Oil dips as weaker China, US economic data offset IEA demand forecast

NEW YORK, May 16 (Reuters) – Oil futures dipped on Tuesday as weaker-than-expected economic data in China and the United States offset a forecast of higher global demand from the International Energy Agency (IEA).

Brent crude futures settled 32 cents lower to USD 74.91 a barrel. US West Texas Intermediate crude edged down 25 cents to USD 70.86.

Both benchmarks rose more than 1% on Monday, reversing a three-session losing streak.

Weighing on prices on Tuesday was Chinese data showing industrial output and retail sales growth undershot forecasts in April, suggesting the world’s second-largest economy lost momentum at the start of the second quarter.

However, an 18.9% year-on-year rise in China’s oil refinery throughput in April to the second-highest level on record helped to keep a floor under crude prices.

“There has been a lot of concern about China’s industrial numbers, but if you look at their actual demand numbers or refinery runs, they’re knocking on the door of breaking records,” said Phil Flynn, an analyst at Price Futures Group.

With refiners building stockpiles ahead of the summer travel season in the northern hemisphere, crude imports by China in May are moving towards 11 million barrels per day, versus 10.67 million bpd in April, Refinitiv Oil Research said.

China’s June refinery intake is expected to grow by 1.5% month on month, data compiled from Wood Mackenzie showed.

US data showed that retail sales increased less than expected in April, pointing to consumers feeling the pinch from rising prices and interest rates.

Richmond Federal Reserve President Thomas Barkin on Tuesday said he is “comfortable” with raising interest rates further if that is what is needed to lower inflation.

The IEA raised its forecast for global oil demand this year by 200,000 bpd to a record 102 million bpd. It said China’s recovery after the lifting of COVID-19 curbs had surpassed expectations, with demand reaching a record 16 million bpd in March.

In another bullish development, the US Department of Energy on Monday said it would buy 3 million barrels of crude oil for delivery in August in a move to begin refilling the Strategic Petroleum Reserve.

The SPR has been drawn down to its lowest level since 1983 after President Joe Biden’s administration last year conducted the largest-ever sale from the emergency stockpile of 180 million barrels, as part of a strategy to stabilize soaring oil markets and combat high pump prices in the aftermath of Russia’s invasion of Ukraine.

Meanwhile, US crude oil inventories rose by about 3.6 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday. Government data on US stockpiles is due on Wednesday.

Additionally, widespread fires in the Canadian province of Alberta have shuttered at least 319,000 barrels of oil equivalent per day, representing 3.7% of Canada’s production.

Global crude supplies could also tighten in the second half of the year as the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, implement additional output cuts.

(Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo, and Trixie Yap in Singapore; Editing by Paul Simao and Stephen Coates)

Gold muted after higher Fed rate signals, debt talks eyed

May 16 (Reuters) – Gold prices eased in a narrow range on Tuesday as traders assessed comments from US central bank officials on interest rates staying high, while the US debt-ceiling debate and risk of a default curbed further losses in bullion.

Spot gold fell 0.2% to USD USD 2,015.84 per ounce by 0452 GMT, while US gold futures GCv1 eased 0.1% to USD 2,020.40.

US Fed members are playing down the possibility of rate cuts this year and that is pushing gold slightly lower, said Matt Simpson, a senior market analyst at City Index, adding gold’s failure to hold above the previous record high had shaken confidence.

Gold hit USD 2,072.19 this month, just shy of a record high of USD 2,072.49, after the Federal Reserve hinted that its marathon raising cycle may be ending.

However, US central bankers on Monday signalled they see interest rates staying high and, if anything, going higher, given inflation that may be slow to improve and an economy showing only tentative signs of weakness.

While gold is considered a hedge against inflation, rising interest rates dull the non-yielding bullion’s appeal.

Market participants were also closely following developments in the debt-ceiling debate, with President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy scheduled to meet at 3 p.m. (1900 GMT) on Tuesday for talks.

“Hopes remain of a resolution whilst talks continue, but at the same time the risk of a U.S. default lingers as Democrats and Republicans run down the clock, and that has gold in a holding pattern,” Simpson added.

Meanwhile, India slashed the base import prices of silver, and raised the price of gold, the government said late on Monday.

