US STOCKS-Wall St flat as oil offsets Facebook's drop; Fed move awaited - Reuters News
21-Mar-2018 10:20:22 PM
• Facebook down for third day on privacy concerns
• Energy stocks gain as oil prices jump over 1 pct
• Fed to make rate announcement at 2 p.m. ET
• China plans countermeasures for U.S. tariffs - WSJ
• Dow up 0.04 pct, S&P off 0.05 pct, Nasdaq down 0.16 pct
Updates to open
By Sruthi Shankar
March 21 (Reuters) - U.S. stocks were little changed on Wednesday, ahead of an expected Federal Reserve interest rate hike, as weakness in Facebook's shares for a third day were countered by gains in energy stocks.
Technology shares fell 0.3 percent as Facebook's data privacy travails persisted. Facebook was down 2 percent, adding to a 9 percent loss in the past two days in the wake of an uproar over the alleged misuse of users' data.
The energy index gained 1.15 percent, mirroring a jump in crude oil prices that neared their highest in six weeks after a surprise decline in U.S. inventories and as concern persisted over possible disruption to Middle East supply.
The markets are also jittery about the possibility of a global trade war after the Wall Street Journal said China was planning countermeasures to the Trump administration's threatened import duties. Equity futures dipped earlier in the day on the news.
That adds to the nerves about what kind of monetary policy regime will be pursued by new Federal Reserve Chair Jerome Powell.
"There has been some worry off-and-on for sometime now. Fear of a trade war versus maybe some hope that it's not going to be so bad or it's going to be more limited," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"There is going to be a little bit more fear this morning, especially heading into the Fed meeting. He's (Powell) is going get asked about tariffs, its implications for the economy and for the Fed policy."
At 9:42 a.m. ET, the Dow Jones Industrial Average was up 0.04 percent at 24,737.57 and the S&P 500 fell 0.05 percent to 2,715.46.
The Nasdaq Composite fell 0.16 percent to 7,352.43.
Among stocks, General Mills slumped about 10 percent after the company cut its full-year profit forecast due to higher freight and commodity costs.
That weighed on other food companies, with Kellogg down 4 percent and JM Smucker and ConAgra down 3.6 percent.
The Fed is widely seen raising its benchmark interest rate by 25 basis points when it concludes the first meeting of the Jerome Powell era at 2:00 p.m. ET.
While markets are sure about the quarter-point hike, they are less confident of what the Fed signals next: three hikes this year, as previously forecast by policy makers, or four.
Some investors believe that corporate tax cuts and recent hints of inflation pressures will push policymakers to add an additional increase beyond the expected three.
One worry among equity investors is faster rate hikes could dent the appeal of stocks relative to bonds. Stocks remain relatively expensive despite recent pull backs.
Ahead of the Fed announcement, two-year note yields, which are highly sensitive to monetary policy, jumped to 2.357 percent, the highest since September 2008.
Advancing issues outnumbered decliners on the NYSE for a 1.18-to-1 ratio, and for a 1.05-to-1 ratio on the Nasdaq.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Dan Burns and Savio D'Souza)
UPDATE 6-Oil hits 6-week high on inventory data, Middle East worries - Reuters News
21-Mar-2018 11:24:13 PM
• EIA data shows surprise U.S. crude draw
• Saudi Crown Prince visits Washington
• U.S., Saudi Arabia expected to put pressure on Iran
• Demand also supports crude prices
Includes EIA data, adds commentary, changes byline, updates dateline (previous London
By Ayenat Mersie
NEW YORK, March 21 (Reuters) - Oil hit a six-week high on Wednesday after a surprise decline in U.S. inventories and as concern persisted over possible disruption to Middle East supply.
Data released by the U.S. Energy Information Administration (EIA) on Wednesday morning showed a surprise 2.6 million barrel draw in crude inventories. Analysts had expected a 2.5 million barrel build.
Brent crude futures were up $1.47, or 2.2 percent, at $68.89 per barrel by 10:50 a.m. EDT (1450 GMT). Brent has risen by 11.5 percent since hitting a two-month low of $61.77 in early February.
U.S. West Texas Intermediate (WTI) crude futures were up $1.89, or 1.9 percent, at $64.74 a barrel.
"A few things happened," said Jim Ritterbusch, president of Ritterbusch and Associates, referring to the data released by the EIA.
"Crude imports dropped by half a million barrels per day, that contributed to the draw. We saw refinery runs increase more than expected by around 400,000 barrels per day so that ate up a lot of crude. And exports were up slightly," he said.
Saudi Arabia's Crown Prince Mohammed bin Salman on Tuesday arrived in Washington, raising speculation the United States could reimpose sanctions on Iran, following renewed criticism of the 2015 nuclear deal.
