Oil climbs on tightening supply; IEA demand outlook awaited

April 14 (Reuters) – Oil prices rose on Friday on worries over tightening supply, with the market looking ahead to the International Energy Agency’s (IEA) monthly report later in the day to clarify the global demand outlook.

Brent crude futures climbed 36 cents, or 0.42%, to USD 86.45 per barrel by 0600 GMT. West Texas Intermediate crude futures (WTI) rose 43 cents, or 0.52%, to USD 82.59 a barrel.

Both benchmarks fell more than 1% in the previous session.

“Russian exports are showing signs of weakening as production is reported to have been curtailed by 700,000 barrels per day (bpd),” said analysts from ANZ Bank in a client note.

Investors are also focused on the IEA’s monthly oil market report to be released later on Friday. The possibility that the agency might downgrade the global demand outlook over faltering macroeconomic growth is helping to cap prices.

A report from the Organization of the Petroleum Exporting Countries (OPEC) released on Thursday pointed to downside risks in summer demand, citing a weaker growth backdrop, tighter monetary policy and instability in the global financial sector.

Chinese trade data on Thursday, however, showed that crude imports by the world’s second-largest oil consumer rose 22.5% year-on-year in March, stoking bullish sentiment regarding China’s economic recovery.

“Despite renewed economic pressures in the US and Europe, global demand for mobility fuels has increased 2.2 million bpd during the reference week ending April 8, compared to year-ago levels,” JP Morgan analysts said in a client note.

A rebound in China along with other Asia countries accounted for two-thirds of global mobility fuel demand growth, the analysts said.

Friday morning’s marginally higher levels come at the end of a week in which both benchmarks reached their highest levels in more than two months on decelerating US inflation data and a weakening dollar.

WTI has jumped 2% so far this week and Brent is 1.3% higher, with both heading for a fourth straight week of gains.

The US dollar index was trading at roughly a one-year low, after US consumer and producer price data releases this week raised expectations that the Fed was approaching the end of its rate hiking cycle.

The weakening greenback makes dollar-denominated oil cheaper for investors holding other currencies, boosting demand.

Analysts say current prices could be close to a technical ceiling, however.

“It looks like the rally in crude prices has finally hit a wall,” OANDA analyst Edward Moya said in a note.

Oil prices are expected to record an upward trend but the increments are expected to be capped at USD 90 a barrel, said CMC Markets analyst Leon Li.

(Reporting by Andrew Hayley in Beijing and Trixie Yap in Singapore; Editing by Sonali Paul and Tom Hogue)

Oil rises, logs weekly gains after IEA predicts record demand

NEW YORK, April 14 (Reuters) – Oil prices were up on Friday and secured a fourth straight week of gains after the West’s energy watchdog said global demand will hit a record high this year on the back of a recovery in Chinese consumption.

The International Energy Agency (IEA) also warned that deep output cuts announced by the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia – a group known as OPEC+ – could exacerbate an oil supply deficit and hurt consumers.

Brent crude futures settled at USD 86.31 a barrel, rising 22 cents, or 0.3%. West Texas Intermediate crude futures (WTI) settled at USD 82.52 a barrel, gaining 36 cents, or 0.4%.

Both contracts posted a fourth consecutive week of gains amid easing concerns over a banking crisis that struck last month and the surprise decision last week by OPEC+ to further cut output.

Brent is set to post a 1.5% weekly gain, while WTI was up 2.4% on the week. Four weeks of increases would be the longest such streak since June 2022.

In its monthly report on Friday, the IEA said world oil demand is set to grow by 2 million barrels per day (bpd) in 2023 to a record 101.9 million bpd, driven mostly by stronger consumption in China after the lifting of COVID restrictions there.

Jet fuel demand accounts for 57% of the 2023 gains, it said.

But OPEC on Thursday flagged downside risks to summer oil demand as part of the backdrop for its decision to cut output by a further 1.16 million bpd.

The IEA said the OPEC+ decision could hurt consumers and global economic recovery.

“Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly,” it said in its monthly oil report. “This augurs badly for the economic recovery and growth.”

The IEA said it expected global oil supply to fall by 400,000 bpd by the end of the year, citing an expected production increase of 1 million bpd from outside of OPEC+ beginning in March versus a 1.4 million bpd decline from the producer bloc.