Elsewhere, spot silver fell 0.4% to USD 24.01 per ounce, platinum ticked 0.1% lower to USD 1,063.76, while palladium was flat at USD 1,532.28.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips and Janane Venkatraman)

Dow, S&P edge up as data, debt ceiling curb gains

NEW YORK, May 15 (Reuters) – The S&P 500 and the Dow ended with modest gains on Monday after manufacturing data raised concerns about a slowing US economy that could help bring down inflation amid ongoing debt ceiling negotiations, while a rise in Meta shares helped lift the Nasdaq.

The New York Federal Reserve’s “Empire State” index, a gauge of manufacturing activity in New York State on current business conditions, tumbled to a reading of -31.8 in May, against expectations of -3.75.

“This is always tough because we are in a period now where bad news is actually good news from a stocks standpoint and vice versa, but you still get the market reacting when you get a bad number because everybody then begins to worry about a recession,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

“So we want the economy to be weak enough to bring down inflation but not so weak that it causes a recession.”

Analysts cautioned that the barometer is also volatile, lessening its impact.

Also keeping markets subdued was the wrangling in Washington between the White House and Republicans in debt-ceiling talks, with a meeting scheduled for Tuesday, although it was unlikely a deal would be reached then.

“We’ve been through this before, eventually they come to their senses and do something, compromise and actually get something done instead of playing this game of chicken, it’s really who blinks first,” said Ghriskey.

The Dow Jones Industrial Average rose 47.98 points, or 0.14%, to 33,348.6, the S&P 500 gained 12.2 points, or 0.30%, to 4,136.28 and the Nasdaq Composite added 80.47 points, or 0.66%, to 12,365.21.

Meta Platforms Inc (META) climbed 2.16% as one of the top boosts to both the Nasdaq and S&P 500 after Loop Capital upgraded it to “buy” from “hold.”

In a relatively light week for economic data, investors will focus on retail sales, weekly jobless claims and housing data.

Slowing economic data has heightened expectations for when the Federal Reserve will pause its interest rate hike cycle as the central bank tries to stamp out high inflation.

On Monday, several Fed officials indicated they expect interest rates to stay high, at odds with market expectations for a rate cut before the end of the year.

In addition, Richmond Federal Reserve President Thomas Barkin said in an interview with Reuters that he is not yet convinced inflation is on a steady path downward, although he is comfortable with the Fed using a data-dependent approach for additional rate hikes.

Fed Chair Jerome Powell is scheduled to speak on Friday and investors will monitor his comments for any signals on the path of interest rates this year.

Oneok Inc (OKE) slumped 9.06% after it agreed on Sunday to buy US pipeline operator Magellan Midstream Partners (MMP) in a USD 18.8-billion deal. Shares of Magellan rallied 12.99%.

Western Digital Corp (WDC) climbed 11.26% after Reuters reported the memory chip firm and its Japanese JV partner Kioxia Holdings Corp are speeding up merger talks.

Volume on US exchanges was 9.06 billion shares, compared with the 11.1 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 2.10-to-1 ratio; on Nasdaq, a 1.85-to-1 ratio favored advancers.

The S&P 500 posted nine new 52-week highs and seven new lows; the Nasdaq Composite recorded 59 new highs and 136 new lows.

(Reporting by Chuck Mikolajczak; Editing by Marguerita Choy)

US recap: Dollar off with risk on before Tuesday’s key event risks

May 15 (Reuters) – The dollar retreated along a broad front on Monday, correcting risk-off-driven gains at the end of last week while markets braced for Tuesday’s US retail sales report and the next US debt ceiling talks.

A weak but highly volatile NY Fed report was taken with a grain of salt, while most of Monday’s Fed speakers pushed back against market expectations of rate cuts this year.

The dollar index’s 0.25% loss was a mirror image of EUR/USD’s gains, with both having tangled with dollar resistance levels on Friday and Monday.

The real action in FX Monday was between rebounding high beta currencies, such as the Australian dollar, and the lowest beta yen, with AUD/JPY gaining more than 1%, while USD/JPY managed just a 0.22% gain.

