2024-05-31 19:32

NEW YORK, May 31 (Reuters) - The U.S. gasoline market is flashing signs of weakness at the start of summer driving season, a time it generally picks up strongly, and analysts say this clouds the picture for oil demand ahead of the OPEC+ group policy meeting that kicks off this weekend. U.S. gasoline demand fell about 2% week-over-week to 9.15 million barrels a day, even as refiners ramped up to their highest run-rate in nine months, government data for the week ended May 24 showed. That led to a surprise jump in gasoline inventories, which pushed futures prices for the fuel to a three-month low on Thursday. The difference between gasoline futures and U.S. oil futures , a measure of refiners' margins on gasoline, also slipped to a three-month low on Thursday. Softer refining margins could lead to run cuts at refineries, Citi analysts wrote on Friday. "Weak refined product markets could drive the entire complex lower, including for crude," they wrote. U.S. gasoline consumption represents roughly 10% of global oil demand. Rising oil stocks over the past few months due to soft fuel demand had already strengthened the case for OPEC+ to extend supply cuts at the meeting, delegates and analysts said. "OPEC+ is looking at all incoming data points, so they will take note of the latest developments," UBS analyst Giovanni Staunovo said on Friday. Weakness in U.S. gasoline demand is likely due to a mix of factors, including a record number of travelers choosing to fly over the holiday weekend instead of driving long distances, Staunovo said. More fuel-efficient cars and electric vehicles also cut gasoline usage, he added. "There were almost 3 million people at the airport last Saturday, a new record high. So despite many on the road, the miles driven might have been lower than a year ago and eventually more-efficient cars weighed on demand," Staunovo noted. The market structure for U.S. gasoline futures flipped briefly to a 'contango' on Friday , a structure where gasoline available immediately is priced lower compared to deliveries later in the future. A contango for U.S. gasoline in May is rare, last recorded in 2021. It is a sign of how weak the market is and a gasoline trader called it a signal to "store now, sell later". Sign up here. https://www.reuters.com/business/energy/weak-us-gasoline-demand-compounds-pressure-oil-ahead-opec-meet-2024-05-31/

2024-05-31 19:26

May 31 (Reuters) - Georgian Prime Minister Irakly Kobakhidze called on Friday for a review of relations with the United States after Washington ordered punitive measures over the passage of a law on "foreign agents", Russian news agencies reported. "Georgian-American relations must truly be reviewed. We'll discuss this with the ambassador," RIA news agency quoted Kobakhidze as telling journalists in Tbilisi. The prime minister said relations with Washington had suffered under the previous U.S. ambassador over the diplomat's call for rapid and sharp changes in policy. Georgia's parliament, controlled by the prime minister's Georgian Dream party, passed the law requiring organisations receiving more than 20% of their funding from overseas to register as agents of foreign influence. The legislation sparked large street protests. Opponents of the bill, with its provisions for onerous disclosure requirements and hefty fines for violations, say it is authoritarian and inspired by similar legislation in Russia. The European Union says the law could compromise Georgia's bid to join the 27-nation bloc. U.S. Secretary of State Antony Blinken this week imposed visa restrictions and launched a review of bilateral cooperation. He said the law would "stifle the exercise of freedoms of association and expression" and impede the work of independent media organizations. Kobakhidze's government says the bill will promote transparency and safeguard sovereignty against what it says is a bid in the West to drag Georgia into confrontation with Russia. Parliament voted to override a presidential veto of the bill, which has sparked some of the biggest protests seen in the South Caucasus country since independence from the Soviet Union in 1991. Sign up here. https://www.reuters.com/world/europe/georgian-pm-calls-review-relations-with-us-2024-05-31/