"So even though you do see signs that the market is lax on the physical side, do you go aggressively bearish when you have the potential for something happening between the U.S. and Iran?"
Analysts also pointed to the nomination of Mike Pompeo as U.S. Secretary of State as a risk to oil markets, given he fiercely opposed the Iranian nuclear deal as a member of Congress.
Energy consultancy FGE said new U.S. sanctions on Iran could result in a drop of 250,000 to 500,000-bpd in its exports by year-end, compared with crude exports of roughly 2.0 million to 2.2 million bpd since early 2016, when sanctions were lifted.
"... Oil sanctions against Iran would have a greater impact in an undersupplied market than in an oversupplied one. The unexpected 2.7-million barrel decline in U.S. crude oil stocks last week, as reported by the API, is likely to confirm market participants in this view. The oil price strength could therefore continue in the coming days," Commerzbank analysts said in a note.
Investors have been particularly wary of the steep rise in U.S. output, which has grown by more than 20 percent since mid-2016, to 10.38 million bpd, putting the United States on track to possibly become the world's largest oil producer this year.
UPDATE 1-Record U.S. oil offshore lease sale to test Trump energy push - Reuters News
21-Mar-2018 10:21:08 PM
Adds comment from API in paragraphs 11-13
By Richard Valdmanis
March 21 (Reuters) - The U.S. Interior Department will hold the largest lease sale in American history in the offshore Gulf of Mexico on Wednesday, in a major test of the oil industry's appetite for federal acreage offered by the Trump administration.
The auction of more than 77 million acres (31.2 million hectares), an area twice the size of Florida, is part of an effort by President Donald Trump's administration to ramp up U.S. fossil fuels production by lowering royalty rates, opening up more public lands, and rolling back environmental protections.
U.S. crude oil and natural gas output is already smashing records thanks to improved drilling technology that has opened up cheaper onshore reservoirs, and as Brazil and Mexico compete for drillers in their own deepwater acreage.
The United States produces about 1.5 million barrels of oil per day from the Gulf of Mexico, about 15 percent of the national total, according to the Energy Information Administration.
"American energy production can be competitive," Vincent DeVito, an energy policy advisor at the Interior Department, said of the auction. "People need jobs, the Gulf Coast states need revenue, and Americans do not want to be dependent on foreign oil."
Others called the unusually large lease sale ill-considered.
"Offering a nearly unrestricted supply in a low demand market with a cut rate royalty and almost no competition is bad policy and an inexcusable waste of taxpayer resources," the Center for American Progress, a left-leaning policy think tank, said in a statement.
PUMPING UP INTEREST
The U.S. government offers Gulf of Mexico leases annually, but usually in smaller regional batches. An auction in March 2017, for example, offered up 48 million acres in the Central Gulf of Mexico planning region.
Wood Mackenzie energy analyst Mfon Usoro said she expected demand for the acreage to be slightly higher than in last year's auctions thanks to higher oil prices and lower corporate taxes. But she noted it could be hurt by competition from Latin America and concerns over the impact that U.S. tariffs on steel imports could have on capital costs.
She said she expected traditional deepwater oil and gas drillers like Royal Dutch Shell Plc and Chevron Corp to "lead the pack" at the auction.
A spokeswoman for the American Petroleum Institute, which represents U.S. oil and gas companies, said the administration's commitment to providing the industry broad access to the region was important.
"Without this key access to new U.S. energy resources, we could see millions in investments, significant government revenues and thousands of jobs shift to other parts of the world," spokeswoman Cornelia Horner said.
She did not comment on expected demand for the acreage.
In an effort to pump up interest, the Interior Department has said it is considering cutting the royalty rate companies must pay in offshore waters by a third to 12.5 percent.
The administration had already cut that rate for shallow water acreage offered in a Gulf of Mexico lease sale last year, which nonetheless yielded relatively low bids on a small percentage of the acreage offered.
A Reuters analysis of government data showed the amount of money per acre that oil companies spent in the Gulf in 2017 was about a third the levels in 2013, when oil prices were higher. Energy firms also bid for less than 1 percent of the offered acreage in 2017, compared with 4.5 percent in 2013.
The administration is eyeing further vast lease sales offshore in the future, having proposed opening up parts of the Arctic, Atlantic and Pacific - an idea that has faced pushback from several governors in U.S. coastal states.
