2025-01-09 07:38

Analysts expect Jan demand to grow by 1.4 mln bpd US gasoline and distillates stocks rise more than expected Saudi Arabia crude oil supply to China to fall in Feb LONDON, Jan 9 (Reuters) - Oil prices were little changed on Thursday as investors weighed firm winter fuel demand expectations against large U.S. fuel inventories and macroeconomic concerns. Brent crude futures were down 3 cents at $76.13 a barrel by 1003 GMT. U.S. West Texas Intermediate crude futures dipped 10 cents to $73.22. Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a bigger than expected rise in U.S. fuel stockpiles pressured prices. "The oil market is still grappling with opposite forces - seasonal demand to support the bulls and macro data that supports a stronger U.S. dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further," said OANDA senior market analyst Kelvin Wong. JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day (bpd) year on year to 101.4 million bpd, primarily driven by increased use of heating fuels in the Northern Hemisphere. "Global oil demand is expected to remain strong throughout January, fuelled by colder than normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays," the analysts said. The market structure in Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing. The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing. Nevertheless, official Energy Information Administration (EIA) data showed rising gasoline and distillates stockpiles in the United States last week. The dollar strengthened further on Thursday, underpinned by rising Treasury yields ahead of U.S. President-elect Donald Trump's entrance into the White House on Jan. 20. Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's administration policies and fresh fiscal stimulus measures out of China, OANDA's Wong said. Meanwhile, Saudi Arabia's crude oil supply to China is set to decline in February from the previous month, trade sources said on Thursday, after the kingdom raised its official selling prices to Asia for the first time in three months. Sign up here. https://www.reuters.com/business/energy/oil-prices-extend-losses-rising-us-fuel-inventories-2025-01-09/

2025-01-09 07:34

NEW DELHI, Jan 9 (Reuters) - India is expected to sign a preliminary agreement with Mongolia soon in the area of geology and exploration, a senior Indian government official with direct knowledge of the matter said. Landlocked Mongolia is rich in deposits of copper and coking coal, and India is mostly dependent on imports to meet rising demand for the red metal used in power, construction and electrical vehicles as well as coking coal for steelmaking. "India's cabinet has approved the MoU (memorandum of understanding) and both countries are expected to sign it soon," the source said, declining to be identified as the deliberations are not yet public. India's federal mines ministry did not respond to a Reuters email seeking comment. Mongolia's Ministry of Mining and Heavy Industry did not immediately respond to a Reuters email seeking comments. Companies such as Adani, Hindalco and Vedanta have expressed an interest in sourcing copper from Mongolia, the source said. All three companies did not respond to emails from Reuters seeking comment. Both Indian and Mongolian officials are working out supply routes for Indian companies to source copper and coking coal, with India preferring the route from Vladivostok in Russia despite the longer distance, the official said. "China is convenient but we prefer the route from Russia," the official said. Relations between Asian giants India and China were strained after a deadly military clash on their disputed border in 2020 but have been on the mend since they reached an agreement in October to pull back troops from their last two stand-off points in the western Himalaya mountains. Unlike China, India has traditionally maintained close ties with Russia. Resource-rich Mongolia can offer superior grades of coking coal, industry officials say. In November, India's JSW Steel (JSTL.NS) , opens new tab and state-run Steel Authority of India (SAIL) (SAIL.NS) , opens new tab were in talks with Mongolian authorities to import two shipments of coking coal, Reuters reported. Sign up here. https://www.reuters.com/markets/commodities/india-sign-mining-pact-with-mongolia-soon-govt-source-says-2025-01-09/

