2024-09-04 12:16

DUBAI, Sept 4 (Reuters) - Abu Dhabi state oil giant ADNOC will acquire a 35% stake in a planned Exxon Mobil (XOM.N) , opens new tab large-scale hydrogen plant in Texas, the companies said on Wednesday. The production facility aims to produce up to 1 billion cubic feet per day of low-carbon hydrogen, with around 98% of carbon dioxide removed, they said in a statement, without disclosing a value for the investment. The project is part of Exxon's efforts to create a new business to make money out of cutting greenhouse gas emissions by other companies looking to decarbonise their own operations. ADNOC Executive Vice President of Low Carbon Solutions and Business Development Michele Fiorentino told Reuters that the output will be used to supply "either the refining system of Exxon Mobil or third party buyers of blue hydrogen connected to the pipeline network in the Gulf coast". Alternatively, Fiorentino said, it could produce blue ammonia, which will be used to supply either Northeast Asia or Europe, which are the two main demand centres. A final investment decision on the project is expected around mid-2025 or in the second half of next year, he said. First production is expected in 2029 and will likely ramp up to full capacity within 12 months, subject to demand, he added. ADNOC is "reasonably confident the demand will be there," Fiorentino said, adding that the scale of the project will make its hydrogen among the most cost-competitive. He declined to disclose the project's costs, but indicated it would be in the billions of dollars. A second train of the same size could be added "if it made sense at that point in time," Fiorentino added. Sign up here. https://www.reuters.com/markets/deals/adnoc-take-35-stake-exxons-texas-hydrogen-plant-2024-09-04/

2024-09-04 12:08

BRASILIA, Sept 4 (Reuters) - Brazil's central bank said on Wednesday that credit growth and asset prices do not pose a medium-term concern, though it highlighted existing uncertainties that warrant ongoing caution for financial institutions. In the minutes of its Financial Stability Committee meeting held last week, the central bank said that credit growth has been accelerating moderately since the first half of 2024, in line with economic activity, which has been growing above expectations. In the 12 months through July, outstanding loans in Brazil have increased by 10.3%. Brazil's gross domestic product (GDP) surprised to the upside in the second quarter, according to official data released on Tuesday, triggering a wave of upward revisions for annual growth estimates, now hovering around 3%. GDP data also increased bets on an imminent interest rate hike to curb inflationary pressures as the central bank prepares for its upcoming policy decision this month. The central bank stressed in the minutes that there has been a slight deterioration in the quality of credit extended to households, but it has not yet led to an increase in materialized risks. "Only rural credit shows a rise in materialized risk," it said. "For micro, small, and medium-sized enterprises, the slight variation in lending criteria suggests that the level of materialized risk should remain stable." Sign up here. https://www.reuters.com/business/finance/brazils-central-bank-says-credit-growth-not-medium-term-concern-2024-09-04/

2024-09-04 12:04

HOUSTON, Sept 4 (Reuters) - Abu Dhabi National Oil Company (ADNOC) will acquire a 35% equity stake in Exxon Mobil Corp's (XOM.N) , opens new tab proposed low-carbon hydrogen project in Texas, with the companies announcing a one-year start-up delay until 2029. ADNOC's investment shows a sign of confidence in a multi-billion dollar project that Exxon has threatened to cancel if the U.S. government restricts tax credits for it. A final investment decision has been pushed into 2025, from 2024. Exxon and ADNOC declined to disclose the value of the transaction. "This is a very significant investment and the partners it is attracting give a sense for the momentum that's building around this project," Exxon President of Low Carbon Solutions Dan Ammann told Reuters. TAX INCENTIVES Exxon in 2022 disclosed , opens new tab plans to build the world's largest low-carbon hydrogen facility at its refining site at Baytown, Texas. Hydrogen is a fuel that produces water when burnt. The project would be powered by natural gas, with associated CO2 captured and buried underground. It was announced on the back of clean energy tax incentives proposed by the administration of U.S. President Joe Biden. But the government limited incentives for natural gas-run facilities. Exxon CEO Darren Woods earlier this year said the project could be canceled without similar tax credits offered to hydrogen facilities powered by renewable fuels. AMMONIA BOOST The project's estimated production has been revised since its initial announcement. It was initially set to produce 1 million tons of hydrogen annually. Now, the goal is to produce 900,000 tons of low-carbon hydrogen and over 1 million tons of low-carbon ammonia, a well-established industrial product commonly used as fertilizer. Ammonia, which has three atoms of hydrogen in its composition, is also used as a carrier for hydrogen, allowing it to be exported by ship in a liquid form. Exxon earlier this year signed an agreement with JERA, Japan's top power generator, to explore selling about 500,000 tonnes annually of low-carbon ammonia. "The timing (for the hydrogen project) depends on supply, demand and supporting regulation coming together in sync," said Ammann. Sign up here. https://www.reuters.com/markets/commodities/exxon-abu-dhabis-adnoc-partner-delayed-texas-hydrogen-project-2024-09-04/