“The narrative has taken hold again of rising demand and relative supply tightness, and that’s what’s keeping oil buoyed,” said John Kilduff, partner at Again Capital LLC.

Also helping to boost prices was the US oil and gas rig count, an indicator of future supply, which fell for the third week in a row, according to Baker Hughes data. US oil rigs fell by two to 588 this week, their lowest since June 2022, while gas rigs fell by one to 157.

The US dollar index was trading at roughly a one-year low, after US consumer and producer price data releases raised expectations that the Fed was approaching the end of its rate-hiking cycle.

Still, the greenback edged up on Friday, making dollar-denominated oil more expensive for investors holding other currencies and limiting oil price growth.

(Additional reporting by Ron Bousso in London, Andrew Hayley in Beijing, Trixie Yap in Singapore and Arathy Somasekhar; editing Sharon Singleton, Susan Fenton and Josie Kao)

Soft landing hopes fuel that Friday feeling

April 14 (Reuters) – Asian markets are poised to end the week on a positive note, spurred by a powerful rally on Wall Street and growing optimism that the Fed might achieve the holy grail of a ‘soft landing’ for the US economy.

Thursday’s surge across US markets followed the stunning Chinese trade figures for March earlier in the day that suggested global demand may be stronger than most people had anticipated.

The upside surprise to the export and trade balance figures was so big that China’s broader economic surprises index jumped to its highest in 17 years, and one of the highest on record.

Little wonder investors in Asia go into the final day of the week in buoyant mood, especially after US data on Thursday showed cooling inflation and labor market pressures, trends that could convince the Fed to pause its rate-hiking campaign.

The Nasdaq surged 2% for its best day in a month, the VIX ‘fear gauge’ of S&P 500 index volatility fell to its lowest in over two months and US bond market volatility fell back below the pre-banking shock levels of a month ago.

Another good indication of how broad the ‘risk on’ rally is globally is the dollar. It continues to weaken and on Thursday fell to its lowest in over two months – it is a whisker away from a one-year low.

The dollar is on track for its biggest weekly fall in three months and has weakened five weeks in a row – a downturn not recorded since mid-2020.

Asian currencies are enjoying the ride too – Indonesia’s rupiah which hit an eight-month high on Thursday, and Singapore’s dollar rose to a two-month peak.

The ‘Sing dollar’ is liable to move further on Friday, with traders braced for first quarter GDP growth data and the central bank’s semi-annual monetary policy decision.

The Monetary Authority of Singapore (MAS) is expected to tighten monetary policy for the sixth time in a row, amid persistent price pressures in the Asian financial hub due to global supply chain disruptions.

A slim majority of analysts polled by Reuters expect MAS to tighten, although this could be the last time if the growth picture is any guide – the first estimate of Q1 GDP is expected to show growth slowing sharply on an annual basis and shrinking from the previous quarter.

Lastly, Indian wholesale price inflation is expected to virtually halve in March to a 1.87% annual rate from 3.85%. It was 16% less than a year ago.

Here are three key developments that could provide more direction to markets on Friday:

– IMF/World Bank spring meetings in Washington

– Singapore Q1 GDP and policy decision

– India WPI inflation (March)

(By Jamie McGeever; Editing by Josie Kao)

US recap: EUR/USD hits 1-year high as US data favor end of Fed hikes

April 13 (Reuters) – EUR/USD hit a 1-year high as markets coalesced around the Fed having maybe one more 25bp rate hike before a spate of rate cuts begin later this year in the wake of March US PPI, which fell far more than forecast while jobless claims inched higher.

The dollar’s initial slide on the data, in the wake of other somewhat disinflationary numbers of late, was curtailed by Treasury yields rebounding from earlier lows, in part because the Fed remains well favored to hike in May.

Data point to an economy that is cooling but not drastically enough to force the US central bank to abandon its focus on inflation just yet.

Markets, see the delayed impact of aggressive rate hikes, tighter bank credit after March’s record fall in smaller banks’ deposits and a shrinking pool of savings from the pandemic pointing to economic weakness later this year and next.

