2023-12-06 21:49

Dec 7 (Reuters) - A look at the day ahead in Asian markets. Bond yields, interest rate expectations, oil prices and inflationary pressures around the world are falling, and the conviction behind this broad-based move appears to be strengthening. That's the backdrop to the Asian market open on Thursday, but it won't necessarily boost investor sentiment or power a rally in risk assets like emerging market stocks. The slide in yields, oil and rate expectations on Wednesday, in some cases to multi-month lows, is increasingly being driven by worries over the U.S. economic outlook. Figures this week show that the U.S. labor market is softening, intensifying the spotlight on November's non-farm payroll report to be released on Friday. Although financial conditions are loosening, Wall Street's big three indexes fell on Wednesday (the Russell 2000 held up better as investors continued to rotate into small caps). Asian and emerging stocks may struggle too on Thursday. The Asia Pacific economic calendar on Thursday includes indicators that will shine a regional light on these issues and concerns, as well as FX reserves figures for five countries including China. Thailand publishes its November inflation numbers. Analysts polled by Reuters expect CPI monthly inflation of -0.3% and the annual rate to slow slightly to 0.6%. Thai CPI doesn't often grab investors' attention, but it will be watched more closely than usual to see whether it paints a similar picture to South Korean and Tokyo CPI this week. Both these reports showed inflation cooling more than expected. Indeed, consumer prices in South Korea plunged 0.6% in November from the previous month, the fastest rate of deflation in three years. The latest Chinese and Australia trade figures are on tap too. Alarmingly weak trade flows earlier this year were one of the biggest red flags that the Chinese economy was creaking, but the ship seems to have steadied in recent months. The outlook for Chinese trade isn't particularly bright though - U.S. growth next year will slow significantly, perhaps to around 1-1.5%, the euro zone is flirting with recession, and slowing growth in China to less than 5% will weigh on demand for imports. Currency traders and central bank watchers, meanwhile, will take note of the latest FX reserves figures on Thursday from Asian countries - China, Indonesia, Malaysia and Singapore - and Hong Kong. Their total holdings currently exceed $4 trillion, of which China accounts for $3.1 trillion. International reserves managers are conservative by nature, so changes to their investments tend to come at a glacial pace. Still, the broad trend over the last year or so has been one of central banks reducing their holdings of U.S. Treasuries, potentially another headwind for the dollar. Here are key developments that could provide more direction to markets on Thursday: - China trade (November) - China FX reserves (November) - Thailand CPI inflation (November) https://www.reuters.com/markets/asia/global-markets-view-asia-pix-2023-12-06/

2023-12-06 21:05

On track for a strong interim dividend Reports higher margins in 3 main sales channels Quarterly profit after tax up 61.7% Dec 7 (Reuters) - New Zealand's Fonterra Co-operative (FCG.NZ) on Thursday increased its fiscal 2024 earnings and farmgate milk price forecasts, citing strengthening demand for reference commodity products from key importing regions. The company hiked the forecast range for its farmgate milk price - the price it pays to farmers - to between NZ$7.00 and NZ$8.00 per kilogram of milk solids (kgMS) from its prior range of between NZ$6.50 and NZ$8.00 per kgMS. According to December's first GDT auction, Global Dairy Trade (GDT) prices rose, while volumes dropped. The company has seen a rise in demand from countries including China during the first quarter after a recent gain in GDT prices. The dairy giant also increased its fiscal 2024 earnings per share outlook to between 50 NZ cents and 65 NZ cents per share from prior expectation of between 45 NZ cents and 60 NZ cents and said it is on track for a "strong" interim dividend. In the first quarter, Fonterra's profit after tax jumped 61.7% to NZ$346 million ($212.55 million) on the back of strong margins across operations. The dairy firm attributed the lift in quarterly earnings to higher margins across the company’s three main sales channels - ingredients, food service, and consumer. "Looking ahead, we expect these higher margins to continue throughout the first half of the year, before tightening across all three sales channels in the second half of the year," Chief Executive Miles Hurrell said. The company reported first-quarter gross margin of 21.4%, up from 15.5%. ($1 = 1.6279 New Zealand dollars) https://www.reuters.com/markets/commodities/fonterra-hikes-2024-earnings-milk-price-outlook-strong-demand-2023-12-06/

