Oil prices ease as China COVID concerns outweigh supply woes

SINGAPORE, Nov 16 (Reuters) – Oil prices slid on Wednesday as COVID-19 cases in China continued to climb, sparking worries of lower fuel demand in the world’s top crude importer that outweighed concerns about an escalation of geopolitical tensions and tighter oil supply.

Brent crude futures dropped by 33 cents, or 0.4%, to USD 93.53 a barrel by 0737 GMT, while US West Texas Intermediate (WTI) crude futures fell 44 cents, or 0.5%, to USD 86.48 a barrel. Both benchmarks fell more than USD 1 earlier in the session.

Oil prices settled higher on Tuesday after oil supply to parts of Eastern and Central Europe via a section of the Druzhba pipeline was temporarily suspended, according to oil pipeline operators in Hungary and Slovakia.

The disruption came concurrent with an explosion in a village in eastern Poland near the Ukraine border that killed two people and raised the possibility that the Russian-Ukraine conflict could spill over.

But after the initial “knee-jerk rally in oil prices, the tepid market follow-through reflects the significant prudence that will be taken to avoid an escalation,” said Stephen Innes, managing partner at SPI Asset Management.

US President Joe Biden’s comments that the missile was probably not fired from Russia also helped to ease immediate escalation worries, Innes said.

In China, rising COVID-19 cases are weighing on sentiment despite the hopes raised by easing virus restrictions this week.

“From all accounts, China is persisting with its zero-COVID policy, which is a natural dampener for oil market sentiment,” said Vandana Hari, founder of Vanda Insights in Singapore.

That has dampened the oil demand growth outlook, with the International Energy Agency (IEA) forecasting demand growth to slow to 1.6 million bpd in 2023 from 2.1 million bpd this year.

Earlier, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for 2022 global oil demand growth for a fifth time since April citing mounting economic challenges.

Industry data showing a bigger-than-expected drop in US crude stockpiles provided some support to oil prices.

US crude oil inventories fell by about 5.8 million barrels for the week ended Nov. 11, according to market sources citing American Petroleum Institute figures.

By comparison, seven analysts polled by Reuters estimated on average that crude inventories dropped by about 400,000 barrels.

Official US inventory data from the Energy Information Administration is due at 10:30 a.m. EST (1530 GMT).

In the United States, producer prices increased less than expected in October, suggesting inflation was starting to ease, which may allow the Federal Reserve to slow its aggressive pace of interest rate hikes.

(Reporting by Isabel Kua; Editing by Tom Hogue)

Oil falls as Druzhba pipeline reopens, China COVID worries stay at the fore

BENGALURU, Nov 16 (Reuters) – Oil prices settled more than a dollar lower on Wednesday after Russian oil shipments via the Druzhba pipeline to Hungary restarted and as rising COVID-19 cases in China weighed on sentiment.

Brent crude futures settled a dollar lower at USD 92.86 a barrel, down 1.1%. US West Texas Intermediate (WTI) crude futures slid by USD 1.33, or 1.5%, to settle at USD 85.59 a barrel.

The market gave up early gains after Hungarian Foreign Minister Peter Szijjarto said that flows through the Druzhba oil pipeline from Russia had resumed following a brief outage.

The market later recovered some losses after US crude stocks fell more than expected on the back of heavy refining activity. The Energy Information Administration said US crude inventories fell by 5.4 million barrels last week, compared with expectations for a 440,000-barrel drop.

In addition, tanker-tracker Petro-Logistics said in a report that exports from the Organization of Petroleum Exporting Countries (OPEC) have fallen significantly so far this month.

“Various geopolitical influences – from an oil tanker being hit by a bomb-carrying drone off the coast of Oman, to Russia tensions – are being largely dismissed in favor of a focus on the more bearish elements such as weak Chinese economic data and demand,” said Matt Smith, oil analyst at Kpler.

In China, rising COVID-19 cases weighed on sentiment after an easing of virus restrictions this week.

Meanwhile, Iraq plans to raise its production capacity to around 7 million barrels a day in 2027, state-owned oil marketer SOMO told Reuters, although any increases will be in coordination with OPEC.

The International Energy Agency (IEA) forecast demand growth to slow to 1.6 million bpd in 2023 from 2.1 million bpd this year.

