2024-09-06 06:03

LITTLETON, Colorado, Sept 6 (Reuters) - Fossil fuels continue to rule the roost in the United States' power sector, despite clean energy sources being rolled out at the fastest pace in history. For the past decade, U.S. power generators have prioritized clean power sources over fossil fuels, and since 2014 they have lifted clean electricity generation capacity by over 70% while cutting fossil-fired capacity by 5%, according to Ember. Even so, fossil fuels remain the dominant source of national power, accounting for just over 58% of total generation over the first eight months of 2024, according to LSEG. That share is down from 60.4% during the same months in 2021, and reflects ongoing efforts to lift generation from clean energy as part of net zero emissions targets. Yet in terms of absolute generation, output from fossil fuels has hit new heights this year, in response to steadily rising total energy demand that is placing strain on power systems across the country. To keep pace with that rapid demand growth - fuelled in part by data centers and artificial intelligence applications - power firms have been forced to lift generation from fossil fuels alongside clean energy sources, despite pledges to cut reliance on fossil fuels over the longer run. Only once clean generation capacity exceeds fossil capacity, and is complemented by a vastly larger battery storage network than is currently in place, may power generators be able to make material cuts to fossil generation. STAYING POWER Total U.S. power generation from fossil fuels over the first eight months of 2024 was 68.6 million megawatt hours (MWh), which was up 2.8% from a year ago and the highest since at least 2021, according to LSEG. Natural gas-fired plants supplied the lion's share, generating 49.3 million MWh. That total was up 5% from the January to August window of 2023, and the highest on record. Coal-fired output was down 2.3% from the year before at 19.1 million MWh, marking the third consecutive contraction in coal use during the January to August window. Oil-fired production was 179,368 MWh, a new low for the period. The steady reductions in coal and oil-fired generation are in keeping with industry efforts to cut use of high-polluting fuels. Emissions per unit of electricity generated by gas-fired plants are the lowest among all fossil fuels, and roughly 77% lower than from coal-fired generation, data from Ember shows. So far in 2024, around 537,000 metric tons of carbon dioxide (CO2) was emitted for every terawatt hour (TWh) of electricity produced from gas-fired power stations. That compares to around 950,000 tons of CO2 per TWh from coal plants, and 700,000 tons from oil-fired plants. CLEAN LIMITATIONS Emissions from clean energy sources per TWh of electricity average around 21,500 tons of CO2, or 25 times less than from gas-fired power plants. That sharply lower emissions profile is a major reason why power firms and government authorities are supporting clean energy uptake within U.S. power generation. Nuclear reactors are the largest source of clean U.S. power, accounting for around 18.6% of total generation over the first eight months of 2024. Wind farms (10.7%), hydro dams (6.4%) and solar farms (5%) are the other major forms of clean generation. Yet clean power sources have their limitations at current capacity levels. Nuclear plants offer the most robust source of around-the-clock clean energy, but have fallen out of favor due to high construction costs, years-long development times and tough regulations on waste handling. Hydro dams have a similarly long build-out phase, are only suited to certain geographies, and face fervent environmental opposition in many locations. Wind and solar farms have proven to be quicker and cheaper to build than other power sources, but have their own shortcomings. Onshore wind farm construction costs have soared since 2020 due to labor and parts inflation, and often need to clear local community objections before getting the go-ahead. Offshore projects have similar hurdles but with even higher price tags. Solar parks are the quickest and cheapest to bring to fruition, but can only produce power during daylight and so require back-up supplies whenever solar output slumps. In the U.S., utilities that are on the hook to ensure steady power availability regardless of the time of day currently depend on fossil fuels to meet the bulk of demand, and to plug any supply gaps during windless and sunless periods. Many utilities are currently building battery networks that can store surplus clean power for later use, and offer a path to lower fossil fuel reliance in the long run. But current installed battery capacity is only around 21,000 megawatts, which is less than 2% of total installed generation capacity, according to energy data platform Cleanview. That means batteries can currently only deploy a tiny fraction of national power needs. Until batteries can reliably deploy a far larger share of generation capacity, power firms may have no choice but continue to rely on fossil fuels for a majority of power generation, even as they bring on further clean capacity. Sign up here. https://www.reuters.com/business/energy/high-fossil-fuel-use-highlights-us-power-transition-challenge-maguire-2024-09-06/

