2024-09-05 11:23
OPEC+ almost there on agreeing delay, source says Move comes amidst falling prices on weak economic outlook Output hike of 180,000 bpd had been due to proceed in October LONDON, Sept 5 (Reuters) - OPEC+ is nearing an agreement to delay a planned October oil output increase after crude prices hit their lowest in nine months, two sources from the producers group told Reuters on Thursday. Oil prices have been falling along with other asset classes on concerns about a weak global economy and soft data from China, the world's biggest oil importer. "It is likely that the countries will take action to balance the market by delaying the increase," one the sources said. The second source said OPEC+ was "almost there" on getting an agreement. Oil prices rose on the possible delay, with benchmark Brent crude rising to $73 a barrel on Thursday but remaining close to its lowest level since December. The planned increase was for 180,000 barrels a day, part of some 5.86 million bpd in output OPEC+ is holding back equivalent to about 5.7% of global demand. Last week, OPEC+, which is made up of the Organization of the Petroleum Exporting Countries and allies led by Russia, was set to proceed with the increase. Fragile oil market sentiment over the prospect of more supply from OPEC+ and an end to a dispute halting Libyan exports, coupled with a weakening demand outlook, have raised concern within the group. HSBC said in a report that any decision by OPEC+ might be taken negatively by the market. "Raising production would tip the market into a meaningful surplus from the first quarter 2025 onwards. On the other hand, holding off may be interpreted as a belated admission by OPEC that oil demand is weak." RBC Capital analyst Helima Croft said in a note that it may be prudent for OPEC+ to wait until December before returning extra barrels. The planned October increase was set to come from OPEC+ members who agreed in June to start unwinding the group's most recent layer of output cuts - a cut of 2.2 million bpd by eight countries - from October 2024 to September 2025. The remaining cuts of 3.66 million bpd, agreed in earlier steps, will remain in place until the end of 2025. OPEC+ agreed to cut output to support market prices amid an uncertainty demand outlook and rising supply from outside of the group. Sign up here. https://www.reuters.com/markets/commodities/opec-nearing-agreement-delay-oil-output-hike-sources-say-2024-09-05/
2024-09-05 11:14
Central bank under pressure to kick-start flagging growth Deputy governor says policy stance will remain supportive Shrinking bank interest margins may limit rate cuts Bank is watching policy moves in other major economies BEIJING, Sept 5 (Reuters) - China still has room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates, a central bank official said on Thursday, as it seeks to bolster the country's flagging economic recovery. The People's Bank of China, which has steadily reduced interest rates and injected liquidity this year, is under pressure to do more to ensure the economy grows around 5% this year, in line with the government's target. The average reserve requirement ratio, or RRR, for financial institutions is around 7% at present, "so there is some room," Zou Lan, head of the bank's monetary policy department, said at a media briefing. The central bank would watch developing economic trends before making any adjustments, Zhou said, adding that the bank was closely monitoring policy changes in major economies. China's central bank has cut the weighted average RRR from nearly 15% in 2018 to the current level, pumping more than 12 trillion yuan into the economy. It made a 50-bps RRR cut for all banks that took effect on Feb. 5 but indicators showed China's economy grew much slower than expected in the second quarter, dragged by a protracted property downturn and weak domestic demand. Goldman Sachs on Thursday expected the PBOC to deliver a 25-bps RRR cut in September and a 10-bps policy rate cut in the fourth quarter. An official survey at the weekend showed China's sprawling manufacturing activity sank to a six-month low in August, pressuring policymakers to press on with plans to direct more stimulus to households. Zou said banks' shrinking net interest margins would constrain further cuts in the deposit and lending rates. "The PBOC will continue to adhere to a supportive monetary policy," deputy central bank governor Lu Lei told the media briefing, adding the bank would promote a steady decline in corporate financing costs and credit costs for households. The PBOC would guide market interest rates closer to its main policy rate - the seven-day reverse repo rate - as it shifts its focus from quantitative targets to price-based tools such as interest rates, Zou added. The central bank wants to shift its policy framework to target the cost of credit rather than its size, but liquidity risks and uncooperative markets are making it difficult to transition the economy away from state-directed bank lending. Sign up here. https://www.reuters.com/world/china/china-sees-room-lower-reserve-requirement-ratio-pboc-official-says-2024-09-05/