(Reporting by Shariq Khan in Bengaluru; Additional reporting by Isabel Kua in Singapore; Editing by Jonathan Oatis, Matthew Lewis and Deepa Babington)

Wall Street gains on inflation data, but rocky on geopolitics

Nov 15 (Reuters) – Wall Street’s main indexes gained on Tuesday, shaking off an unconfirmed report of Russian missiles crossing into Poland that sparked volatility, as investors seized on softer-than-expected inflation data that raised hopes of a pullback in rate hikes by the US Federal Reserve.

Equities were boosted by Tuesday’s inflation report that showed producer prices rising 8% in the 12 months through October against an estimated 8.3% rise.

The gains built on a rally that was kicked off late last week by a cooler-than-expected report on consumer prices.

“The market has been driven by the inflation number that came out a little bit lower than expected and confirmed last week’s number to some degree that we may have rounded the corner on inflation,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The market was “a little bit more volatile this afternoon as news stories came out about the Russian missile landing in Poland,” Tuz said.

The Dow Jones Industrial Average rose 56.22 points, or 0.17%, to 33,592.92, the S&P 500 gained 34.48 points, or 0.87%, to 3,991.73 and the Nasdaq Composite added 162.19 points, or 1.45%, to 11,358.41.

Two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, firefighters said as NATO allies investigated reports that the blast resulted from Russian missiles.

The Associated Press earlier cited a senior US intelligence official as saying the blast was due to Russian missiles crossing into Poland. But the Pentagon said it could not confirm that account.

Stocks pulled back around mid-day after the report, with the Dow turning negative, before they steadied.

“The decline was triggered by reports of a Russian missile landing in Poland,” said Steve Sosnick, chief strategist at Interactive Brokers. “This could develop into something far worse, but right now markets are nervous, not panicked.”

Shares of Walmart Inc jumped 6.5% after the top US retailer lifted its annual sales and profit forecasts, benefiting from a steady demand for groceries despite higher prices.

Shares of other retailers, including Target Corp and Costco, also rose following Walmart’s report. Target, which is due to report on Wednesday, rose 3.9%, while Costco gained 3.3%.

Home Depot HD.N shares rose 1.6% after the home improvement chain’s results showed it tapped higher prices to override a drop in customer transactions for the third quarter.

Advancing issues outnumbered declining ones on the NYSE by a 3.25-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq Composite recorded 85 new highs and 76 new lows.

About 13.1 billion shares changed hands in US exchanges, compared with the 12.2 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf and Carolina Mandl in New York, Shubham Batra, Sruthi Shankar, Amruta Khandekar and Ankika Biswas; Additional reporting by Devik Jain;
Editing by Shounak Dasgupta and Arun Koyyur)

Oil prices settle higher on Druzhba oil pipeline disruption

NEW YORK, Nov 15 (Reuters) – Oil prices rose on Tuesday and settled higher after news that oil supply to Hungary via the Druzhba oil pipeline has been temporarily suspended due to a fall in pressure.

Brent crude futures rose 72 cents to settle at USD 93.86 a barrel, while US West Texas Intermediate crude rose USD 1.05 to USD 86.92.

Russia’s state-owned pipeline monopoly Transneft has been notified by Ukraine of the pipeline disruption, the RIA news agency quoted Transneft as saying on Tuesday.

The United States said it was investigating unconfirmed reports that stray Russian missiles caused an explosion that killed two people in a Polish village near the border with Ukraine.

A European Union ban on seaborne Russian crude, set to start on Dec. 5, means that 1.1 million barrels per day (bpd) must be replaced, the International Energy Agency said on Tuesday.

“When you look at what we saw from the IEA about global oil inventories, that should be very bullish,” said Phil Flynn, an analyst at Price Futures Group.

Adding support to oil prices, US producer prices increased less than expected in October, more evidence inflation was starting to ease, which could allow the Federal Reserve to slow its aggressive interest rate hikes.

Wall Street indexes rose after the data, while the US dollar index fell, making greenback-denominated oil less expensive for other currency holders.

“The inflation data was positive in a way. Stocks took off from that and it looks like we’re getting dragged higher now,” said John Kilduff, partner at Again Capital LLC in New York. “We’re still in that inverse dollar effect here.”