2024-09-06 06:03

LONDON, Sept 6 (Reuters) - The stark divide between the performance of the U.S. manufacturing sector and the more dominant services sector is giving stock markets a headache at a critical moment. Investors desperate to parse the economic mood amid resurfaced recession fears are scrutinising monthly business surveys for signs of a downturn. But what factories and services firms are saying right now seem poles apart. U.S. manufacturers continue to register declines in overall activity, as they have for much of the past two years during the interest rate squeeze. Surveys from both ISM and S&P Global concurred on this in August, with darkening clouds in China and Europe appearing to weigh on the factory sector. The negativity was underscored by an eye-catching detail in the ISM manufacturing survey: a big jump in reported inventories. The rise in August was the first increase in 18 months. But on the flipside, the mostly domestically-facing services sector - which makes up more than 75% of U.S. GDP - reflected a much brighter picture. S&P Global's U.S. services survey for August registered its fastest pace of expansion since the Federal Reserve started raising interest rates in March 2022. As a result, S&P Global's all-industry readout is currently humming along nicely, close to its best levels in more than two years. CANARY IN THE DATA MINE? While the manufacturing sector accounts for only about 10% of U.S. national output, gloom in manufacturing PMI surveys was cited as a cause of the shakeout in lofty U.S. stock prices this week. This angst could reflect that manufacturing readouts now capture information about the red-hot chipmaker firms so prominent in the overall market cap of major stock indexes. Even though the U.S. share of global chip manufacturing is currently only 10%, the information technology sector - which includes many big chipmakers - now accounts for almost one-third of the S&P 500's entire $46 trillion market value. And Washington's post-pandemic push for "re-shoring" and "re-industrialisation" has, via 2022's CHIPS act, helped to boost optimism about U.S. manufacturing by setting a course to increase the U.S. share of the chip market to 14% by 2032. Sour manufacturing readings may therefore feed the gnawing concern about the durability of the dominant artificial intelligence theme and thus lead to continued market ructions. HEADFAKE FROM FACTORIES? Putting market volatility aside, what the divide between the prevailing fortunes of the two different sides of economy says about the true risk of recession is an open question. While manufacturing accounts for a low share of U.S. GDP and employs just 8% of U.S. workers, its notoriously cyclical nature means it could be seen as a canary in the coalmine. And it's certainly more sensitive to the state of the global economy at large than services. But even if we consider manufacturing surveys to be a warning signal, they aren't yet flashing red. While the August ISM readout did show declining activity for the fifth straight month, the ISM itself claims that a manufacturing index below the 50 boom-bust line is not necessarily a game-changer by itself. It insists readings above the 42.5 level - which has not been breached since April 2020 - have over time indicated continued expansion of the wider economy. Add to all of this the dominance of services and their relative buoyancy through the late summer period, and it is clear why investors - though growing cautious - are reluctant to bet the farm on a wider downturn. All of the speculation then flips back to Friday's employment report to confirm signs of labour market weakening seeping in from both of these surveys, as well as job openings and layoffs data earlier in the week. As if reflecting the indecision, the 2-to-10 year Treasury yield curve's two-year inversion - so often a harbinger of recession in the past - has returned to precisely zero this week in anticipation of the jobs report that could go some way to tipping the scale to one side. The opinions expressed here are those of the author, a columnist for Reuters Sign up here. https://www.reuters.com/markets/markets-torn-by-us-services-factories-divide-mike-dolan-2024-09-06/

2024-09-06 05:13

Brent settles at lowest since Dec 2021 US employment increased less than expected in Aug US active oil rig count held at 483 this week NEW YORK, Sept 6 (Reuters) - Oil prices settled 2% lower on Friday, with a big weekly loss after data U.S. jobs data was weaker than expected in August, which outweighed price support from a delay to supply increases by OPEC+ producers. Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel, their lowest level since Dec. 2021. U.S. West Texas Intermediate crude futures fell $1.48, or 2.14%, to$67.67, their lowest since June 2023. For the week, Brent declined 10%, while WTI dropped around 8%. U.S. government data showed employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown that may not warrant a big interest rate cut from the Federal Reserve this month. "The jobs report was a little soft and implied that the economy in the U.S. is on the slide," Bob Yawger, executive director of energy futures at Mizuho. Concerns around Chinese demand also kept pressuring oil prices, Yawger said. On Thursday, Brent settled at its lowest since June 2023 despite a withdrawal from U.S. oil inventories and a decision by OPEC+ to delay planned oil output increases. U.S. crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week, compared with a projected decline of 993,000 barrels in a Reuters poll of analysts. Signals that Libya's rival factions could be closer to an agreement to end the dispute that has halted the country's crude exports also pressured oil prices this week. Exports remained mostly shut in but some loadings have been permitted from storage. Bank of America lowered its Brent price forecast for the second half of 2024 to $75 a barrel from almost $90 previously, it said in a note on Friday, citing building global inventories, weaker demand growth and OPEC+ spare production capacity. The U.S. active oil rig count, an early indicator of future output, remained unchanged at 483 this week, energy services firm Baker Hughes (BKR.O) , opens new tab reported on Friday. Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 3, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. Sign up here. https://www.reuters.com/business/energy/oil-steadies-us-crude-stock-drawdown-opec-output-hikes-delay-2024-09-06/