The risk-on bias was aided by hopes China will increase stimulus to help revive growth, but also on speculation that, in the end, the US will manage not to score a crisis-inducing own goal by defaulting on its own debt.

An actual default, not just delayed payments to those other than Treasury debt holders, would weaken the dollar’s standing as a reserve currency, though the market appears to expect that the worst will be averted.

Also, a plus for risk-taking was a bounce in beleaguered US bank stocks.

Sterling, which hues more closely to risk acceptance flows, and with employment and particularly wage data out Tuesday that could keep the BoE hiking, rallied throughout the day and accumulated a 0.65% rise.

USD/JPY’s 0.2% gain came after the 136.32 early high on EBS held by the May 2 low at 136.33, with May 2’s 137.78 high, by March’s 137.90 peak, triggering the three-day plunge to 133.50.

Hopes of the BoJ’s policy review reducing accommodation were dimmed by the government’s lukewarm reception to the plan.

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

Gold gains on dollar pullback, debt-ceiling talks in focus

May 15 (Reuters) – Gold advanced on Monday on a weaker dollar as traders stuck to bets on interest rate cuts before year-end despite comments from Federal Reserve officials, with a focus also on the US debt ceiling talks.

Spot gold was up 0.4% at USD 2,019.37 per ounce by 1:40 p.m. EDT (1740 GMT), rebounding from its one-week low touched on Friday.

US gold futures settled up 0.1% at USD 2,022.70.

The dollar eased from a five-week high, making bullion cheaper for overseas buyers.

“Investors will continue to deploy their capital in gold as the prospect of a rate-cutting cycle continues to firm over the next 12 months,” said Daniel Ghali, commodity strategist at TD Securities.

Most market participants were still betting on at least one rate cut before 2023 ends, according to the CME’s FedWatch tool. Higher interest rates dim appeal for zero-yield gold.

Minneapolis Fed President Neel Kashkari said there was more work to be done to rein in inflation, while Atlanta Fed president Raphael Bostic played down chances of rate cuts this year.

Any hawkish comments are “essentially disregarded” because the market is inferring what the Fed might end up doing based on incoming data as opposed to what they are saying, Ghali added.

The focus will be on more Fed speakers this week, including Chair Jerome Powell.

President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy, meanwhile, entered a critical week for debt-ceiling talks to avert a devastating default.

While gold remains supported by factors including rate cut bets, a “major risk-on wave stemming from a deal could drag gold into the sub-USD 2,000 domain”, said Han Tan, chief market analyst at Exinity.

Silver rose 0.8% to USD 24.11 per ounce, platinum gained 1.6% to USD 1,066.27, and palladium climbed 1.4% to USD 1,530.34.

Rising demand from automakers, industry, and investors will push the global platinum market into its biggest deficit in years, three industry reports predicted.

(Reporting by Deep Vakil and Arundhati Sarkar in Bengaluru; Editing by Shilpi Majumdar)

Philippines pushes back retail dollar bond offering to Q3

MANILA, May 15 (Reuters) – The Philippine government is pushing back a planned offering of US dollar-denominated retail bonds to the third quarter, when the exchange rate may be more favourable for potential Filipino investors working overseas, a senior finance official said.

National Treasurer Rosalia de Leon said the “aspiration” was to raise USD 2 billion from the bond offering.

The government was previously looking at offering USD 2 billion to USD 3 billion worth of retail dollar bonds in April, the proceeds of which will be used to finance the government’s budget.

“We’re oozing with cash, so we also have to calibrate in terms of our borrowing. We’re also looking at the good window because right now the peso was at 56 (to the dollar),” de Leon told reporters on Friday.

“For those who are buying dollars with their peso, that’s relatively high. So we’re looking for a more comfortable exchange rate so that they’ll have an upside.”

(Reporting by Enrico Dela Cruz; Editing by Mike Harrison)

Turkey’s lira sinks to two-month low in post-election trade

LONDON, May 14 (Reuters) – Turkey’s lira slipped to a fresh two-month low as financial markets kicked off trading in the wake of the country’s Sunday presidential and parliamentary election with the race for presidency appearing headed for a runoff.

The currency weakened to 19.70 to the dollar before retracing some of its losses to 19.66, on track for its worst session since early November.