The IEA forecast that a gloomy economic outlook will put global oil use on track to contract by nearly a quarter million bpd in the fourth quarter of 2022 year on year, with demand growth slowing to 1.6 million bpd in 2023 from 2.1 million bpd this year.

US crude stocks fell by about 5.8 million barrels for the week ended Nov. 11, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories rose by about 1.7 million barrels, while distillate stocks rose by about 850,000 barrels.

US government data on inventories is due Wednesday.

In China, COVID cases rose further, including in the capital Beijing, and the country’s factory output growth slowed.

Investment bank JPMorgan cut its quarterly and full-year forecasts for economic growth in China. The Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 global oil demand growth forecast for a fifth time since April, citing mounting economic challenges including high inflation and rising interest rates.

(Reporting by Stephanie Kelly in New York; Additional reporting by Rowena Edwards in London and Florence Tan and Isabel Kua in Singapore; Editing by David Gregorio and Emelia Sithole-Matarise)

US recap: EUR/USD rally hits near-term crescendo on soft US PPI

Nov 15 (Reuters) – The dollar index firmed on Tuesday, rallying back sharply from a three-month low as risk sentiment deteriorated rapidly late in the session after Russia-Ukraine concerns vaulted back to the forefront of investors’ worries.

A senior US intelligence official said Russian missiles crossed into Poland, killing two people, the Associated Press reported. Reuters could not immediately confirm the information.

Polish Prime Minister Mateusz Morawiecki has called an urgent meeting of a government committee for national security and defense affairs, the government spokesman said on Twitter. Russia rained missiles on cities across Ukraine on Tuesday after its withdrawal from Kherson.

The afternoon price action reversed much of the earlier trends that followed well-below-forecast US PPI readings, which had sent Treasury yields lower and stocks higher.

Following last Thursday’s disinflationary CPI report the terminal fed funds rate has settled around 4.9% — from above 5% at its peak — while futures also project a switch to rate cuts in the second half of 2023, with nearly two reductions of 25bp priced in.

Most Fed speakers maintained the need to keep hiking rates, albeit smaller than the preceding four 75bp moves, with a data-dependent plateau after that to make certain inflation is retreating toward the long-term 2% objective.

EUR/USD was flat after retreating well back from its earlier 1.0481 four-month high on EBS that overtook the 200-day moving average at 1.0429, but then faltered ahead of the 50% Fibo of 2022’s range by 1.0500. The late drop sent prices to new Tuesday lows.

With IMM specs already well net long EUR/USD before the softer US inflation data boosted prices, it doesn’t have the short squeeze fodder that has helped accelerate yen and sterling recoveries against the dollar.

But EUR/USD’s pandemic downtrend has clearly been reversed and a near-term corrective pullback should precede a broader recovery toward resistance near 1.08.

Sterling rose 0.8% after slipping from its post-PPI spike and 3-month high at 1.2026 that was capped near the 50% Fibo of this year’s implosion.

UK jobs data were somewhat disappointing ahead of Wednesday’s CPI report and Thursday’s autumn statement that’s seen restoring fiscal policy confidence lost after the ill-fated mini-budget in September.

USD/JPY fell 0.48%, having recovered from of its post-PPI slide to 137.665 that briefly breached daily cloud base support at 138.15. But upside is capped by the cresting 100-DMA at 140.86.

US retail sales, IP and NAHB are out Wednesday to sway Fed expectations.

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

Gold near three-month high on latest Russia jitters

Nov 15 (Reuters) – Gold prices edged up near their highest in three months reached earlier on Tuesday on some safe-haven buying after news that two people were killed in eastern Poland near the Ukraine border.

The deaths were in an explosion, firefighters said on Tuesday, with a senior US intelligence official stating Russian missiles had crossed into Poland.

Spot gold rose 0.3% to USD 1,776.64 per ounce by 2:08 p.m. ET (1908 GMT). US gold futures settled little changed at USD 1,776.8.

“It is almost certainly a mistake and would be portrayed as such but Poland is a NATO country, so while gold might not erupt higher it will keep the market nervous for a bit,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

Gold prices had turned negative and slipped from their highest since Aug. 15 reached earlier in the session as the dollar index turned higher from its three-month low.

