2024-06-06 20:06

Heat advisories in effect for 31 million people across multiple states Phoenix implements ice immersion for heat stroke victims June 6 (Reuters) - A massive high-pressure system known as a heat dome that has stalled over the U.S. Southwest was pushing temperatures in the region well above 100 degrees Fahrenheit (38 degrees Celsius) on Thursday, leaving millions of Americans to swelter in the coming days. Some 31 million people from Northern California, south through Arizona and east into Texas, were under excessive heat warnings and heat advisories issued by the National Weather Service through Saturday. The same region suffered under weeks of extremely hot weather last summer. One of the hottest spots is likely to be the Las Vegas strip, where the high temperature is expected to reach 112 F (44 C), which would mark a record for the Nevada city on June 6. "It's going to be a hot one out there today!" the NWS in Las Vegas said on X, urging people to drink fluids, wear loose fitting clothing and stay indoors if possible. In Death Valley, California - which features the lowest point in the country and is believed to be one of the hottest places on Earth - the temperature could reach 121 F by the afternoon, an ominous sign before the official start of the summer. Matthew Lamar, a park ranger at Death Valley National Park, keeps cool by pouring cold bottles of water over his head. "It feels good but doesn't last long. It evaporates quickly," he said, noting that tourist traffic has slowed considerably as the temperature rises. In Phoenix, the high temperature was to reach 114 F, forcing officials to open cooling centers at libraries and to close some popular hiking trails during the day. "The hot temperatures continue and a few records may even be broken over the next couple of days," the NWS in Phoenix said in a post on social media platform X. A heat dome, the cause of this week's conditions, is a ridge of high-pressure air in the upper atmosphere that stalls and traps hot air while keeping cooler air away even at night. Phoenix was one of several cities in the region that experienced their hottest summers on record in 2023. Arizona's capital city endured the high temperatures exceeding 110 F for 55 straight days, a record. Last summer, 645 people died in the Phoenix area due to heat-related illnesses. In response, city firefighters this summer will begin using ice immersion to care for heat stroke victims. The technique calls for rescue personnel to pack patients in ice on their way to quickly lower their body temperature, fire officials said during a demonstration for local media. Forecasters say it was difficult to link the record-breaking heat experienced by the U.S. Southwest in recent years to human-induced climate change, but such extremes are becoming more frequent because of global warming. Sign up here. https://www.reuters.com/world/us/us-southwest-swelters-under-extreme-temperatures-heat-dome-persists-2024-06-06/