That was not far off the 19.80 level it hit in early March following deadly earthquakes in February.

Parties of both incumbent Tayyip Erdogan and opposition rival Kemal Kilicdaroglu were claiming the lead but sources in both camps admitted they may not clear the 50% threshold to win outright.

The presidential vote will decide not only who leads Turkey and shapes the foreign policy of the NATO-member country of 85 million people, but also how it is governed and its economic future amid a deep cost of living crisis.

“It is hard to foresee a market-positive scenario emerging from today’s double vote in Turkey,” Wolfgango Piccoli at Teneo wrote in a note to clients.

Analysts expect the lira to face sharp adjustments in the wake of the elections following years of economic imbalances and unorthodox monetary policy.

JPMorgan forecast the lira could soften to levels of 24-25 to the dollar. Goldman Sachs said in a note in recent days that its calculations showed the market was pricing the lira to weaken by 50% in the next twelve months, including a sharp devaluation post-election.

The lira, which is prone to sharp swings before regular trading hours, has weakened 5% since the start of the year.

The currency has lost almost 95% of its value over the last decade and a half as sugar-rush economic policies have led to spectacular boom and bust cycles and rampant bouts of inflation and currency market turmoil.

A potential second round is scheduled for May 28.

(Reporting by Karin Strohecker; Editing by Frank Jack Daniel and Chris Reese)

Australian shares to open marginally higher, NZ falls

May 15 (Reuters) – Australian shares are likely to open marginally higher on Monday even as bearish investor sentiment strengthened further in global markets after a report showed US consumer sentiment slumped to a six-month low in May.

The local share price index futures rose 0.1%, a 17.3-point premium to the underlying S&P/ASX 200 index close. The benchmark rose 0.1% on Friday.

New Zealand’s benchmark S&P/NZX 50 index was down 0.4% in early trade.

(Reporting by John Biju in Bengaluru; Editing by Cynthia Osterman)

Indian rupee falls on weak Asian peers, premiums at 3-month low

MUMBAI, May 15 (Reuters) – The Indian rupee inched lower on Monday, bogged down by the fall in Asian peers, while forward premiums reached their lowest since February.

The rupee was quoted at 82.20 per US dollar by 10:54 a.m. IST, down from 82.1625 in the previous session. The rupee had fallen by 0.4% last week, tracking the jump in the dollar index.

It is unlikely that the rupee will see a larger fall from current levels, a trader at a private sector bank said. He expected the Reserve Bank of India to step in and sell dollars if USD/INR reaches the 82.40-82.50 level.

The dollar, supported by safe-haven flows, was at its highest level in a month versus its major peers. Asian currencies dropped.

The dollar found support from the move up in U.S. yields. The two-year US yield was back to near 4% following data that slightly pushed up the possibility of a rate hike by the Federal Reserve in June. The odds though remained overwhelmingly in favour of a pause. FEDWATCH

A survey from the University of Michigan showed long-term inflation expectations jumping this month to their highest reading since 2011.

A couple of Fed officials on Friday indicated some uncertainty about whether the US central bank will in fact pause interest rate hikes next month.

Meanwhile, the one-year implied USD/INR yield dropped to 2.06%, thanks to the rise in US yields and India’s April inflation data which eased to a 19-month low of 4.7% in April.

“We believe a macro regime shift is underway from high growth-high inflation to low growth-low inflation, which is likely to cause the RBI to pause in the near term,” Nomura said in a note.

(Reporting by Nallur Sethuraman in Mumbai; Editing by Sohini Goswami)

PH fully awards USD 271M T-bill offer as yields drop

MANILA, May 15 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of T-bills on Monday:

* BTr fully awards PH P15 billion (USD 271.39 million) offer

* BTr awards PHP 5 billion of 91-day T-bills at 5.874% avg yield vs previous rate of 5.891%

* BTr awards PHP 5 billion of 182-day T-bills at 5.991% avg yield vs previous rate of 6.109%

* BTr awards PHP 5 billion of 364-day T-bills at 6.028% avg yield vs previous rate of 6.211%

* Details are on the BTr’s website.

(Reporting by Enrico Dela Cruz)

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