2024-09-06 04:56

BRUSSELS, Sept 6 (Reuters) - The world is emerging from its warmest northern hemisphere summer since records began, the European Union's climate change monitoring service said on Friday, as global warming continues to intensify. The boreal summer of June to August this year blew past last summer to become the world's warmest, the Copernicus Climate Change Service (C3S) said in a monthly bulletin. The exceptional heat increases the likelihood that 2024 will outrank 2023 as the planet's warmest on record. "During the past three months of 2024, the globe has experienced the hottest June and August, the hottest day on record, and the hottest boreal summer on record," said C3S deputy director Samantha Burgess. Unless countries urgently reduce their planet-heating emissions, extreme weather "will only become more intense", she said. Greenhouse gas emissions from burning fossil fuels are the main cause of climate change. The planet's changed climate continued to fuel disasters this summer. In Sudan, flooding from heavy rains last month affected more than 300,000 people and brought cholera to the war-torn country. Elsewhere, scientists confirmed climate change is driving a severe ongoing drought on the Italian islands of Sicily and Sardinia, and it intensified Typhoon Gaemi, which tore through the Philippines, Taiwan and China in July, leaving more than 100 people dead. Human-caused climate change and the El Nino natural weather phenomenon, which warms the surface waters in the eastern Pacific Ocean, both pushed temperatures to record highs earlier in the year. Copernicus said below-average temperatures in the equatorial Pacific last month indicated a shift to La Nina, which is El Nino's cooler counterpart. But that didn't prevent unusually high global sea surface temperatures worldwide, with average temperatures in August hotter than in the same month of any other year except for 2023. C3S' dataset goes back to 1940, which the scientists cross-checked with other data to confirm that this summer was the hottest since the 1850 pre-industrial period. Sign up here. https://www.reuters.com/business/environment/summer-2024-was-worlds-hottest-record-eu-climate-change-monitor-says-2024-09-06/

2024-09-06 04:42

A look at the day ahead in European and global markets from Stella Qiu Whatever Friday's U.S. payrolls report says, it's going to move things. Such is the power that the August non-farm payrolls data holds over the markets, after Federal Reserve Chair Jerome Powell bluntly stated policymakers did not want to see any further weakening in the labour market, laying the ground for imminent rate cuts. Analysts are looking for new jobs to rise by 160,000 and for the unemployment rate to dip to 4.2%. But a recent run of softer partials suggests risks are to the downside, fuelling speculation of an outsized half-point rate cut on Sept. 18. As things stand now, futures are implying a 40% chance of a cut of 50 basis points, and a weak report would likely double that probability while shoving bond yields sharply lower. Equally, an in-line or stronger-than-expected outcome would likely snuff out the chance for 50bp, slamming bonds, although 25bp does seem done and dusted whatever the figure. For equities, there's the wrinkle of a possible recession. A weak report might make an outsized rate move more likely but would also stoke recession fears, and it's not clear which would win out in market sentiment. There is also a lot at stake for the Japanese yen . A weak report could push it through key resistance at 141.66 per dollar and to its highest so far this year, while strong numbers would likely wipe out this week's 2% rally. Oil is staring down its worst week in more than a year, after bullish news on U.S. inventories failed to inspire gains in a market that seems more fixated on economic worries. Brent crude could really use a strong payrolls report to avert falling below $70 a barrel. Trade on Friday brought only small moves in Asian shares all around, although Taiwan outperformed with a rise of 1%. Bonds held onto their gains in the week so far and the dollar nursed losses. Nasdaq futures slipped 0.5%, while Europe looks set for a subdued open with EUROSTOXX 50 futures up 0.1% and FTSE futures down 0.1%. While payrolls will dominate the markets' attention, investors may also look for clues on the U.S. rates outlook from two prominent Fed officials, Governor Christopher Waller and New York Fed President John Williams, who will be speaking later in the day. In any case, it will likely be a day that seals the fate of a possible 50 bp cut by the Fed. Key developments that could influence markets on Friday: -- Germany industrial output for July, Germany trade data -- Eurozone revised GDP data for Q2 -- U.S. non farm payrolls for August -- Fed Governor Christopher Waller, Fed New York President John Williams speak Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-09-06/

2024-09-06 04:13

MUMBAI, Sept 6 (Reuters) - The Indian rupee rose on Friday after disappointing U.S. private payrolls data fuelled expectations of a weaker jobs report, prompting traders to avoid the U.S. dollar. The rupee was at 83.9350 to the U.S. dollar at 9:30 a.m. IST, up from 83.9825 in the previous session. U.S. private employers hired the fewest number of workers in three and a half years in August and data for the prior month was revised lower, suggesting that the labour market was cooling down. The private payrolls data comes before the more important non-farm payroll print due later in the day. With private payroll coming in below estimates, concerns "about a weak non-farm payroll (NFP) report today are keeping markets jittery", Srinivas Puni, managing director at FX advisory firm QuantArt Market Solutions, said. The NFP data is expected to sway the Federal Reserve's decision on whether to cut rates by 25 basis points or 50 bps at their upcoming meeting. Right now, it is nearly a toss-up between the two. "The Fed outcome related to the quantum of the cut and the ensuing language are now very critical for the medium-term USD outlook," Puni said. Economists polled by Reuters expected 160,000 jobs additions and an unemployment rate at 4.2%. If job growth exceeds what is expected and the unemployment rate falls to or below consensus, it is likely to be a negative for those hoping for aggressive rate cuts, Saxo Bank said in a note. The dollar was weaker across the board before the data. The dollar index slipped below 101 and Asian currencies were higher by 0.1% to 0.4%. Sign up here. https://www.reuters.com/markets/currencies/rupee-inches-up-hopes-weak-us-jobs-report-2024-09-06/