2024-06-06 19:53

June 6 (Reuters) - U.S. oil and gas producer Devon Energy (DVN.N) New Tab, opens new tab has lost bids to acquire at least three of its peers in the last 12 months because its shares were spurned as acquisition currency, according to people familiar with the negotiations. Devon missed out on the sector's dealmaking boom by losing to ConocoPhillips (COP.N) New Tab, opens new tab the $22 billion deal to acquire Marathon Oil (MRO.N) New Tab, opens new tab, failing to beat Occidental Petroleum's (OXY.N) New Tab, opens new tab $12 billion bid for CrownRock, and unsuccessfully courting Enerplus before it was sold to Chord Energy (CHRD.O) New Tab, opens new tab for $3.8 billion, the sources with knowledge of the matter said. Like its peers, Devon has turned to dealmaking to gain scale as it drills more of its existing acreage. It has struggled to clinch an acquisition as higher drilling costs and production issues made its stock less attractive to acquisition targets, the sources said. Most recent big deals in the sector, including Exxon Mobil's (XOM.N) New Tab, opens new tab $59.5 billion acquisition of Pioneer Natural Resources and Chevron's (CVX.N) New Tab, opens new tab $53 billion agreement for Hess (HES.N) New Tab, opens new tab, have been all-stock. All-stock offers help reconcile price disagreements with acquisition targets whose shareholders are reluctant to cash out for fear energy prices may sharply rebound, but are happy to roll their stakes in a deal because they want to stay invested in the combined company. Acquisition targets were skeptical, however, about the value of Devon's stock, the sources said. Devon's shares have underperformed the S&P 500 Energy index by 16 percentage points in the last 12 months, LSEG data shows. Andrew Dittmar, principal analyst at energy consultancy Enverus Intelligence, said the weakness in Devon's stock put the company at a disadvantage to rival bidders for companies. "They had less room to offer premiums and bid-up asking prices without potentially making the deal financially-dilutive to themselves," Dittmar said of Devon. A Devon spokesperson declined to comment. In the company's first-quarter earnings call last month, CEO Rick Muncrief said Devon had a "very, very high bar" on the acquisitions it would pursue. "Can we find something that makes us stronger? Then we would consider that without a doubt," Muncrief said. Founded in 1971, Devon operates in shale formations that include the Permian basin of Texas and New Mexico, the Eagle Ford in south Texas, and the Williston basin in North Dakota. The company has a market value of about $30 billion. The doubts Devon's recent acquisition targets harbored are striking given the strong performance of its stock in the wake of its last major deal. When Devon combined with peer WPX Energy in a $12 billion all-stock merger at the start of 2021, the company went on to be the best-performing stock in the S&P 500 index that year. Yet despite Devon's strategy of running a tight ship and returning cash to shareholders, the production issues and higher costs have undermined investor confidence, and the market has more recently fallen out of love with Devon's stock. The problems with production included a fire at a key gas compression station in Texas in January 2023, which knocked the facility offline for a number of weeks. NEW TARGETS To be sure, Devon's failure to bag a deal is also a function of its price discipline as an acquirer, as well as heightened competition for assets in the sector, according to the sources. Some of the companies Devon failed to buy were pricey; Marathon Oil and Enerplus sold at an average premium to their undisturbed share price that was around 3 percentage points over the average premium paid for U.S. publicly listed oil and gas companies since the start of 2023, according to Enverus data. "Some people feel like when one company does a deal, their competitor needs to do a deal, but smart companies judge every transaction on its merits," said Kevin MacCurdy, director of upstream research at investment advisory firm Pickering Energy Partners. Were Devon to give a potential acquisition another shot soon, investment bankers and analysts say logical targets include Permian Resources (PR.N) New Tab, opens new tab, Matador Resources (MTDR.N) New Tab, opens new tab, and privately-owned Mewbourne Oil, all of which would bolster its Delaware basin footprint. Alternatively, if Devon wants to reinforce its Williston basin position, it could target privately held Grayson Mill Energy, which Reuters reported is considering sale options. Buyout firm EnCap Investments, which owns Grayson Mill, declined comment. Permian Resources, Matador Resources and Mewbourne Oil did not respond to comment requests. Bryce Erickson, who leads valuation consultancy Mercer Capital's oil and gas group, predicted a deal for Devon was only a matter of time, given the company has managed to overcome many of its production issues. "Real or imagined, from my chair, there is a sort of feeding frenzy - it's acquire or be acquired," said Erickson. Sign up here. https://www.reuters.com/markets/deals/how-devon-energy-missed-out-us-oil-gas-mega-deal-wave-2024-06-06/

2024-06-06 18:59

Biden administration supports reactors that would be fueled by HALEU US estimates more than 40 metric tonnes of HALEU needed before 2030 Scientists suggest limiting HALEU enrichment to 10-12% for safety WASHINGTON, June 6 (Reuters) - A special uranium fuel planned for next-generation U.S. nuclear reactors poses security risks because it could be used without further enrichment as fissile material in nuclear weapons, scientists said in an article published on Thursday. The fuel, called high-assay low-enriched uranium, or HALEU, is enriched to levels of up to 20%, compared with about 5% for the fuel that powers most existing reactors. Until recently it was made in commercial amounts only in Russia, but the United States wants to produce it to fuel a new wave of reactors. President Joe Biden's administration believes nuclear power that is virtually emissions-free is essential in the fight against climate change. Biden's Inflation Reduction Act provided $700 million for a HALEU availability program including purchasing the fuel to create a supply chain for planned high-tech reactors. Uranium is a radioactive element that exists naturally. To make nuclear fuel, raw uranium undergoes processes that result in a material with an increased concentration of the isotope uranium-235. "This material is directly usable for making nuclear weapons without any further enrichment or reprocessing," said Scott Kemp, one of five authors of the peer-reviewed article in the journal Science. "In other words, the new reactors pose an unprecedented nuclear-security risk," said Kemp, a professor at the Massachusetts Institute of Technology and a former science adviser on arms control at the State Department. A bomb similar in power to the one the U.S. dropped on Hiroshima, Japan in 1945 could be made from 2,200 pounds (1,000 kg) or less of 19.75% enriched HALEU, the article said. "Designing such a weapon would not be without its challenges, but there do not appear to be any convincing reasons why it could not be done," it said. The authors said if enrichment is limited to 10% to 12%, the supply chain would be far safer with only modest costs. The authors said HALEU is a domestic risk as it is not required to have the protections normally required for weapons-usable material. U.S. use of the fuel could also set a precedent for other countries building the reactors where proliferation standards are not as strict. "Were HALEU to become a standard reactor fuel without appropriate restrictions determined by an interagency security review, other countries would be able to obtain, produce, and process weapons-usable HALEU with impunity, eliminating the sharp distinction between peaceful and nonpeaceful nuclear programs," said the article, also written by Edwin Lyman at the Union of Concerned Scientists nonprofit group. The U.S. Department of Energy estimates that more than 40 metric tonnes of HALEU could be needed before the end of the decade, with additional amounts required each year, to deploy advanced reactors to support the Biden administration's goal of 100% clean electricity by 2035. The DOE did not immediately respond to a request for comment. TerraPower, a company backed by Bill Gates that has received funding from the Energy Department, hopes to build its Natrium nuclear plant in Wyoming by 2030 to run on HALEU. TerraPower in late 2022 delayed Natrium's launch date by at least two years to 2030 due to a lack of HALEU. A TerraPower spokesperson said Natrium will use HALEU as it allows more efficient energy production and reduces nuclear waste volumes. "TerraPower has made reduction of weapons risks a foundational principle" the spokesperson said, adding that its fuel cycle eliminates the risk of proliferation. Natrium is expected to start construction on the non-nuclear side but needs federal permits to build the nuclear work. Centrus Energy (LEU.A) New Tab, opens new tab a U.S. company that has begun making small amounts of HALEU in Ohio and is working with TerraPower to establish commercial production capabilities for the 2030 start, referred questions to the DOE. Sign up here. https://www.reuters.com/world/us/uranium-fuel-planned-high-tech-us-reactors-weapons-risk-scientists-say-2024-06-06/