2024-09-04 12:00

LAUNCESTON, Australia, Sept 4 (Reuters) - The response of crude oil markets to a series of developments this week shows how the bearish mindset is dominating the narrative. News that should be positive for oil prices is largely discounted and ignored, while factors that add to negative sentiment are embraced and reflected in price movements. Global benchmark Brent futures show this dynamic, with the front-month contract dropping 4.9% on Tuesday to end the session at $73.75 a barrel. This was the lowest close in nine months and extends a downtrend that has been in place since July 5, when Brent ended at $86.54 a barrel. The immediate catalyst for the sharp fall on Tuesday were reports that the various parties vying for control in Libya have reached an agreement that may lead to the resumption of crude exports from the North African producer. Libya's legislative bodies have agreed to appoint a new central bank governor within 30 days after U.N.-sponsored talks, a statement signed by representatives of those bodies said on Tuesday. Libya's crude exports at major ports were halted on Monday and production curtailed across the country, the latest moves in an ongoing standoff between rival political factions over control of the central bank and oil revenue. The Libyan National Oil Company has confirmed that actual production has slumped, dropping to little more than 591,000 barrels per day (bpd) as of Aug. 28 from nearly 959,000 bpd on Aug. 26, and as much as 1.28 million bpd on July 20. This is a real cut to the volume of oil available to global markets, but the price reaction to the news on Monday was at best muted, with Brent actually ending the day slightly lower than the previous close. But news of a potential deal that is several weeks away, and doesn't restart oil output immediately, is enough to send oil prices down by almost 5%. That alone shows that the market is currently seizing on bearish news and amplifying it, while discounting any bullish developments. TANKER ATTACKS At the same time the market was choosing to focus on hopes for a deal in Libya rather the reality of lower output, it was also ignoring missile attacks on two crude tankers in the Red Sea, carried out by the Iranian-aligned Houthi group in Yemen. There is some uncertainty over whether both vessels were targeted and damaged, with the U.S. military saying missiles struck the Saudi-flagged Amjad and the Panama-flagged Blue Lagoon I. However, the Saudi owners of the Amjad, which is carrying two million barrels of oil, said it was unscathed and continuing its voyage. Even if the latest attack on shipping was limited in the amount of damage inflicted, it still highlights the ongoing risk the Houthis pose to vessels in the Red Sea, and the potential for more serious incidents definitely exists. A further development on Monday was news that output by the Organization of the Petroleum Exporting Countries (OPEC) dropped to the lowest since January. OPEC members produced 26.36 million barrels per day last month, down 340,000 bpd from July, according to a Reuters survey. Libya was the main factor behind the lower output, declining by 290,000 bpd. But the lower OPEC production in August, coupled with news that Russia, the main exporter in the wider OPEC+ group, also lowered its output, had zero impact on crude prices. It's clear that supply concerns aren't a factor in current pricing dynamics, with investors more focused on demand issues, such as weakness in China, the world's biggest oil importer and the country OPEC had expected to deliver the bulk of global demand growth in 2024. China's August imports are estimated by LSEG Oil Research at 11.02 million bpd, up from July's official customs number of 9.97 million bpd, which was the lowest on a daily basis since September 2022. But even with the rebound in August imports, it's likely that China's arrivals will remain in negative territory for the first eight months of the year, compared to the same period in 2023. The question for the crude oil market is whether the focus on bearish news has swung too far. Certainly it sets up the risk of a short squeeze should something unexpected happen, such as OPEC+ deciding to abandon the planned increases in output from October onwards. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/crude-oil-bears-run-rampant-bullish-news-ignored-russell-2024-09-04/

