain had asked the Canada Energy Regulator (CER) to allow it to install smaller-diameter pipe in a 1.4-mile (2.3 km) section of the oil pipeline's route after encountering challenging drilling conditions in a mountainous area between Hope and Chilliwack, British Columbia. The CER denied the request on Dec. 5, later saying that the application did not adequately address concerns about pipeline integrity and the environment. Trans Mountain then asked the regulator to reverse that decision on Dec. 14, warning of a possibly "catastrophic" two-year delay and billions of dollars in losses. The CER has not yet made a decision. The pipeline can enter service within one month of mechanical completion, which precedes line fill, Trans Mountain said in the filing. Canadian heavy oil prices strengthened as the filing suggested Trans Mountain and the regulator are working hard to resolve construction problems, a trader said. In Trans Mountain's 33-page filing, it told the CER it had considered numerous alternatives before settling on the revised plan for which it is seeking approval. The company said it has faced growing problems with water flow and abnormal wear on tools as it drills into hard rock. Under the worst-case scenario for the plan currently approved by CER, the company's horizontal directional drilling approach could fail and require a fresh alternative that may delay the project by two years to 30 months, Trans Mountain said. Prime Minister Justin Trudeau's Liberal government bought the project in 2018 to ensure the expansion went ahead, but costs have ballooned to C$30.9 billion ($23.14 billion), more than four times the original budget. ($1 = 1.3352 Canadian dollars) https://www.reuters.com/markets/commodities/trans-mountain-pipeline-plans-line-fill-march-or-may-pending-regulatory-decision-2024-01-03/

2024-01-03 20:52

HOUSTON, Jan 3 (Reuters) - Venezuela's oil exports increased 12% last year to almost 700,000 barrels per day (bpd) as the United States eased sanctions imposed since 2019 on the OPEC country's energy sector, according to data and documents viewed by Reuters. The increase shows the impact of sanctions relaxation on the country's oil exports, and the degree to which further gains could remain limited by the need for stable policies and capital to rebuild Venezuela's crude production, which rose at a slower rate than exports last year. Washington in late 2022 began green lighting foreign oil firms' swaps of Venezuelan oil for debt and unpaid dividends. In October, the U.S. further eased the South American country's exports of crude and gas to its chosen markets with a 6-month license intended to encourage a free presidential election this year. The sanctions relaxation allowed state oil company PDVSA last year to increase its exports of crude and fuel. Global trading houses that had been barred from dealings emerged as early buyers of cargoes, and provided product imports to meet domestic fuel demand. The moves reopened the U.S. market for Venezuela's crude after a four-year pause, and allowed a resumption of oil exports to India, which before U.S. sanctions was among the three top destinations for Venezuelan oil. China, which never suspended imports of Venezuelan crude amid U.S. sanctions, last year remained the largest destination for Venezuela's oil, taking about 65% of the country's average exports of 695,192 barrels per day (bpd), according to LSEG vessel monitoring data and PDVSA documents. The U.S. received 19% of shipment volumes or about 135,000 bpd, while countries in Europe took 4% and Cuba imported 8%. Nations including Brazil, Colombia and Panama also received cargoes last year, the data showed. Higher exports also was boosted by more stable oil production during the year and a spurt in December shipments. A total of 46 cargoes departed Venezuelan ports carrying 798,000 bpd of crude and fuel, and 376,000 metric tons of oil byproducts and petrochemicals in the year's final month. Venezuela's crude output averaged 794,000 bpd through November, an increase from the 716,000 bpd of 2022 and the 636,000 bpd of 2021, according to figures reported to OPEC. The country aims at surpassing 1 million bpd in the coming months, a goal analysts have said would only be feasible if the U.S. license that is set to expire in April is renewed. PDVSA previously had set a production goal of 1.17 million bpd in 2023. Venezuela imported 59,595 bpd of condensate and fuel mainly from Iran and the United States in 2023 through oil swaps by PDVSA and business partners. The average was below the 78,170 bpd received in 2022 as PDVSA's refineries were able to restart key units to produce motor fuels, reducing the need for imports last year. https://www.reuters.com/markets/commodities/venezuelas-2023-oil-exports-rose-aided-by-us-sanctions-easing-2024-01-03/