2023-12-06 20:57

Dec 6 (Reuters) - Canada on Wednesday said it plans to unveil a cap and trade system starting in 2026 for limiting emissions from the oil and gas sector, a step toward fulfilling one of Prime Minister Justin Trudeau's key climate policies. The framework for the cap and trade system will be announced on Thursday, ahead of draft regulations being released next year. Federal Natural Resources Minister Jonathan Wilkinson said the cap would start in 2026 to give oil and gas companies time to adjust and acquire the technology needed for decarbonizing the operations. "So there will be some time for adoption, but there will be a significant reduction in greenhouse gas emissions from the oil and gas sector by 2030," Wilkinson told reporters in Ottawa. Oil and gas is Canada's highest-polluting industry and produced 189 megatonnes of emissions in 2021, according to the federal government's national inventory report, more than a quarter of the country's total. Trudeau's Liberals have pledged to cut emissions 40-45% below 2005 levels by 2030. Projections from the federal government's Emissions Reduction Plan (ERP) shows oil and gas emissions should drop to 110 megatonnes by the end of the decade to help Canada stay on track for that target. "The cap is going to be set at what is known to be technically achievable without impacting production," a government source said. The source did not say what level the emissions cap would start at, but said it would not be the 110 megatonne number that was in the ERP. Any oil and gas producers that exceed the cap will have the option, up to a certain point, of buying carbon credits to offset their emissions or paying into a decarbonization fund, the source added. Trudeau first proposed an cap on oil and gas emissions during his 2021 election campaign. The long-awaited policy has drawn strong opposition from Canada's main oil-producing province Alberta. https://www.reuters.com/sustainability/climate-energy/canada-unveil-cap-trade-system-capping-oil-gas-emissions-govt-source-2023-12-06/

2023-12-06 20:44

NEW YORK/WASHINGTON, Dec 6 (Reuters) - The U.S. nuclear power industry is pressuring the administration of President Joe Biden to include existing reactors in a subsidy program for hydrogen, arguing that U.S. goals to jumpstart a "clean hydrogen" economy could fail without them. The lobbying push reflects the big stakes for the nuclear industry, which has been struggling for years amid an upswing in low-cost electricity from natural gas-fired power plants and rapidly expanding wind and solar. The U.S. Treasury is expected to issue guidance later this month on a hydrogen tax credit known as 45V that was outlined in the Inflation Reduction Act. So-called "green hydrogen" is a fuel made from water using electrolyzers; industry and government officials say it can be considered “clean” if its production is powered by virtually carbon-free energy sources like solar, wind, and nuclear. Virtually no green hydrogen is produced now due to high costs. The Biden administration sees clean hydrogen as vital to tackling hard-to-decarbonize industries like aluminum and cement, and is offering production subsidies of $3 per kilogram through the Inflation Reduction Act. The Treasury is weighing the details of the 45V credit, including a so-called "additionality" proposal backed by groups that support renewable energy that would make the perks available only to hydrogen producers that power their facilities with new, instead of existing, low-carbon energy sources. The Treasury meets with a range of stakeholders and federal agencies on the tax credit, said a spokesperson who did not comment on the timing or content of the guidance. Deputy Secretary of Energy David Turk said at the COP28 summit in Dubai that agencies are split over the design of 45V. "It's a big tax credit. We have to get it right," Turk said. RAISING THE STAKES Proponents of additionality say diverting existing nuclear electricity from the power grid to produce hydrogen would leave a gap in power generation that would have to be made up by burning fossil fuels that cause climate change. U.S. electricity grids will still need power if nuclear power is diverted to produce hydrogen, said Julie McNamara, deputy policy director with the Climate & Energy program at the Union of Concerned Scientists, a science-based advocacy group. With the renewable energy capacity still nascent, this "means that the only thing that has the capacity to ramp up when that nuclear power is diverted for electrolysis is coal plants and gas plants," she said. But nuclear industry backers say a more flexible approach is needed to make a hydrogen economy work. “Allowing existing nuclear reactors to qualify will help ensure that clean hydrogen is available and affordable enough to be used by customers across a wide range of industries," Senator Tom Carper, a Democrat, said in a recent letter to Treasury Secretary Janet Yellen. "It would be a huge unforced error to exclude existing nuclear from eligibility,” said Doug Vine, director of energy analysis at the environmental policy think tank the Center for Climate and Energy Solutions. Nuclear power is efficient at producing hydrogen as opposed to solar and wind power, which is intermittent, Vine said. Raising the stakes, the Department of Energy in October awarded $7 billion in grants to seven proposed clean hydrogen hubs as part of its strategy to jumpstart production. Three of the hubs plan to use existing nuclear. Constellation (CEG.O), a nuclear power plant operator, says it plans to build a $900 million clean hydrogen facility at its LaSalle plant in Illinois with a portion of the $1 billion hydrogen hub award it received for the Midwest. "The economics of the project are such that you really need... access to the tax credit in order to make it work," said Mason Emnett, Constellation's senior vice president of public policy. Xcel Energy (XEL.O), a nuclear plant operator also set to receive money from the hub program, said in a recent letter to the Treasury that excluding existing facilities would limit the industry's ability to develop hydrogen. https://www.reuters.com/sustainability/climate-energy/nuclear-backers-pressure-biden-include-industry-hydrogen-tax-break-2023-12-06/