(Writing by Richard Valdmanis
Editing by Marguerita Choy and Paul Simao)
UPDATE 1-Compliance with oil supply cuts hits record, overhang shrinks - Reuters News
21-Mar-2018 10:35:27 PM
• Oil inventory overhang shrinks to 44 million barrels
• Compliance hits record 138 percent
• Meeting looked at new metrics to assess supply cut - sources
Adds details from OPEC statement, source comments
By Alex Lawler
LONDON, March 21 (Reuters) - Compliance with a global deal to cut oil supply hit a new high in February, a joint OPEC and non-OPEC committee estimated, suggesting a rise in the price of crude has not weakened commitment.
Producers in the pact achieved 138 percent of pledged output reductions last month, OPEC said in a statement, a record since the deal among OPEC and non-member countries aimed at clearing a glut and bolstering prices began in January 2017.
The previous high was reached in January, at 133 percent.
The Organization of the Petroleum Exporting Countries, Russia and several other non-OPEC producers have extended the pact until the end of 2018.
The supply cut's original aim was to shrink oil inventories in developed economies to their five-year average. Stocks in February were 44 million barrels above that level, OPEC said, the closest the group has come to the target.
"The committee stressed that all participating countries should strive to achieve or exceed full conformity with their voluntary production adjustments," the OPEC statement said.
"February continued the accelerated rebalancing path witnessed in recent months."
The compliance figures reflect both high adherence by top exporter Saudi Arabia and other Gulf OPEC countries, as well as an involuntary slide in production in Venezuela, whose output is dropping amid an economic crisis.
OPEC's deal has helped boost oil prices, which topped $71 a barrel this year for the first time since 2014 and were above $68 on Wednesday, supported by a surprise decline in U.S. inventories.
While developed-country oil stocks are dropping closer to the five-year average, OPEC is talking of adjusting the metric to give a more complete picture of the supply cut.
The committee, which met at OPEC's Vienna headquarters on Monday, discussed this issue but made no conclusions, sources familiar with the matter said.
To get a broader picture, producers could look at a longer period than five years, or take into account inventories in other countries, floating storage and oil in transit, OPEC officials have said.
The committee includes officials from Saudi Arabia, Venezuela and Algeria, plus non-OPEC Russia and Oman.
(Editing by Dale Hudson)
PRECIOUS-Gold rebounds from three-week lows ahead of Fed rate outlook - Reuters News
21-Mar-2018 11:33:17 PM
• Fed seen raising interest rates, 2018 projections in focus
• Gold down 4 pct from over 1-1/2 year high touched in January
(Updates prices, PGM minor metals)
By Zandi Shabalala
LONDON, March 21 (Reuters) - Gold recovered from a three-week low as the dollar eased on profit-taking ahead of the U.S. Federal Reserve's meeting later on Wednesday, which could provide further clues on the pace of expected interest rate increases.
With a rate rise of 25 basis points seen as a done deal, investors will be on the lookout for whether the Fed forecasts four increases in 2018, one more than previously forecast.
Spot gold was up 0.8 percent at $1,321.85 an ounce at 1517 GMT, having dropped as low as $1,306.91 in the previous session.
U.S. gold futures for April delivery rose 0.6 percent to $1,319.60.
"A 25 base hike is priced in, so the potential impact could come from the statement and what happens to the Fed projection for inflation and rate expectations in 2018," said Capital Economics commodities economist Simona Gambarini.
The dollar index, which measures the greenback against a basket of six major currencies, slipped 0.4 percent to 90.135 after climbing to its highest since March 1 in the previous session.
A weaker greenback makes dollar-denominated assets such as gold cheaper for holders of other currencies.
"The U.S. dollar has been the primary driver of the gold price over the last week, and market reaction to tonight's FOMC announcement is likely to dictate any near-term move," MKS said in a note.
"Gold should find support at the $1,307-$1,308 level that has held over the last couple of sessions, and at the psychological $1,300 level below that."
The Fed will make an announcement on interest rates at 1800 GMT on Wednesday and new Fed Chairman Jerome Powell will hold his first news conference at 1830 GMT.
The expectations for a faster pace of U.S. rate hikes have caused gold to fall 4 percent from a 1-1/2 year high reached in January.
Higher U.S. interest rates typically reduce demand for non-yielding bullion, though analysts said that the possibility of an escalation in geopolitical tensions could cushion gold.
U.S. President Donald Trump is expected to unveil up to $60 billion in import duties on Chinese goods by Friday, following on from tariffs he imposed this month on imported steel and aluminium.
Investors are worried that Trump's actions could escalate into a trade war if China and other countries retaliate, threatening global growth.
Rhodium prices rallied to a near seven-year peak, ruthenium to its highest since 2010 and iridium to its strongest in five years on Wednesday as rising industrial demand squeezed prices of the minor precious metals higher.
Among other precious metals, silver added 1.6 percent to $16.43 an ounce while platinum was up 0.5 percent at $945.24 and palladium rose 0.9 percent to $987.80.