Weekly Fed bank data late Thursday and Friday will be checked for banking crisis fallout. But Friday’s March retail sales and April Michigan sentiment data will set the pre-May Fed meeting tone and likely extend dollar weakness.

EUR/USD rose 0.5% even with Reuters reporting ECB policymakers were converging on a 25bp May hike while markets still project a 41% probability of a 50bp increase and a total of 78bp of tightening by October.

Two-year Bund-Treasury yield spreads are their least negative since 2021 and EUR/USD prices are now well clear of the 100-week moving average with room to run.

Sterling rose 0.3% after making new 10-month highs. Fed rates are seen falling below the BoE’s by November. Longer-term charts suggest a rise to roughly 1.29 is plausible.

USD/JPY fell 0.3% after recovering with Treasury yields from a dive toward this week’s lows.

Aussie surged 1.4% amid risk-on flows, strong jobs data and China growth hopes.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold rallies to 1-year peak as economic worries mount

April 13 (Reuters) – Gold surged on Thursday as more weak US economic readings bolstered bets for a pause in interest rate hikes, with prospects of a mild recession also sending investors scurrying for the safe-haven.

Spot gold was up 1.4% at USD 2,042.50 per ounce by 1:40 p.m. EDT (17:40 GMT), its highest since March 2022, and about USD 30 shy of its record high hit in 2020. US gold futures settled 1.5% higher at USD 2,055.30.

Treasury yields dropped and the dollar dipped after data showed a moderation in the rise in producer prices last month and an uptick in jobless claims, suggesting the Federal Reserve’s aggressive tightening over the past year was taking a toll on the economy.

“These economic data have reinforced the market’s assessment that the cycle of interest rate hikes is nearing its end, which makes gold attractive to investors as it does not pay interest itself,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

Further, US consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering.

“That’s an underlying positive environment for gold where the Fed is done with their interest rate hike cycle, yet inflation overall remains higher than they would like,” said David Meger, director of metals trading at High Ridge Futures.

This comes after US Fed minutes on Wednesday indicated that several policymakers considered pausing rate increases and projected that recent banking sector stress would tip the economy into recession.

Safe-haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift the appeal of the zero-yield asset.

Spot silver rose 1.6% to a one-year high of USD 25.88. Platinum jumped 3.7% to USD 1,052.70 and palladium gained 3.8% to USD 1,515.95.

(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Sharon Singleton, Shilpi Majumdar and Shweta Agarwal)

Australian shares dip as jobs data points to further rate hike

April 13 (Reuters) – Australian shares snapped two sessions of gains on Thursday, as data showing a tight labour market suggested further monetary policy tightening by the country’s central bank.

The S&P/ASX 200 index closed 0.3% lower at 7,324.10, dragged by mining and banking stocks. The benchmark rose 0.5% on Wednesday.

Australia’s employment blew past expectations for a second straight month in March, while the jobless rate held near 50-year lows, pointing to a drum-tight labour market.

“This increases the likelihood of a further (and likely final) rate hike at next month’s meeting,” said Anna Milne, an equity analyst at Sydney-based Wilson Asset Management.

Analysts at Citi said in a note they expected the labour market to loosen this year, likely in the second half.

Meanwhile, minutes of the US Federal Reserve’s March meeting showed policymakers considered pausing rate hikes due to concerns related to the failures of two regional banks, and projected a “mild recession” starting later this year.

Data showed US consumer prices barely rose in March, suggesting the rate-hike cycle was nearing its end.

In Australia, financials dipped 0.3% in their second straight session of fall.

Miners slipped 0.6%, as iron ore futures fell on pessimism spurred by tepid steel demand in China.

Index heavyweights Rio Tinto, BHP Group and Fortescue Metals Group fell between 0.7% and 1.8%.

BHP won support from OZ Minerals shareholders to proceed with its AUD 9.6 billion (USD 6.44 billion) takeover of the Australian copper and gold producer.

On the other hand, energy stocks advanced 0.9%, with Woodside Energy and Santos adding 1.1% and 0.4%, respectively.

New Zealand’s benchmark S&P/NZX 50 index rose 0.1% to 11,930.86.