If gold manages to close above the USD 1,780 to USD 1,800 area, then that would be another bullish development, encouraging more bulls to step back in, Fawad Razaqzada, market analyst at City Index, said in a note.

Data earlier showed US producer prices increased less than expected in October, further evidence that inflation was starting to subside.

“The cooling inflation data is good news for gold, but it just seems that we have a strong price barrier within the USD 1,800 level,” said Edward Moya, senior analyst with OANDA.

Atlanta Fed President Raphael Bostic on Tuesday said he sees little evidence that aggressive monetary policy tightening is slowing inflation, anticipating that more hikes would be needed to get inflation down to the Fed’s 2% target.

Rising interest rates dim non-yielding bullion’s appeal.

Among other precious metals, spot silver slipped 1.8% to USD 21.56 per ounce, platinum fell 0.4% to USD 1,013.25 and palladium rose 2.9% to USD 2,085.52.

(Reporting by Seher Dareen and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber)

Tech, commodity stocks help Europe’s STOXX 600 close higher for fourth-day

Nov 15 (Reuters) – Europe’s STOXX 600 index closed higher on Tuesday, boosted by gains in technology and commodity stocks after softer-than-expected US inflation data bolstered hopes of less-aggressive Federal Reserve interest rate hikes in the coming months.

The continent-wide index rose 0.4%, logging its fourth-straight session of gains and erasing intraday losses after softer-than-expected US producer prices data provided further evidence that inflation was starting to subside.

Last week’s report showed consumer prices rising at a slower pace and the rate-sensitive technology index added
1.7%, as euro zone bond yields slipped in line with US Treasury yields.

“Investors are sort of seeing the fog of inflation clearing slightly, particularly in the United States,” said Danni Hewson, financial analyst at AJ Bell.

Eurozone inflation data for October is due on Thursday.

Meanwhile in the euro area, European Central Bank (ECB) policymaker Francois Villeroy de Galhau said the bank expects to raise interest rates above 2%, but beyond that level rate hikes may be in a more flexible and less rapid manner.

The STOXX 600 still hovered near 11-week highs, but is still down 11.3% for the year amid worries about a harsh recession in the euro zone.

Latest data showed a flash estimate for euro zone gross domestic product grew in line with expectations in the July-September period. Separately, German investor sentiment rose again in November on hopes that inflation rates will fall soon.

“The ECB is going to have to work harder to cool inflation,” Hewson said.

“The expectation is that inflation will stay higher for longer in the eurozone and that energy prices are going to keep taking a bite out of consumer spend in the eurozone, which is a reason why European equities haven’t been looking quite so perky.”

Investors also awaited the UK budget on Nov. 17, with expectations of tax increases and spending cuts – aimed at closing a 50 billion-pound hole in Britain’s finances.

Oil and gas firms and miners added more than 1% each.

Teleperformance jumped 10% after Citigroup upgraded the French office support provider’ stock to “buy” from “neutral”.

The company would meet with Colombian Labor Ministry representatives this week after the country
opened a probe into its work practices there.

Weighing the most on the STOXX 600 index was a 7.9% slide in Vodafone shares after the company cut its full-year free cash flow forecast and said annual earnings would come in the bottom range of its target.

European telecoms dipped 1%.

Danish medical device maker Ambu tumbled 14.8% to the bottom on the STOXX 600 after a cautious 2022/23 outlook.

(Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Savio D’Souza, Shinjini Ganguli and Alexander Smith)

China stocks surge on Xi-Biden meeting, pro-growth policies

SHANGHAI, Nov 15 (Reuters) – China stocks closed up for a third straight session on Tuesday, led by semiconductor and internet companies on signs of easing China-US tensions after a meeting between US President Joe Biden and Chinese leader Xi Jinping, while Beijing’s latest supportive steps also lifted sentiment.

** The blue-chip CSI 300 Index ended higher 1.9%, and the Shanghai Composite Index added 1.6%.

** The Hang Seng Index jumped 4.1%, while the Hang Seng China Enterprises Index surged 4.8%.

** A positive sign on the Group of 20 (G20) nations summit was a three-hour meeting between Biden and Xi in which the two leaders pledged more frequent communications despite their many differences.