2025-01-09 07:30

Short bets on yuan highest since June 2023 Bearish bets on Singapore dollar highest since Oct 2022 S.Korean won most shorted Asian currency Jan 9 (Reuters) - Bearish bets on most Asian currencies climbed to multi-month highs as prospects of fewer U.S. interest rate cuts this year continued to boost dollar demand, while the threat of potential U.S. tariffs undermined the appeal of risky Asian assets, a Reuters poll showed on Thursday. Short bets on the Chinese yuan rose to their highest since June 2023, while those on the Malaysian ringgit and the Indonesian rupiah reached a seven-month high, according to a fortnightly poll of 13 respondents. The yuan, which has been trading near 16-year-lows against the dollar, is seen as most vulnerable to a stronger dollar and heavier tariffs under U.S. President-elect Donald Trump's administration. China is also Southeast Asia's largest trading partner and a weaker yuan could send ripples across regional currency markets. Ahead of Trump's inauguration on Jan. 20, markets have steered away from Asian assets as his policies around tax cuts, tariff hikes and tighter immigration are likely to boost U.S. prices, bond yields and the dollar. Moreover, the Federal Reserve's projection of two rate cuts for 2025, half of what it had earlier estimated, has led markets to now fully price in only one 25 basis-point (bp) rate cut in 2025, with a 60% chance of a second reduction. Higher U.S. rates and the dollar's yield advantage could spur capital outflows in emerging Asian markets and weaken their currencies. "The external environment may constraint how far Asia central banks can ease with Asia FX weakness seen since the start of the Fed cut cycle," DBS analysts said in a note. The U.S. central bank has cut rates by 100 bps since September. DBS added that there is a conflict of domestic and external priorities for Asia central banks and less export-oriented economies may see lower volatility in prices. Short positions on the Taiwan dollar were at their highest since May 2024. Bearish bets on the Indian rupee , which logged its ninth straight weekly drop last week, were the highest since July 2022. Short positions on the Singapore dollar were at their highest since October 2022. "While Singapore could be directly protected from escalation of U.S. tariffs, it would still be significantly exposed to the indirect impact via slower global growth and spillovers from a slowdown in China's exports," Citi analysts said. Citi's base case is for the Monetary Authority of Singapore (MAS) to ease policy settings in January due to recent disinflation trends and challenges to growth resilience. The South Korean won is currently the most shorted Asian currency, according to the poll. It had posted its worst annual drop in 16 years in 2024 as the government's efforts to boost the market were overshadowed by signs of a slowdown in exports and domestic political turmoil. The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs). The survey findings are provided below (positions in U.S. dollar versus each currency): Sign up here. https://www.reuters.com/markets/currencies/asian-fx-bears-firm-us-rates-trump-tariff-threats-stay-focus-2025-01-09/

2025-01-09 07:19

LONDON, Jan 9 (Reuters) - Extreme bond market agitation has put the Federal Reserve in a bind. It can either cool long-term inflation fears or acquiesce to President-elect Donald Trump's complaints about interest rates being "far too high." It can't do both and will likely opt to tackle the former, potentially setting up a running verbal battle with the White House over the coming year. The surge in U.S. Treasury borrowing rates in the first weeks of 2025 can no longer be dismissed as just natural ebb and flow around the latest economic updates. The market is signaling that we're in alarming new territory that requires caution from the central bank and government alike. Chief among those red flags is the reappearance of a substantial risk premium being demanded by investors to hold longer-dated U.S. government debt. This gap is typically measured as the extra compensation demanded to lock into a long-term bond to maturity over a strategy of simply buying much shorter-dated debt and rolling it over as events unfold. The so-called term premium has largely been absent from the market for over a decade. But the New York Fed's estimate of the 10-year term premium has climbed sharply this year, topping half a percentage point for the first time since 2014. A 50-basis-point risk premium may not be excessive by historical standards, but it's 50 bps above the average of the past 10 years. The term premium's direction of travel indicates a level of investor uncertainty about longer-term inflation, debt accumulation and fiscal policy that hasn't been seen for many years. This is almost certainly due to the mix of historically high budget deficits and a still-hot economy with the incoming president's pledges of tax cuts, immigration curbs and tariff rises. This uncertainty is showing up in other debt metrics that are increasingly moving independently of the Fed's policy steer. The Fed has cut its policy rate by a full percentage point since September, yet the 10-year Treasury yield has risen 100 basis points since then. And 30-year yields are rising even faster, threatening to hit 5% for the first time in over a year - just a quarter point from levels since just before the banking crash of 2008. While the two-year yield , which most closely reflects Fed policy, has barely moved over the past few months, the two-to-30-year yield curve gap has expanded to its widest since the Fed began tightening policy almost three years ago. Long-term inflation expectations captured by the inflation-protected Treasury securities market and the swaps market stopped falling in September and have risen back close to 2.5% - about a half point above the Fed's stated goal. HAWKISH TURN FOR FED? If the Fed is losing control of the long end of the bond market, it may be forced to take a more hawkish turn to reassert its commitment to achieving its 2% inflation target on a sustained basis. This means that, barring a sharp cooling of the economy or a significant U-turn on many of Trump's stated policy promises, it's entirely possible the Fed may not cut again in this cycle. That's not apt to please a new president who has already expressed antagonism toward the Fed and questioned the need for its independence. 'NO IDEA' Fed Governor Christopher Waller tried to play the middle ground on Wednesday by saying policy remains historically tight, though not enough to force a recession, and that one-off price hits from Trump tariff hikes wouldn't change the Fed view. But he also made clear that the Fed - like most bond investors - is now essentially in a guessing game. While Waller said he doubted the most "draconian" of the new administration's proposed policies would be implemented, he added that coming up with a forecast for the Fed's December economic projections was "a very difficult problem." "I have no idea what is coming," he concluded. He's clearly not alone. If top Fed officials have no idea what to expect from Trump, then your average bond investors certainly don't either. Two scenarios thus seem plausible. If the Fed were to accelerate rate cuts in line with what Trump appears to want, without a significant shift in economic fundamentals to justify this move, then bond investors would reasonably assume the central bank is not overly concerned about hitting its 2% target. Bond investors would likely continue to price that risk, "de-anchoring" inflation expectations, as policy wonks say. But the Fed has routinely stated that containing inflation expectations is one of its primary roles, so it's hard to imagine it ignoring that development. And even if Trump's threatened tariffs do not change the inflation calculus per se, Trump's plan to roll over tax cuts and tighten labor markets via immigration crackdowns and deportations certainly crank up already-aggravated inflation risks. If Trump is successful in slashing government spending and federal jobs, he might make some headway in squaring this circle. But few expect this to be either a quick or easy task, especially given that he may not have the votes in Congress to actually pass large parts of his agenda. Perhaps the incoming president could help the Fed - and himself - by making it clear that the borrowing rates he deems "far too high" are long-term bond yields. That way he could allow the Fed do its job and potentially give himself more wiggle room. But less than two weeks from the inauguration, speculation around what may or may not be coming can and likely will cause considerable market disruption. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/us/fed-can-soothe-trump-or-treasuries-not-both-mike-dolan-2025-01-09/