2024-01-03 20:22

Canadian dollar weakens 0.3% against the greenback Touches its weakest since Dec. 21 at 1.3371 Price of U.S. oil settles 3.3% higher Bond yields ease across much of a flatter curve TORONTO, Jan 3 (Reuters) - The Canadian dollar weakened to a near two-week low against its U.S. counterpart on Wednesday as investors grew less confident that the Federal Reserve will soon pivot to cutting interest rates. The loonie was trading 0.3% lower at 1.3360 to the greenback, or 74.85 U.S. cents, after touching its weakest intraday level since Dec. 21 at 1.3371. The currency had been on a tear in recent weeks along with gains for other risk-sensitive assets, such as stocks. "The Canadian dollar is selling off as the global Santa (Claus) rally unravels," said Karl Schamotta, chief market strategist at Corpay. "Odds on an imminent loosening in Federal Reserve policy are fading as the economy displays continued resilience, and sentiment is generally shifting away from the euphoric conditions that characterized trading in late December," Schamotta said. Minutes from the Fed's Dec. 12-13 policy meeting shed little light on when rate cuts might commence. The U.S. dollar (.DXY) rallied against a basket of major currencies and U.S. stock indexes fell for a second straight day. Gains for the price of oil, one of Canada's major exports, were of little help to the loonie. U.S. crude oil futures settled 3.3% higher at $72.70 a barrel after a disruption at Libya's top oilfield added to fears that tensions in the Middle East could reduce global oil supplies. The next domestic catalyst for the currency could come from the release of the Canadian employment report on Friday. Economists expect a jobs gain of 13,500. Canadian government bond yields eased across much of a flatter curve, tracking moves in U.S. Treasuries. The 10-year was down 5.5 basis points at 3.124% but holding above the recent 7-month low at 3.018%. https://www.reuters.com/markets/currencies/canadian-dollar-hits-2-week-low-investor-optimism-fades-2024-01-03/

2024-01-03 20:20

LOS ANGELES, Jan 3 (Reuters) - Ocean freight rates are surging after a missile attack and attempted hijacking of a Maersk ship this weekend prompted carriers to suspend plans to restart transits through the Red Sea, a key artery to the vital Suez Canal trade route. Yemen-based Houthi militants have been attacking high-value cargo vessels in the Red Sea since November in a show of support for Palestinian Islamist group Hamas fighting Israel in Gaza. It has forced ships to reroute around the southern tip of Africa, driving up the cost for vessels for the longer voyage, though rates are still far below pandemic levels reached in 2021. Egypt's Suez Canal connects the Red Sea to the Mediterranean Sea and is the fastest way to ship fuel, food and consumer goods from Asia and the Middle East to Europe. Shippers use the route to ferry as much as one-third of all global container cargo, including toys, tennis shoes, furniture and frozen food. The attacks are already delaying delivery of products destined for numerous companies, as the Suez route is used by the likes of IKEA, Walmart (WMT.N) and Amazon (AMZN.O). Asia-to-North Europe rates more than doubled to above $4,000 per 40-foot container this week, with Asia-to-Mediterranean prices climbing to $5,175, according to Freightos (CRGO.O), a booking and payments platform for international freight. Some carriers have announced rates above $6,000 per 40-foot container for Mediterranean shipments starting mid-month, and surcharges of $500 to as much as $2,700 per container could make all-in prices even higher, Judah Levine, Freightos' head of research, said in an email. As of Wednesday, hundreds of container ships and other vessels have been rerouted around Africa's southern Cape of Good Hope to avoid the attacks - adding anywhere from 7 to 20 days to their voyages. Those so-called, one-time "spot" rates are roughly double the rates for freight that moves on the contract market, logistics executives said. "People desperate to get space (on ships), are going to pay," said Christian Sur, executive vice president for ocean freight at Unique Logistics. Rates to less-affected North American ports also are moving higher. Up to 30% of cargo that arrives at the U.S. East Coast travels through the Suez Canal. Logistics executives expect some of those imports to be diverted to the U.S. West Coast - which is a straight shot across the Pacific Ocean from China and other Asian exporters. Rates for shipments from Asia to North America's East Coast climbed 55% to $3,900 per 40-foot container. West Coast prices jumped 63% to more than $2,700 ahead of expected cargo diversions to avoid Red Sea-related issues, Levine said. While rates have spiked, they remain far below 2021's pandemic-fueled record highs of $14,000 per 40-foot container for Asia to North Europe and the Mediterranean and $22,000 for Asia to North America's East Coast. https://www.reuters.com/markets/commodities/ocean-cargo-rates-climb-after-new-red-sea-ship-attacks-2024-01-03/