** Recent moves by Chinese authorities to ease some COVID curbs and provide financial support to the property market also underpinned sentiment.

** Hong Kong-listed tech giants soared 7.3%, sending their month-to-date gains to 33.7%. Index heavyweights Alibaba and Tencent surged more than 10% each.

** “We believe the Xi-Biden meeting today could reduce the risk of Chinese ADRs (American Depositary Receipts) being delisted but is unlikely to reduce the intensity of the tech war,” said Jefferies analysts in a Monday note.

** In mainland markets, semiconductor shares jumped 6.7% and securities firms climbed 3.6%.

** The strong market performance overshadowed concerns over data showing slower Chinese factory output growth and a fall in October retail sales.

** “Economic activities slowed in October due to worsening COVID outbreaks and weak external demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “As investors are forward looking, the focus in the market is on the change of policies.”

** Several Chinese cities began cutting routine community COVID-19 testing, days after China announced an easing of some of its coronavirus measures, although daily infections had jumped to the highest level since April, when Shanghai was in a two-month citywide lockdown.

** Separately, China’s central bank partially rolled over maturing medium-term policy loans and kept the interest rate unchanged for a third straight month.

(Reporting by Shanghai Newsroom; Editing by Rashmi Aich and Angus MacSwan)

Philippines raises USD 611 mln via 2034 T-bond re-issue

MANILA, Nov 15 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of re-issued 2034 T-bonds on Tuesday:

* BTr fully awards 35 billion pesos (USD 610.50 million) offer

* Average yield 8.168%

* Tenders total 80.953 billion pesos

* Bonds were originally issued in 2009

(USD 1 = 57.3300 Philippine pesos)

(Reporting by Enrico Dela Cruz)

Oil prices little changed amid China COVID concerns, supply woes

SINGAPORE, Nov 15 (Reuters) – Oil prices held steady on Tuesday as rising COVID-19 cases in China sparked fears of lower fuel consumption from the world’s top crude importer and a cut in OPEC’s 2022 global demand forecast offset worries about tight supply.

Brent crude futures edged up 11 cents, or 0.1%, to USD 93.25 a barrel by 0715 GMT after settling 3% lower on Monday. US West Texas Intermediate crude was at USD 85.68 a barrel, down 19 cents, or 0.2%, after tumbling 3.5% in the previous session.

While investors cheered China’s announcements last week that it would lessen the impact of a strict zero-COVID policy to spur economic activity and energy demand, analysts said lockdowns and surging case numbers continue to be a key downside risk.

The country’s COVID cases rose further on Tuesday, including in the capital Beijing, even as many cities scaled back routine testing.

“Rolling lockdowns across heavily populated areas in China penalize mobility and oil demand even more than economic activity,” said Stephen Innes, managing partner at SPI Asset Management, in a note.

The country’s factory output growth slowed, retail sales fell and property slumped further in October, the latest sign that the world’s second-largest economy is losing momentum as it struggles with protracted COVID curbs and a property downturn.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 global oil demand growth forecast for a fifth time since April, citing mounting economic challenges including high inflation and rising interest rates.

This comes after the International Monetary Fund said on Sunday the global economic outlook has become gloomier than projected last month, citing a steady worsening in purchasing manager surveys in recent months.

However, concerns about tight supplies this winter continued to support oil prices. A European Union embargo on Russian oil is set to start on Dec. 5. The ban will be followed by the halting of oil product imports in February.

US crude oil stocks were expected to have dropped by about 300,000 barrels in the week to Nov. 11, a Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute due at 4:30 p.m. ET (2130 GMT) on Tuesday and the Energy Information Administration (EIA) due on Wednesday.

Elsewhere, oil output in the Permian Basin is set to hit another record of 5.499 million barrels per day (bpd) in December, the EIA said in its monthly productivity report on Monday.

However, aging shale regions are showing weaker per-well output, causing overall US crude oil production in shale regions to rise by a mere 91,000 bpd to 9.191 million bpd in December, despite a surge in prices, it said.

(Reporting by Florence Tan and Isabel Kua; Editing by Lincoln Feast, Kirsten Donovan)

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