2024-09-04 11:33

LONDON, Sept 4 (Reuters) - The London Metal Exchange unveiled a set of proposed measures on Wednesday designed to boost electronic trading while also protecting its complex structure used for deals in physical metal. The measures attempt to navigate a recurring tension between traditional physical users on the LME's open-outcry trading floor and the financial community which prefers electronic trading. The exchange released a white paper detailing a liquidity provider programme, the introduction of block trade thresholds, new trading functionality and market data changes, it said in a statement. The exchange, the world's oldest and largest market for industrial metals, said block limit rules would mean that small-sized trades on monthly dates would have to be executed on its electronic LMESelect system. "These future-focused measures... seek to grow participation in our markets, and make our prices as representative and accessible as possible, while continuing to support physical market trading practices,” Chief Executive Matthew Chamberlain said. Key outcomes would be improved bid-offer spreads and better execution for clients, the exchange said. The LME, owned by Hong Kong Exchanges and Clearing Ltd. (0388.HK) , opens new tab, said the new block limit rules would not apply to deals using the LME's daily prompt dates mainly used by physical users, such as miners and industrial consumers. The LME's new version of its electronic system, which has been released for member testing, will increase functionality for electronic traders, it said. Many physical deals are executed in the LME's ring, one of the last venues in the world to use open-outcry trading. The future of ring trading looked secure after nearly all of the seven remaining firms participating on the floor recently told Reuters they remained committed to the age-old practice. Three years ago the 147-year-old exchange proposed to close the trading floor and join the bulk of other financial exchanges that have moved to pure electronic trading, but an outcry from physical LME users saved the ring. LME now operates on a hybrid basis, using open-outcry trading for official prices used by physical users as benchmarks for their deals and an electronic system for closing prices. Sign up here. https://www.reuters.com/markets/commodities/lme-announces-package-measures-boost-liquidity-2024-09-04/

2024-09-04 11:25

LONDON, Sept 4 (Reuters) - OPEC+ is discussing a delay in a planned output increase next month as oil prices hit their lowest in 9 months, three sources from the producer group told Reuters on Wednesday. Oil prices have been falling together with other asset classes on concerns about a weak global economy and particularly soft data from China, the world's biggest oil importer. Last week, the group looked set to proceed with a 180,000 barrel per day (bpd) hike in October, but market volatility from oil facility shutdowns in Libya and a weak demand outlook have raised concern within the group, one of the sources said. There were suggestions to delay the increase, one of the sources said. Another said a delay was looking highly possible. The Organization of the Petroleum Exporting Countries and the Saudi government communications office did not immediately respond to requests for comment. Eight members of the OPEC+ - which includes its allies - are scheduled to raise output by 180,000 bpd in October as part of a plan to begin unwinding their most recent layer of output cuts of 2.2 million bpd while keeping other cuts in place until the end of next year. Brent crude traded 1% higher at $74.47 a barrel at 1104 GMT on Wednesday, rising on the news of the potential delay, but remained at its lowest since December. Prices have experienced high volatility in recent weeks as a standoff between rival factions in OPEC producer Libya over control of the central bank led to a loss of at least 700,000 bpd of production. Prices slumped by about 5% on Tuesday on news that a possible deal to resolve the conflict was in the works. Weak Chinese demand and a slump in global refining margins which could translate into refiners processing less crude, have also weighed. "While the APAC region was supposed to carry a majority of the growth this year, China's underperformance has dented 2024 growth projections and has continued to trail both 2023 crude import and refinery throughput levels," RBC Capital analyst Helima Croft said in a note. Sign up here. https://www.reuters.com/markets/commodities/opec-discussing-delay-planned-oil-output-hike-october-sources-say-2024-09-04/