(Reporting by Echha Jain in Bengaluru; Editing by Subhranshu Sahu)

Japan’s Nikkei rises for fifth day, buoyed by retail sector optimism

Adds details on closing prices

By Rocky Swift

TOKYO, April 13 (Reuters) – Japan’s Nikkei stock gauge climbed for a fifth straight session on optimism of a recovery in the domestic retail sector, while financial shares were weighed down by U.S. recession concerns.

Japan’s Nikkei share average .N225 closed 0.26% higher, erasing an early slide, to cement the longest winning streak in more than a month. The broader Topix .TOPX finished 0.05% higher.

Aeon Co Ltd 8267.T rose 2.7% to lead all gainers on the Nikkei after the retailer said revenue in the year through February reached an all-time high and forecast record profit for next year.

Cosmetics maker Shiseido Co Ltd 4911.T jumped 1.96%. Investors will be eyeing results from other major retailers on Thursday, including Uniqlo operator Fast Retailing Co Ltd 9983.T and Muji owner Ryohin Keikaku Co Ltd 7453.T.

“As seen in the results of retail companies, increased mobility of people and the recovery of inbound travel are boosting the economy,” Nomura strategist Maki Sawada said.

“That seems to be providing some support for the Nikkei.”

There were 128 decliners on the Nikkei index against 89 that rose. Financials and tech companies were the biggest losers on the gauge.

Lender Resona Holdings Inc 8308.T lost 1.62%. Chip equipment maker Tokyo Electron Ltd 8035.T fell 1.57%.

U.S. shares fell after minutes from the Federal Reserve’s policy meeting last month indicated that banking sector stress could tip the economy into a recession. The minutes followed inflation data, which added to the likelihood of another rate hike next month.

“The market has been too complacent on both recession risk and inflation persistence,” said Mio Kato, founder of LightStream Research, who publishes on the SmartKarma platform.

“I am expecting earnings guidance to come out cautious, especially on tech,” he added.

Lunar transport start-up ispace Inc 9348.T traded for the first time and closed at 1,201 yen, more than four times its initial public offer price.

(Reporting by Rocky Swift; Editing by Janane Venkatraman and Sonia Cheema)

((rocky.swift@thomsonreuters.com;))

China’s March crude oil imports surge 22.5% from year earlier

BEIJING, April 13 (Reuters) – China’s crude oil imports in March surged 22.5% from a year earlier to the highest since June 2020, data showed on Thursday, as refiners stepped up runs to capture fuel export demand and in anticipation of a domestic economic recovery.

Crude imports in March totalled 52.3 million tonnes, or 12.3 million barrels per day (bpd), according to data from the General Administration of Customs. This compares with 10.1 million bpd of crude imported in March last year.

The imports were in line with expectations of higher refinery runs and product inventory draws on improved demand following the lifting of COVID restrictions late last year.

Analysts pointed to a sharp increase in refined fuel product exports as a key reason behind the jump in crude imports. Refined product exports jumped 35.1% to 5.5 million tonnes for March, versus 4.1 million tonnes in the same month of 2022.

“Refined fuel exports will increase, as currently the margins on exported gasoline are quite positive,” said Xu Peng, a refined products analyst at China-based commodities consultancy JLC.

“The growth of diesel demand has been less than expected, while (domestic) gasoline consumption was relatively flat,” Xu added.

Kerosene consumption had also been widely anticipated to increase through March, as the country’s aviation sector rebounds following the lifting of travel curbs.

Analysts also cited lower costs of Russian crude as a factor driving China’s imports.

“Lower prices and discounted Russian oil along with improving demand prospects are behind the rise,” stated analysts from ANZ Bank in a client note.

Crude demand had also been expected to increase at big private refiners such at Zhejiang Petrochemical (ZPC) and Hengli Petrochemical, which are reportedly operating at or above official processing rates to profit from stronger refining margins.

ZPC and Hengli account for 6.5% of China’s refining capacity.

Total crude imports for the first quarter stood at 136.6 million tonnes, a 6.7% increase over 127.9 million tonnes in the same period last year.

China imported 8.9 million tonnes of natural gas in March, up 11.2% from 8.0 million tonnes a year ago. Total natural gas imports for the first quarter stood at 26.7 million tonnes, down 3.6% on last year.

