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Oil dips just a little as bulls buy back plunge after mega U.S. crude build 



Oil dips just a little as bulls buy back plunge after mega U.S. crude build 
© Reuters.

By Barani Krishnan – The U.S. crude inventory build isn’t going away. In fact, it’s growing. But that didn’t deter crude bulls who bought back much of the market’s plunge on Wednesday after a mega crude build reported by the U.S. government.

Oil prices settled the day just slightly in the red, recovering from a 2% plunge after the Energy Information Administration, or EIA, reported that stockpiles of U.S. crude jumped by a little over 16 million barrels last week in the fourth largest build ever.

New York-traded West Texas Intermediate, or WTI, crude for settled down just 47 cents, or 0.6%, at $78.59 per barrel, rebounding from a session low of $77.28. 

“Crude prices are under pressure” but “WTI crude might not break here,” said Ed Moya, analyst at online trading platform OANDA. “Energy traders may continue to buy on dips and the mid-$70s may still provide major support.” 

London-traded Brent crude for was down even less, with a decline of 20 cents, or 0.2%, at $85.38. The intraday bottom for Brent was $83.91.

In oil bulls corner was longer-term demand for crude predicted by the Paris-based International Energy Agency. The so-called IEA raised its forecast for 2023 oil demand by 500,000 barrels per day to nearly 102M bpd. It also cautioned that producer alliance OPEC+ might try to squeeze output to keep crude prices supported.

rose by 16.283M barrels during the week ended Feb. 10, the Washington-based EIA, which serves as the statistical arm of the U.S. Energy Department, said in its Weekly Petroleum Status Report.

U.S. commercial crude inventories have grown by 50.75M barrels so far this year. 

The climb came as most U.S. refineries entered seasonal maintenance that foresaw less processing of crude. 

U.S. crude oil refinery inputs averaged 15.0M barrels per day, or bpd, during the week ended Feb. 10 — some 383,000 bpd less than the previous week’s average, the EIA said.

Refineries operated at 86.5% of their operable capacity last week, the agency added. Typically, inventory runs at this time of the year are about 90% or more. 

Last week’s crude build was the fourth-largest ever in the history of the EIA’s reporting, data showed. It was also the third largest in eight straight weeks of builds.

“That’s a gigantic build,” analyst Adam Button said on the ForexLive platform, referring to the 16.3M barrels. “It’s not entirely shocking as the API data late yesterday also showed a large build, but not that large.” 

Trade group API, or the American Petroleum Institute, using its own count, on Tuesday a crude build of 10.507M barrels for the week to February 10.

Reuters, meanwhile, cited “unusually large crude oil supply adjustment” in EIA data that it said contributed to the outsized build.

“It’s the worst kind of build that you can possibly have. It’s all about the…adjustment number. There’s no getting around that,” said Bob Yawger, director of energy futures at Mizuho, in comments carried by Reuters.

Aside from crude, the EIA reported a build in stockpiles of gasoline while noting a dip in distillate inventories.

On the side, the EIA reported a build of 2.317M, against a forecast rise of 1.542M and the prior week’s 5.008M. Gasoline inventories have gone up by more than 19M barrels since the start of the year. The automotive fuel is the primary U.S. fuel product.

The EIA said U.S. gasoline demand over the past four weeks fell 3.2% from a year ago, to 8.334M barrels per day.

resumed their drop after rising last week for the first time in five weeks. Distillate inventories fell by 1.285M versus an expected build of 0.447M. In the previous week, distillate stocks rose by 2.932M.

Also weighing on oil earlier was the rally in the dollar, which slowed demand for oil and other commodities priced in the currency.  

The , which measures the greenback against six other major currencies, hit a 10-month low of 100.68 on Feb. 2 but is now hovering near 104. The index rose after stickier-than-expected data on Tuesday sparked that the Federal Reserve might turn aggressive again on U.S. interest rates just as the central bank seemed to be getting a little lax about monetary tightening. 

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French climate investments to drive up national debt burden – think-tank




French climate investments to drive up national debt burden - think-tank
© Reuters. FILE PHOTO: French President Emmanuel Macron visits Institut Curie laboratory ahead of announcements on biomedical research in Saint-Cloud, France, May 16, 2023. REUTERS/Benoit Tessier/Pool

PARIS (Reuters) – Investments that France needs to finance its transition to a low-carbon economy are set to add 25 percentage points to its debt burden by 2040, a report from the government-funded France Strategie think-tank said on Monday.