2025-01-09 06:49

Jan 9 (Reuters) - Global energy major BP (BP.L) , opens new tab has pledged to lift oil production by 44% and gas output by 89% from India's largest field off its west coast, under a decade-long contract, according to block operator Oil and Natural Gas Corp (ONGC.NS) , opens new tab on Thursday. ONGC named BP as its technical service provider on Wednesday to assist in boosting output from a baseline crude production of 45.47 million metric tons and 70.40 billion cubic metres (BCM) of gas. Energy major Shell (SHEL.L) , opens new tab also participated in the tender, which sought advanced recovery technologies and expertise in managing complex mature reservoirs to boost production, ONGC said in an exchange filing. BP projected an increase in oil production by 44% to 65.41 million tons and gas output by 89% to 112.63 BCM from the Mumbai High field, which was discovered in 1974. India, the world's third-biggest oil importer and consumer, aims to rapidly increase its oil and gas production, which has remained stagnant for years. The increase in production is expected to begin in the next fiscal year starting April 1, with full-scale visibility anticipated by 2027-28, ONGC said in the filing. The incremental production is expected to generate additional oil and gas revenue for the country of up to $10.30 billion, and contributions from royalty, cess and other levies amounting to as much as $5 billion, the explorer said. In return, BP will receive a fixed fee for the first two years, followed by a service fee based on a percentage share of the revenue from net incremental production, after recovering incremental costs, according to ONGC. The field reached peak production of 471,000 barrels per day of oil in March 1985, and its output had declined to about 134,000 bpd in April 2024, a tender document showed last year. Sign up here. https://www.reuters.com/business/energy/bp-projects-44-jump-oil-output-indias-largest-field-ongc-says-2025-01-09/

2025-01-09 06:42

Malaysia looks to produce GPUs, chips in 5-10 years Influx of investments boosting economy, says PM Malaysia's location strategic for supply chain diversification KUALA LUMPUR, Jan 9 (Reuters) - Malaysia wants to leverage its location to become an energy and chip manufacturing hub this year, riding a recent jump in investments and a favourable outlook for the domestic economy, its premier and economic minister said on Thursday. Malaysia is fast becoming a haven in Southeast Asia, with foreign investors returning as improving growth and a stable currency set it apart from peers grappling with political flux and economic uncertainty. Prime Minister Anwar Ibrahim said Malaysia's economy rebounded dramatically last year, spurred by an influx of strategic investments, most substantially in renewable energy and artificial intelligence infrastructure. He added inflation and the ringgit were stable and the stock market was the region's top performer. "In 2025, we want to double down on our geographical centrality, as a conduit for electricity, talent and supply chain diversification," he said at an economic forum. Anwar said Malaysia will now aim to refine its expertise in oil and gas, semiconductors, and Islamic finance to become a global market leader in each field. Economy minister Rafizi Ramli said Malaysia is looking to produce its own graphics processing unit chips as demand for artificial intelligence and data centres grows. "We are hoping that we can start producing made-by-Malaysia GPUs and chips in the next five to 10 years," he said. Malaysia, a major player in the semiconductor industry that accounts for 13% of global testing and packaging, is targeting over $100 billion in investment for the sector. The Southeast Asian country is seen as well placed to attract more business as Chinese chip firms diversify overseas for assembling needs, and has attracted multibillion-dollar investments from leading firms in recent years, including Intel (INTC.O) , opens new tab and Infineon (IFXGn.DE) , opens new tab. Malaysia also received a slew of digital investments from major tech firms last year, including Alphabet's (GOOGL.O) , opens new tab Google, helping to propel its economy with growth beating market expectations in the second and third quarters and the ringgit becoming one of Asia's top performers in 2024. Sign up here. https://www.reuters.com/markets/asia/malaysia-aims-be-conduit-diversification-energy-supply-chains-pm-says-2025-01-09/