2024-09-05 11:11
WARSAW, Sept 5 (Reuters) - Poland is targeting a 56% share of renewable power in its electricity mix in 2030, the climate minister said on Thursday, as she presented the draft of the national energy and climate plan that Warsaw has to submit to the European Commission. The target is below the pre-election pledge of the biggest party in the government that Poland would have up to 70% of green power in the mix by 2030, but above the 50% Poland declared in February. "We are no longer arguing in the government about the basic parameters of the plan, the lack of transformation is more expensive than its implementation," Paulina Hennig-Kloska told a news conference. The plan presented on Thursday envisages investment of 792 billion zlotys ($205 billion), she added. National energy and climate plans detail member states contribution to the bloc's target to reduce greenhouse gas emissions by at least 55% by 2030 and provide a road map driving investments by the energy industry. Warsaw seeks to accelerate the deployment of renewables to reduce dependence on coal while it copes with legacy of the previous government, which had blocked the development of onshore wind and pledged to keep mining coal until 2049. The plan envisages a reduction in greenhouse gas emissions by 50.4% by the end of the decade and a 16.7% reduction in primary energy consumption compared to 2020. ($1 = 3.8496 zlotys) Sign up here. https://www.reuters.com/sustainability/climate-energy/poland-sees-56-renewables-2030-power-mix-climate-plan-2024-09-05/
2024-09-05 11:11
BUENOS AIRES, Sept 5 (Reuters) - Brazil's real will continue to be restrained by worries about the fiscal situation in the near future despite an expected boost from a widely anticipated first interest rate cut by the U.S. Federal Reserve later this month, a Reuters poll showed. The currency has traded weaker since June due to mounting concerns over the budget deficit, which has kept worsening and exceeded 10% of gross domestic product in the 12 months through July. Numeric estimates in the survey for the real , were optimistic but responses to extra questions painted a more cautious picture. The currency was expected to gain 7.2% in 12 months to 5.27 per U.S. dollar against 5.65 on Tuesday, according to the median estimate of 26 foreign exchange strategists polled Aug. 30-Sept. 4. However a slim majority - seven of 13 - who answered an extra question on the risks to their estimates said they were skewed towards a weaker real. The other six were divided between four who saw the greater risk being to the upside, and two with a neutral stance. "The real continues under pressure due mainly to a challenging fiscal scenario, with a significant rise in spending and an adjustment based only on revenue growth," said Flavio Serrano, chief economist at Banco BMG. "If there is greater commitment to fiscal targets, we may see some correction (strengthening) of the real. The beginning of a monetary policy easing process in the United States could also support this movement." The outlook for the Mexican peso was also mixed. Although it was seen advancing 3.7% in 12 months to 19.08 per dollar, seven of 10 respondents to the extra question viewed risks more tilted to the downside, two as neutral, and one to the upside. It has been on the back foot since the government recently launched a judicial reform that investors fear could hurt business interests. On Wednesday, the lower house of Congress approved the initiative. In Argentina, while the consensus forecast in one year pointed at a 36.5% depreciation of the peso to 1,500 per dollar, some economists said it may actually fare better than expected, after confounding pessimistic calls earlier this year. "The current crawling peg scheme for the peso will likely be sustained at least until the end of 2024, but this will become harder next year without new government funding," said Federico Zirulnik, economist at CESO. So far this year, the Brazilian real is down 14.2% and the Mexican peso has lost 14.3%. The Argentine currency has depreciated 15.2% due to a tight central bank scheme that includes a preset 2% monthly devaluation rate. (Other stories from the September Reuters foreign exchange poll) Sign up here. https://www.reuters.com/markets/currencies/brazils-real-up-stay-restrained-by-fiscal-worries-2024-09-05/