(Additional reporting by Eileen Soreng and Nallur Sethuraman in Bengaluru
Editing by David Goodman and Mark Potter)
Brazil soybean exports to benefit from Argentina drought - crop analyst - Reuters News
21-Mar-2018 10:37:25 PM
By Roberto Samora
LUÍS EDUARDO MAGALHÃES, Brazil, March 21 (Reuters) - Brazil's soybean farmers are poised to export a record volume of the oilseeds this year as a drought reduces supplies from neighboring Argentina, André Pessoa, founding partner of consultancy Agroconsult, said on Tuesday evening.
Hot, dry weather in Argentina, the world's third largest soybean exporter, has pushed up prices on the Chicago Board of Trade (CBOT) in recent weeks and boosted prospects for suppliers like Brazil and the United States in global markets.
Brazil's farmers could export up to 75 million tonnes of soybeans in 2018, Pessoa told grain growers in the west of Bahia, speaking on the second day of a crop tour of the Matopiba region, a new agricultural frontier where about 11 percent of Brazil's soybeans are grown.
Pessoa said Brazil will likely gain market share this year as U.S. farmers are expected to channel more soy into soymeal production, a move designed to take advantage of the gap being left by Argentina, the world's No 1 soymeal exporter.
But while Brazilian soybean exports may benefit from Argentina's drought, the potential to increase soymeal sales is hampered by the fact Brazil's soymeal plants have not been modernized, Pessoa said.
Agroconsult had estimated earlier in March that Brazil would export 71.3 million tonnes of soybeans this year thanks to strong demand from China.
Brazil, the world's top soybean exporter, sold 68 million tonnes of the oilseeds in global markets in 2017.
Sales to China, the world's biggest soybean importer, are likely to reach a historical high of 100 million tonnes in the 2017/18 crop cycle, up from 93 million tonnes in the prior season, driven by demand from the animal feed industry, Pessoa said.
(Reporting by Roberto Samora
Writing by Ana Mano
Editing by Frances Kerry)
UPDATE 1-EU scraps duty on most Argentina, Indonesia biodiesel - document - Reuters News
21-Mar-2018 10:32:53 PM
• Duties dropped after EU drops appeal to EU court
• Bunge, Cargill, Wilmar among companies affected
• EU still has anti-subsidy case for Argentina
Adds more on impact of ruling, background
By Philip Blenkinsop
BRUSSELS, March 21 (Reuters) - The European Union has removed duties on biodiesel imports for 13 Argentine and Indonesian producers following the end of legal proceedings at the European Court of Justice (ECJ), an EU document shows.
The bloc set anti-dumping duties on imports of the renewable fuel from the two countries in 2013, but faced a series of legal challenges at the ECJ and the World Trade Organization. Both bodies have ruled against the measures.
The EU appealed against a Sept 2016 ruling by the ECJ, but dropped that appeal earlier this year. This was registered by the court in February and the parties were notified earlier in March. The Commission's tax database shows the duties removed.
Companies that had challenged the measures at the ECJ now no longer face duties. They include the Argentine arms of Bunge, Cargill and Louis Dreyfus, as well as Molinos Rio de la Plata and Indonesia's Ciliandra Perkasa and Indonesian arms of Wilmar.
They represent the vast bulk of biodiesel exports. Under EU law, importers can also claim back duties paid in the past.
Indonesia said the elimination of duties meant its businesses would be able to export to Europe again.
For the European Union, the world's top producer of biodiesel, rising shipments from Argentina and Indonesia threaten to cripple output, particularly after the United States imposed import duties of more than 70 percent.
Both countries impose an export duty on the raw material - soybeans for Argentina and palm oil for Indonesia - which the EU said means biodiesel producers in the two countries have lower costs than elsewhere, allowing them to "dump" product at unfairly low prices.
The EU had argued that the biodiesel markets in both countries were heavily regulated, so it needed to construct a "normal value" for the product, including a higher reference price for soybeans or palm oil and a reasonable profit margin.
Argentina and Indonesia called the resultant five-year anti-dumping measures protectionist.
The WTO has also ruled in favour of several challenges by Argentina and Indonesia to the anti-dumping duties.
The EU has since opened an investigation into whether Argentine biodiesel exporters benefit from unfair subsidies.
For companies that did not lodge a legal challenge at the ECJ, EU duties would still apply - of 166.95-178.85 euros ($205.08-219.70) per tonne for Indonesia and of 62.52-79.56 euros per tonne for Argentina.
The EU does still apply a general customs duty of 10.9 percent to third countries.
($1 = 0.8141 euros)
(Reporting by Philip Blenkinsop, editing by Louise Heeavens)
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