2023-12-06 20:27

Dec 6 (Reuters) - U.S. crude oil stockpiles fell last week with production dropping for the first time since July, while gasoline and distillate inventories rose as refiners ramped up output, the Energy Information Administration said on Wednesday. Crude inventories (USOILC=ECI) fell by 4.6 million barrels in the week ending Dec. 1 to 445 million barrels, the EIA said, compared with analysts' expectations in a Reuters poll for a 1.4 million-barrel drop. Crude runs at U.S. oil refineries (USOICR=ECI) rose by 179,000 bpd last week, the EIA said, while utilization rates (USOIRU=ECI) rose by 0.7 percentage point to 90.5% of total capacity. The crude stock figure was adjusted down 2.7 million barrels, the biggest week-on-week drop in unaccounted barrels on record. U.S. gasoline futures dropped to their lowest level in two years on Wednesday after the Energy Information Administration (EIA) reported a larger-than-anticipated build in the motor fuel's stockpiles. Gasoline stocks (USOILG=ECI) rose by 5.4 million barrels in the week to 223.6 million barrels, the EIA said, far exceeding expectations for a 1 million-barrel build. “We're finally beginning to see the impact of refiners returning from maintenance as crude oil inventories drew, but gasoline and distillate inventories more than enough to offset the crude oil draw," said Andrew Lipow, president of Lipow Oil Associates. Product supplied of motor gasoline, the EIA's measure of demand, rose 3% last week to 8.46 million barrels per day, EIA data showed. That was the first increase in demand in four weeks, but still lags the 10-year seasonal average by 2.5%. Distillate stockpiles (USOILD=ECI), which include diesel and heating oil, increased by 1.3 million barrels to 112 million barrels, the data showed, versus forecasts for a 1.5 million-barrel rise. Both crude benchmarks extended losses following the storage report. Brent crude futures settled down $2.90, or 3.8%, at $74.30 a barrel. U.S. WTI crude futures fell by $2.94, or 4.1%, to $69.38 a barrel. Net U.S. crude imports (USOICI=ECI) rose by 2.1 million barrels per day (bpd), while crude production fell 100,000 bpd to 13.1 million bpd, its first weekly decline since July, the EIA said. Crude stocks at the Cushing, Oklahoma, delivery hub for WTI (USOICC=ECI) rose by 1.8 million barrels in the last week, the EIA said. https://www.reuters.com/markets/commodities/us-crude-stocks-fall-fuel-inventories-rise-latest-week-eia-2023-12-06/

2023-12-06 20:27

Dec 6 (Reuters) - The U.S. Coast Guard said on Wednesday it found a light sheen west of an area in the Gulf of Mexico where it was leading the clean-up of a million-gallon (liters) oil spill for nearly three weeks, but could not confirm if the sheen was from that spill. The oil spill was first observed on Nov. 16 around 19 miles (30 km) offshore the Mississippi River delta, shutting in around 89 miles of underwater pipelines and around 3% of the Gulf of Mexico's daily crude oil output. "The reported sheen is being investigated and has not been confirmed to be associated with the November 16 observed initial discharge," the Coast Guard said. No damage or indication of a leak had been identified after surveying the entire length of Main Pass Oil Gathering Co's (MPOG) 67-mile (108-km) pipeline, along with 22 miles (35 km) of surrounding pipelines. Remote-controlled devices and divers continued to reassess the pipelines. The surrounding pipelines belong to operators whose oil production facilities are also closed, including W&T Energy VI (WTI.N), Occidental Petroleum (OXY.N), Walter Oil and Gas, Cantium, Arena Offshore, and Talos Energy Ventures (TALO.N). "The main pipeline and several surrounding lines remain shut in and have not been put back into service," the Coast Guard said. Initial calculations placed the volume of the leak at 1.1 million gallons (4.2 million liters), or 26,190 barrels. https://www.reuters.com/world/us/us-coast-guard-finds-sheen-near-oil-spill-gulf-mexico-2023-12-06/