France will need to make additional annual investments of about 67 billion euros ($74 billion) – more than 2% of economic output – by 2030 to meet its objectives for reducing its dependence on fossil fuels, France Strategie calculated.

The think-tank, which is part of the prime minister’s office, said the financial effort would weigh heavily on public finances partly because the investments imply lower potential growth, which would cut tax revenues.

As a result, the debt burden would rise by 10 percentage points by 2030 and 25 percentage points by 2040, which France Strategie suggested might need to be financed in part by a temporary tax on wealthy households.

President Emmanuel Macron’s government has hoped to chip away in the coming years at France’s national debt, which currently stands at slightly more that 111% of gross domestic product after surging during the COVID crisis.

The report said the financial burden of investing in Europe’s energy transition also posed a risk in terms of international economic competition, as other major economies such as the United States and China were less concerned about budgetary constraints.

About 100 experts in French and European research groups as well as public French institutions participated in the report, which was led by economist Jean Pisani-Ferry, who previously helped Macron draft his economic programme.

($1 = 0.9084 euros)

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Crude oil largely flat; Caution ahead of debt ceiling meeting




Crude oil largely flat; Caution ahead of debt ceiling meeting
© Reuters — Oil prices traded largely unchanged Monday, with traders cautious ahead of the resumption of U.S. debt ceiling negotiations while supply concerns add support. 

By 09:30 ET (13:30 GMT), futures traded 0.1% lower at $71.59 a barrel, while the contract fell 0.1% to $75.52 a barrel.

U.S. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet later this session to try and agree on a deal to raise the more than $31 trillion debt ceiling.

Concerns that a failure to come up with an acceptable compromise have weighed heavily on the market over the recent weeks, as this would result in the U.S. defaulting on its debt obligations, likely plunging the global economy into recession.

The U.S. Treasury has warned that the government could run out of money to pay its bills as soon as June 1.

That said, both crude benchmarks managed to post gains last week, ending four straight weeks of heavy declines, helped by the U.S. starting to refill its Strategic Petroleum Reserve as well as the supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province. 

Additionally, the latest data from showed the U.S. oil rig count fell by 11 over the last week, to its lowest count since June 2022.

“A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of the year,” said analysts at ING, in a note. 

“Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year.”

This brings the Organization of Petroleum Exporting Countries and allies, known as OPEC+, firmly into focus, with its next meeting in early July. 

The cartel surprised the market with an output cut at the last meeting, which came into effect at the start of this month. However, this has done little to support crude prices, implying the members may be looking at a further reduction in production.

The fact U.S. producers are not increasing in number will be good news for OPEC+, ING added, “as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers.”

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California grid operator signs off on $7.3 billion of power lines




California grid operator signs off on $7.3 billion of power lines
© Reuters. FILE PHOTO: A woman jogs by power lines, as California’s grid operator urged the state’s 40 million people to ratchet down the use of electricity in homes and businesses as a wave of extreme heat settled over much of the state, in Mountain View, Californi

(Reuters) – California’s electric grid operator has approved a plan expected to cost $7.3 billion for 45 new power transmission projects over the next decade and made it easier for new power plants in high-priority areas to connect to the grid.

The projects will support the development of more than 40 gigawatts (GW) of new generation resources, the California Independent System Operator (CAISO) said on Thursday.

“With electrification increasing in other sectors of the economy, most notably transportation and the building industry, even more new power will be required in the years ahead,” the CAISO said.

The vast majority of the transmission projects will be built in California, with some in neighboring Arizona, it said.

The power lines recommended by CAISO’s 2022-2023 Transmission Plan will allow the state’s grid to add more than 17 GW of solar resources, 8 GW of wind generation, 1 GW of geothermal development, and battery storage projects.

CAISO will prioritize connecting power plants to the grid in specific geographical zones identified by its plan where developing new power lines and plants “make the most economic and operational sense.”

The grid operator also approved proposed reforms to account for “increasing levels of net load forecast uncertainty between day-ahead and real-time markets … as the generation fleet evolves towards a cleaner, but more variable, resource mix.”

It projected that its transmission plan next year could include the need to add 70 GW of new power to the grid by 2033, rising to 120 GW as the state seeks to meet its goal of a carbon-free power system by 2045.

Power supply in the U.S. West is vulnerable to extreme heat as it relies on regional energy transfers to meet demand at peak or when solar output is diminished, the North American Electric Reliability Corp (NERC) said in its summer outlook on Wednesday.

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