2024-09-05 11:10
TORONTO, Sept 5 (Reuters) - The Canadian dollar is set to give back some of its recent gains over coming months but could make another move higher in 2025 if central bank easing cycles revive the global economy, spurring demand for commodities, a Reuters poll found. Since hitting a near two-year low at 1.3946 per U.S. dollar, or 71.71 U.S. cents, in August the loonie has rallied 3.3%, helped by short covering and broad-based declines for the greenback. The median forecast of more than 30 foreign exchange analysts in the Aug. 30-Sept. 4 poll showed the loonie weakening about 1% to 1.365 in three months, versus 1.380 expected in an August poll. In a year, the currency was predicted to advance 1.3% to 1.3333, compared to 1.3350 seen previously. "The Canadian dollar has rallied quite a bit beyond our expectations," said Jimmy Jean, chief economist at Desjardins Group, adding the currency could weaken in the near term if expectations for "supersized" interest rate cuts from the Federal Reserve begin to fade. Investors are looking to Friday's U.S. and Canadian employment reports for clues on the prospect of central banks easing in steps of 50 rather than 25 basis points. A rise in the U.S. unemployment rate to near a three-year high of 4.3% in July rattled financial markets and ignited fears of a recession. The BoC on Wednesday cut its benchmark interest rate for a third time since June, lowering the rate by 25 basis points to 4.25%. The Fed is expected to begin its easing cycle later this month. Still, monetary policy tends to work with a lag so it could take some time before the global economy feels the effect of lower borrowing costs. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global outlook. The price of oil fell on Wednesday to its lowest level this year as lackluster data from the U.S. and China reinforced expectations of a weaker world economy. "Later in 2025, the effects of those rate cuts should be more visible," Jean said. "We expect a bit of a pick-up in China and also Europe in the back end of 2025, so global demand pushing (up) oil prices a little bit." (Other stories from the September Reuters foreign exchange poll) Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-rally-resume-2025-if-global-economy-picks-up-2024-09-05/
2024-09-05 10:35
JAKARTA, Sept 5 (Reuters) - Singapore will issue conditional approval to import 1.4 gigawatts (GW) of electricity from two solar power projects in Indonesia as the country ramps up low-carbon power supply, senior minister Teo Chee Hean said in Indonesia on Thursday. The new deal came on top of a previously agreed 2 GW of solar power imports from Indonesia. The deal will secure supply of clean electricity powered by solar PV and battery energy storage system for Singapore, while helping Indonesia shift its energy exports, said Indonesian senior minister Luhut Pandjaitan. "Having been a long exporter of coal and natural gas, this collaboration is the first step in our transition from fossil fuel exporter to renewable energy exporter," he said. The overall projects have an estimated value of around $20 billion, Luhut said. The conditional approvals for the 1.4 GW power will be granted to TotalEnergies-RGE (TTEF.PA) , opens new tab and Shell-Vena (SHEL.L) , opens new tab consortia, Tan See Leng, Singapore's Minister of Manpower and Second minister for trade and infrastructure said at the conference. The conditional approval for the 2GW of imports, granted last year, will also be upgraded to conditional licences this year, Teo told participants at the Indonesia International Sustainability Forum in Jakarta. It will come from projects being developed by five Indonesian and Singaporean companies that together have proposed to install about 11 gigawatt peak of solar photovoltaic capacity and 21 gigawatt battery storage capacity in Indonesia, and expected to come online in late 2027. The companies involved include Pacific Medco Solar Energy and Adaro Solar International and Keppel Corp Ltd. Keppel has said electricity from their project will be transmitted via a common subsea transmission cable system to be jointly developed and shared by the consortium. Meanwhile, transmission plan for the additional 1.4 GW is still being drawn up, said Rachmat Kaimuddin, an Indonesian deputy coordinating minister told reporters. Rachmat expects the additional power supply to come online around 2030. Sign up here. https://www.reuters.com/business/energy/singapore-import-more-low-carbon-power-indonesia-minister-says-2024-09-05/