2024-05-31 18:40

Group working on complex deal for 2024-2025, sources say Kazakhstan's minister travelling to Riyadh, adviser says OPEC+ still officially schedules meeting as online gathering LONDON, May 31 (Reuters) - Saudi Arabia has invited OPEC+ oil ministers to Riyadh to hold their June 2 policy meeting to discuss a complex deal that may extend deep oil production cuts into 2025, sources from the producer group told Reuters on Friday. Kazakhstan's energy minister Almasadam Satkaliev will travel to Riyadh, Shyngys Ilyasov, an adviser to the minister, told Reuters by phone. The adviser did not say how many other OPEC+ ministers would attend. The Organization of the Petroleum Exporting Countries led by Saudi Arabia and allies including Russia, known as OPEC+, has made a series of output cuts since late 2022 amid rising production from the United States and other non-members. OPEC+ is currently cutting output by a total of 5.86 million barrels per day, equal to about 5.7% of global demand. The cuts include 3.66 million bpd by OPEC+ members valid through to the end of 2024, and 2.2 million bpd of additional voluntary cuts by some members which expire at the end of June. A deal on Sunday could include extending some or all of the cuts of 3.66 million bpd into 2025 and some or all of the voluntary cuts into the third or fourth quarter of 2024, three sources familiar with OPEC+ discussions said on Thursday. Another source, an OPEC+ delegate, when asked on Friday if Sunday's meeting would make decisions on 2025, said: "Part of it, yes." The extension of some cuts into next year will likely be made conditional on OPEC+ agreeing new individual member output capacity figures later in 2024, two of the sources said. Oil prices have risen this year but concern about demand and the prospect of higher-for-longer interest rates in major economies has weighed. Brent , the global benchmark, traded below $82 a barrel on Friday, down from a six-month high of $92.18 in April. SERIES OF MEETINGS Not all ministers are expected to travel to Riyadh for Sunday's meeting, which is still officially scheduled as an online gathering. A series of meetings is expected to begin at 1000 GMT on Sunday. The invitation to the Saudi capital is the second change of plan. OPEC+ originally planned to convene at OPEC's Vienna headquarters but shifted the meeting online. OPEC+ is trying to agree new oil production capacity for its member countries by the end of 2024, an issue that has created tension in the past because each nation's output target is calculated based on its notional capacity. "If the cuts are indeed extended into 2025 that will also raise the issue of the group's planned capacity audit and baseline reset, which likely won't be settled until later this year," said Rory Johnston, founder of oil research service Commodity Context. The countries which have made voluntary cuts are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates. "We would not entirely rule out a plot twist - in the form of a deeper cut - given Prince Abdulaziz's penchant for Hollywood twist endings," said Helima Croft from RBC Capital Markets. Saudi energy minister Prince Abdulaziz bin Salman has repeatedly said he likes keeping the oil market on its toes and has promised to punish speculators. The OPEC+ meeting coincides with Saudi Arabia's sale of a new stake in state oil giant Aramco (2222.SE) New Tab, opens new tab that could raise as much as $13.1 billion to help fund Crown Prince Mohammed bin Salman's plan to diversify the economy. Sign up here. https://www.reuters.com/markets/commodities/saudi-arabia-invites-opec-ministers-riyadh-june-2-meeting-sources-say-2024-05-31/

2024-05-31 18:22

May 31 (Reuters) - More than 150,000 homes and businesses in the U.S. states of Texas, Louisiana, Arkansas and California were still without power on Friday after storms battered the region over the past week, according to meteorologists and data from PowerOutage.us. That is down from over 268,000 customer outages in the region on Thursday and a peak of over 939,000 outages in several states from Texas to Kentucky on Tuesday. Tornado-spawning thunderstorms that swept the Southern Plains and the Ozark Mountains killed at least 21 across four U.S. states over the Memorial Day holiday weekend. Texas power company Oncor, a unit of California-based Sempra Energy (SRE.N) New Tab, opens new tab, had the most outages with 87,422 customers without power in the Dallas-Fort Worth area, according to PowerOutage.us. Oncor said it had already restored power to over 500,000 customers. However, it added that heavy rain, thunder, lightning and flooding this week, including Thursday night, were impacting several of the communities where its teams were working to restore power. Major outages by state: Sign up here. https://www.reuters.com/business/environment/over-231000-still-without-power-texas-other-us-states-2024-05-31/