2024-06-06 18:23

Canadian dollar gains 0.2% against the greenback Canada's trade deficit narrows in April Price of U.S. oil increases 2.2% 10-year yield steadies near a 3-month low TORONTO, June 6 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rose and data showed some narrowing in Canada's trade deficit, while investors awaited the release of monthly jobs reports for the U.S. and Canada. The loonie was trading 0.2% higher at 1.3670 to the U.S. dollar, or 73.15 U.S. cents, after trading in a range of 1.3667 to 1.3709. On Wednesday, the currency touched a near two-week low at 1.3741 after the BoC became the first G7 central bank to lower interest rates, cutting by 25 basis points to 4.75%. Data due on Friday is expected to show Canada's economy adding 22,500 jobs in May and the unemployment rate ticking up to 6.2% from 6.1%. U.S. jobs data for May is also due, expected to show an increase of 185,000. Since the BoC has only just moved on rates, the U.S. employment report could have a bigger impact on the Canadian currency than Canada's jobs report, said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "The markets are going into the (U.S.) jobs data with very low U.S. yields. The risk would be, like we've seen other times this year, a firming of jobs data, bond yields bounce back." The U.S. 10-year yield has fallen 45 basis points from its April peak, pressuring the greenback (.DXY) New Tab, opens new tab against a basket of major currencies. Canada posted a smaller-than-expected merchandise trade deficit of C$1.05 billion ($765 million) in April, as energy and gold helped exports grow faster than imports, data showed. The price of oil, one of Canada's major exports, was up 2.2% at 75.67 a barrel as the European Central Bank cut interest rates for the first time in roughly five years. The Canadian 10-year yield was little changed at 3.388%, after touching a near three-month low during Wednesday's session at 3.372%. Sign up here. https://www.reuters.com/markets/currencies/c-gains-ahead-jobs-data-oil-prices-climb-2024-06-06/