2024-01-03 20:09

Job openings fall 62,000 to 8.790 million in November Quits decline 157,000; layoffs drop 116,000 Manufacturing PMI rises to 47.4 in December from 46.7 WASHINGTON, Jan 3 (Reuters) - U.S. job openings fell to nearly a three-year low in November as the labor market gradually cools, which could pave the way for the Federal Reserve to start cutting interest rates this year. Americans are also feeling the shift in the labor market, with the report from the Labor Department on Wednesday showing the number of people quitting their jobs, most likely for higher paying positions, dropping to the lowest level since February 2021. With fewer people job-hopping, wage growth could continue to moderate and ultimately contribute to lower inflation. But labor market conditions remain fairly strong. There were 1.4 job openings for every unemployed person compared to 1.36 in October. Layoffs were at the lowest level since December 2022. Financial markets are betting the U.S. central bank will begin cutting rates as early as March. "The Fed is likely in a sweet spot as they prepare markets for an upcoming cut in rates," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. Job openings, a measure of labor demand, were down 62,000 to 8.790 million by the last day of November, the Labor Department's Bureau of Labor Statistics said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report. That was the lowest level since March 2021. Data for October was revised slightly up to show 8.852 million unfilled positions instead of the previously reported 8.733 million. Economists polled by Reuters had forecast 8.850 million job openings. Vacancies have declined from a record high of 12.0 million in March 2022 following 525 basis points worth of rate hikes from the Fed. There were 128,000 fewer open positions in the transportation, warehousing and utilities industry. Unfilled jobs fell by 58,000 in the federal government. But vacancies increased by 63,000 in the wholesale trade sector. The job vacancies rate was unchanged at 5.3%. Medium-sized and large companies accounted for the total decline in open jobs in the private sector. Vacancies, however, remained elevated at small businesses. The U.S. South, which had experienced a surge in employment opportunities, saw a sharp drop in openings, while jobs were abundant in the Midwest. Hiring continued to lag, falling 363,000 to 5.465 million, the lowest level since April 2020. The professional and business services sector reported a decline of 163,000. The hires rate dropped to 3.5%, also the lowest in nearly four years, from 3.7% in October. Resignations decreased 157,000 to 3.471 million, the lowest level since February 2021. The drop was led by the professional and business services sector, where quits decreased 77,000. The quits rate, viewed as a measure of labor market confidence, fell to 2.2%. That was the lowest level since September 2020. The decline in the quits rate, which had held at 2.3% for four straight months, bodes well for slower wage growth and price pressures in the economy. But with companies hoarding workers following difficulties finding labor in the aftermath of the COVID-19 pandemic, the job market should continue to underpin the economy and probably avert a recession this year. Layoffs and discharges fell 116,000 to 1.527 million in November, the lowest level in 11 months. The layoffs rate was unchanged at 1.0% for a third straight month. "Anyone still looking for signs of a recession won't find it in this report," said Layla O'Kane, a senior economist at Lightcast. "The Fed has succeeded in managing to curb inflation without blowing up the labor market. I'm expecting that to continue in 2024." Stocks on Wall Street were trading lower as investors booked profits after a rally towards the end of last year that was inspired by rate-cut hopes. The dollar gained versus a basket of currencies. U.S. Treasury prices rose. FOCUS ON PAYROLLS The Fed last month held its policy rate steady in the current 5.25-5.50% range and policymakers signaled in new economic projections that the historic monetary policy tightening engineered over the last two years is at an end and lower borrowing costs are coming in 2024. Minutes of that meeting released on Wednesday showed policymakers appeared increasingly convinced that inflation was coming under control, with diminished "upside risks" and growing concern about the damage that "overly restrictive" monetary policy might do to the economy. Attention now shifts to the release on Friday of the Labor Department's December employment report, which is expected to show that nonfarm payrolls increased by 170,000 jobs in December, according to a Reuters survey of economists, after a rise of 199,000 in November. The anticipated December job gain would be below the average monthly rise of 240,000 over the prior 12 months, but well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is forecast to edge up to 3.8% from 3.7% in November. News on manufacturing, which has been bruised by the higher borrowing costs, remains downbeat. The Institute for Supply Management (ISM) reported on Wednesday that its manufacturing PMI increased to 47.4 in December after being unchanged at 46.7 for two straight months. It was the 14th consecutive month that the PMI stayed below 50, which indicates contraction in manufacturing, the longest such stretch since the August 2000-January 2002 period. But the survey likely overstated the weakness in manufacturing and the broader economy, which continues to grow. "If anything, the survey pushes back against any expectation that the economy significantly slowed at the end of the fourth quarter," said Will Compernolle, a macro strategist at FHN Financial in New York. https://www.reuters.com/markets/us/us-job-openings-fall-moderately-november-2024-01-03/