(Reporting by Andrew Hayley; Editing by Christian Schmollinger, Tom Hogue and Kim Coghill)

Gold firms as US inflation data fuels bets for rate hike pause

April 13 (Reuters) – Gold prices rose for a third consecutive session on Thursday, as softer-than-expected US inflation data prompted bets that the Federal Reserve might raise rates just once more before pausing.

Spot gold was up 0.3% at USD 2,020.52 per ounce, as of 0700 GMT. US gold futures rose 0.5% to USD 2,035.20.

Gold prices rose over 1% on Wednesday after data showed the US Consumer Price Index (CPI) rose 0.1% last month, compared with expectations of a 0.2% increase, after advancing 0.4% in February.

“Expectations that the Fed’s hiking cycle may be nearing its end are well-anchored by the recent US CPI data, with lower Treasury yields and a weaker dollar being supportive of gold prices,” said Yeap Jun Rong, a market analyst at IG.

The CME FedWatch tool shows markets are pricing in a 66.2% chance of a 25 basis point hike in May, with rate cuts seen in the second half of the year.

Rising interest rates reduce the appeal of non-yielding bullion.

Gold might retest a resistance at USD 2,032, Reuters technical analyst Wang Tao said.

San Francisco Fed Bank President Mary Daly on Wednesday said while the Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

Richmond Fed President Thomas Barkin said the Fed had more work to do in bringing inflation down to its 2% target because the latest data on price pressures was not sufficiently weak.

Minutes from the Fed’s March meeting also showed several policymakers considered pausing rate increases after a forecast that banking sector stress would tip the economy into recession.

Recession concerns are “allowing gold prices to ride on its safe-haven status… while technical conditions are revealing some moderation in upward momentum on recent highs,” IG’s Yeap said.

Spot silver fell 0.1% to USD 25.45 per ounce, platinum edged up 0.1% to USD 1,016.44 and palladium eased 0.1% to USD 1,458.66.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)

Oil drops 1% after scaling multi-month highs on OPEC’s demand warning

BENGALURU, April 13 (Reuters) – Oil prices fell a dollar a barrel on Thursday, as an OPEC report stoked summer demand worries and traders took profits after benchmarks scaled multi-month highs in the previous session.

Brent crude fell USD 1.24, or 1.4%, to settle at USD 86.09 a barrel, only the second time this month that the global benchmark has finished lower. The US West Texas Intermediate (WTI) slipped USD 1.10, or 1.3%, to close at USD 82.16 a barrel.

Both benchmarks had gained 2% on Wednesday to their highest in more than a month, as cooling US inflation spurred hopes that the US Federal Reserve will stop raising interest rates.

The Organization of the Petroleum Exporting Countries (OPEC) flagged downside risks to summer oil demand in a monthly report on Thursday, highlighting rising inventories and challenges to global growth.

The report shed light on the reasons behind a surprise production cut announced by OPEC+, which includes Russia and other OPEC allies, at the start of this month.

“Generally, I would say we saw builds in oil inventories this week in those countries which publish stocks data, so maybe that is what has been a realization that the market hasn’t shifted into a deficit,” UBS analyst Giovanni Staunovo said.

Despite Thursday’s declines, the OPEC+ decision has pushed Brent futures up nearly 8% so far this month, and it continues to raise expectations of potential future tightness in the oil markets.

Oil price declines were also limited as OPEC kept its forecast for global oil demand growth in 2023 unchanged. Other economic indicators lent further support.

The US dollar index fell to a two-month low on Thursday after producer prices unexpectedly declined in March, boosting expectations that the Federal Reserve is near the end of its interest rate hiking cycle.

A weaker greenback makes dollar-denominated oil cheaper for investors holding other currencies, lifting demand.

“With the dollar at its weakest in a year versus the euro, that formula kicks in with an exclamation mark,” said Mizuho analyst Robert Yawger.

Signs of a demand recovery in China, the top importer of crude oil and products, provided more support for oil prices, Yawger said.

China’s crude oil imports in March surged 22.5% from a year earlier to the highest since June 2020, data showed on Thursday.

(Reporting by Shariq Khan; Additional reporting by Rowena Edwards, Yuka Obayashi and Jeslyn Lerh; Editing by David Goodman, Will Dunham, Jane Merriman, Mark Heinrich and Mike Harrison)

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