2024-05-31 17:02

May 31 (Reuters) - U.S. inflation tracked sideways in April and consumer spending weakened, mixed signals for the Federal Reserve that provided little clarity on whether the U.S. central bank will be able to begin cutting interest rates in September. The data suggested the elevated pace of price increases could last longer than expected but also the prospect that more tepid consumer spending may keep a lid on prices increases in the months ahead. "People have been pinched for a while, and it's likely starting to show ... This cooling is encouraging for slower inflation in the coming months," said Elizabeth Renter, a senior economist at NerdWallet. The personal consumption expenditures (PCE) price index increased 0.3% last month, the Commerce Department's Bureau of Economic Analysis said on Friday, matching the unrevised gain in March. In the 12 months through April, the PCE price index rose 2.7% after advancing at the same pace in March. Economists polled by Reuters had forecast it would climb 0.3% on the month and 2.7% on a year-on-year basis. The PCE price index is one of the inflation measures tracked by the U.S. central bank for its 2% target. Monthly inflation readings of 0.2% over time are needed to bring inflation back to target. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased by 0.2% in April after a downwardly revised 0.7% rise in March. Revised gross domestic product data released on Thursday showed consumer spending moderating to a 2.0% pace in the first quarter from the brisk 3.3% pace in the October-December period. Yields on U.S. Treasury securities fell to their lowest levels in about two weeks following the release of the inflation report on Friday, while stocks reversed early gains and slid for a third consecutive day. The dollar was broadly weaker. Traders of futures tied to the Fed policy rate added to bets of roughly even odds that the central bank will begin to cut rates in September and boosted the odds of a second rate cut in December to about the same probability. Goods prices increased 0.2% in April after edging up 0.1% in the prior month, the PCE report showed. Services prices rose 0.3%, down from 0.4% in March. Housing and utilities remained the largest contributors to last month's increase. Energy prices rose 1.2% and food prices decreased 0.2%. The Fed has kept its benchmark policy rate in the 5.25%-5.50% range for the past 10 months, having been stung by several stronger-than-expected inflation and labor market readings this year after more encouraging data in the fourth quarter of last year. While inflation still remains sticky, job gains in April were at the lowest level in six months. REAL SPENDING FALLS The Fed has raised borrowing costs by 525 basis points since March 2022 in a bid to cool demand across the economy. Financial markets initially expected the first rate cut to come in March, which then got pushed to June and now to September. Stripping out the volatile food and energy components, the PCE price index increased 0.2% in April after rising 0.3% in March. Core inflation increased 2.8% on a year-on-year basis in April, matching March's advance. PCE services inflation excluding energy and housing rose 0.3% after a 0.4% gain in March. Policymakers are closely monitoring the "super core" inflation to gauge their progress in fighting inflation. Inflation-adjusted personal spending declined 0.1% in April, after an increase of 0.4% in March. That reflected a 0.4% decrease in real goods spending in April, down sharply from a 0.9% increase in March, and a 0.1% rise in real services spending, down from a 0.2% increase in the prior month. "We are in a be-careful-what-you-wish-for moment," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, about the pullback in consumer spending and its potential to lead to lower inflation. "If ... the Fed is able to cut slowly as a result, then that will be good for markets. However, if consumer spending – and the economy – slows too quickly, then corporate profits and stock prices will go down much more quickly than the Fed will be able to cut rates." Sign up here. https://www.reuters.com/markets/us/us-inflation-rises-line-with-expectations-april-2024-05-31/

2024-05-31 16:55

Canadian dollar gains 0.3% against the greenback For the week, the currency advances 0.2% Economy expands 1.7% in the first quarter Bond yields fall across the curve TORONTO, May 31 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Friday as a drop in U.S. bond yields offset increased bets the Bank of Canada would begin cutting interest rates next week following the release of weaker-than-expected Canadian GDP data. The loonie was 0.3% higher at 1.3640 to the U.S. dollar, or 73.31 U.S. cents, after trading in a range of 1.3620 to 1.3689. For the week, the currency was up 0.2%. "The CAD is holding a minor gain on a soft-looking USD on the week," Shaun Osborne, chief currency strategist at Scotiabank, said in a note. The "saving grace" for the currency on Friday was weaker than expected U.S. personal spending data that weighed on U.S. yields and the greenback, Osborne said. The U.S. dollar and Treasury yields fell as data showed U.S. inflation tracked sideways in April and consumer spending weakened. The Canadian economy expanded at a slower-than-expected annualized rate of 1.7% in the first quarter, while the pace of fourth-quarter growth was revised to 0.1% from 1.0% reported initially. Chances that the BoC would lower its benchmark interest rate from the current level of 5% at a policy decision on June 5 climbed to 80% from 66% before the GDP report, swaps market data showed. Failure to cut would risk the bank "keeping policy overly restrictive and having to embark on a much more aggressive easing cycle into year-end," said Simon Harvey, Head of FX analysis for Monex Europe and Monex Canada. "A more dovish outlook for Canadian rates reinforces our bearish stance on CAD," Harvey added. Canadian bond yields fell across the curve. The 10-year was down 7.1 basis points at 3.631%, extending its pullback from a four-week high of 3.783% that it hit during Thursday's session. Sign up here. https://www.reuters.com/markets/currencies/c-gains-despite-gdp-miss-us-bond-yields-ease-2024-05-31/