2024-01-03 20:05

NEW YORK, Jan 3 (Reuters) - Some Federal Reserve officials are ready to talk about what it would take for the central bank to stop the ongoing shrinkage of its massive holdings of cash and bonds, opening the door to a notable shift in central bank monetary policy, according to meeting minutes for the Fed’s Dec. 12-13 policy meeting, released on Wednesday. At the gathering last month, “several participants remarked that the Committee's balance sheet plans indicated that it would slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level judged consistent with ample reserves,” the minutes said. “These participants suggested that it would be appropriate for the Committee to begin to discuss the technical factors that would guide a decision to slow the pace of runoff well before such a decision was reached in order to provide appropriate advance notice to the public," the Fed document said. The policymakers were taking on a process that has complemented the Fed’s aggressive rate hike cycle, and that is its ongoing contraction of just shy of $100 billion per month in the overall size of its balance sheet. The Fed is allowing Treasury and mortgage bonds it owns to mature and not be replaced, and in doing so, it has reduced its balance sheet by just over $1 trillion, to $7.764 trillion on Dec. 27. The Fed bought bonds aggressively through the start of the coronavirus pandemic to help stabilize financial markets and stimulate growth, causing its balance sheet to surge from $4.3 trillion at the start of March 2020 to a peak of just shy of $9 trillion in the summer of 2022. Taking liquidity back out is part of its process of returning monetary policy to a normal footing. Fed officials are trying to reduce liquidity to a level that will still allow them to retain firm control over short-term rates, but they have thus far provided little guidance about timetables and desired levels of liquidity. But with Fed rate hikes almost certainly over and rate cuts on the market’s mind, the minutes show at least some Fed officials are also ready to talk about ending the balance sheet drawdown many refer to as quantitative tightening, or QT. Many in markets have been eying the second or third quarter this year as an end point for the wind down. https://www.reuters.com/markets/us/december-meeting-some-fed-officials-mulled-end-balance-sheet-cuts-2024-01-03/