2024-06-06 17:51

ECB delivers first rate cut in five years But markets question scope for further moves Contrasts with renewed rise in Fed rate cut bets LONDON, June 6 (Reuters) - (This June 6 story has been refiled to correct the spelling of Sabrina Khanniche's name in paragraphs 6 and 7) Traders scaled back bets that the ECB would cut interest rates twice more this year, and outpace peers in easing policy, after the euro zone central bank gave little hint on Thursday of further moves. The European Central Bank lowered its key rate by 25 basis points (bps) from a record high to 3.75% at its policy meeting on Thursday, its first cut in five years. However, it raised its inflation forecasts and President Christine Lagarde declined at a press conference to confirm it had entered a phase of 'dialling back' its restrictive monetary policy. That led traders to price in just 36 bps of further rate cuts this year -- meaning another cut and less than a 50% chance of a third to follow, compared with over a 60% chance earlier on Thursday. When the ECB last met in April, traders were much more certain on a third cut. The odds of a second cut by September fell to less than 70% from nearly 80% before Thursday's decision. "If we'd had more visibility about the cutting cycle it would have been perceived more positively but there is still uncertainty," said Sabrina Khanniche, senior economist at Pictet Asset Management. "Lagarde did not want to commit on the future path ahead," Khanniche said. SHIFTING DIVERGENCE The bank's hawkish tone added fuel to a shift in the economic divergence theme, with receding ECB rate cut bets contrasting with a renewed increase in U.S. rate cut expectations. Earlier this year, the U.S. economy's stronger performance against the euro zone had driven investor preference for the bloc's debt and hurt the euro. Since then, the bloc's economy grew more than expected during the first quarter after a recession late last year. The United States in contrast grew at less than half the rate it posted in the fourth quarter. While traders have become less convinced on the scope for ECB rate cuts, they have increased bets on Federal Reserve easing, now expecting nearly 50 bps, or two cuts, this year, up from less than 35 bps a week ago. The odds of a September Fed cut are now seen higher than one from the ECB. "What we may now be seeing, if the data turns a little bit more in the U.S. and the Fed can go ahead with a cut in September, that may be the saving grace for the ECB (to cut in) September," said Soeren Radde, head of European economic research at hedge fund Point72. That shifting outlook means government bonds in the euro zone will continue to lag, after they underperformed U.S. Treasuries for the first time since January last month, losing 0.2% (.MEREG00) New Tab, opens new tab, while U.S. Treasuries gained 1.5% (.MERG0Q0) New Tab, opens new tab. Euro zone bonds have lost investors 1.2% year-to-date, double the 0.6% loss on U.S. Treasuries. "The potential return you have from when you buy core and semi-core euro zone sovereign bonds is limited. Many investors have been reluctant to go in and buy," said Camille de Courcel, head of G10 rates strategy for Europe at BNP Paribas. And in June so far, Germany's 10-year yield , the euro area benchmark, has dropped 10 basis points, half the 20 bps drop in U.S. peers . Bond yields move inversely with prices. Roman Gaiser, head of fixed income for EMEA at Columbia Threadneedle, said he did not see gains ahead for euro zone government debt. "We're not piling in," he added. Prospects for fewer ECB cuts is better news for the euro . It edged higher on Thursday to $1.0883, adding to its roughly 2% rally from a five-month low hit in mid-April. JPMorgan Private Bank's head of global FX strategy Samuel Zief sees a fair value of around $1.10 -- implying another 1% of gains. The euro zone's improving economic performance means European stocks (.STOXX) New Tab, opens new tab are also seen gaining. While underperforming U.S. peers, they have rallied over 9% this year and touched record highs earlier on Thursday. European equities are "the main overweight we have in our global equity funds," said Kevin Thozet, investment committee member at asset manager Carmignac, adding the euro zone economy is in a "sweet spot". Still, the shadow of the U.S. economy and Fed policy loom large over global markets, and that's no different for the euro zone. Point72's Radde said he would have expected a further scaling back of traders' ECB rate cut expectations after Thursday's policy meeting had it not been for a softening U.S. economy. "Lagarde was striving to argue (on Thursday) why they are not committing a policy mistake in cutting rates today," Radde said. "That should have elicited quite a strong reappraisal of the rate outlook, and the fact that it didn't means there's a strong overlay from outside the euro area." Sign up here. https://www.reuters.com/markets/europe/traders-question-case-rapid-ecb-rate-cuts-2024-06-06/

2024-06-06 16:54

FRANKFURT, June 6 (Reuters) - European Central Bank governors see a further interest-rate cut in July as unlikely after some stronger-than-expected economic data, with the focus now on their September meeting, five sources told Reuters. An ECB spokesperson declined to comment for this story. The ECB went ahead with its first reduction in borrowing costs since 2019 on Thursday, citing progress in tackling inflation even as it acknowledged price growth was likely to stay above its target for another year. Policymakers gathering in Frankfurt agreed not to provide any public guidance about their next meeting on July 18, given that the path ahead for inflation was bumpy and uncertain, the sources said. But some governors, speaking on condition of anonymity, said they thought it was unlikely they would cut rates again next month in light of recent data, including strong wage growth and services inflation. Those policymakers had already shifted their focus to the Sept. 12 meeting, when the ECB will update its economic projections and have a few more inflation prints to consider. One source said a rate cut would be warranted in September if the ECB's inflation forecast for the last quarter of 2025 remained where it has been for some time, that is at 1.9%-2.0%. ECB President Christine Lagarde has singled out that stable projection as key evidence underpinning Thursday's decision to cut rates. Sign up here. https://www.reuters.com/markets/rates-bonds/ecb-governors-see-july-rate-cut-unlikely-focus-now-sept-sources-2024-06-06/