MARKET CHANGES:
—Brent crude oil is trading at $85.03 per barrel, down 0.6%.
—The price of European benchmark gas increases 3.1% to EUR54 per megawatt hour.
—Gold futures are down 1.1%, with a troy ounce price of $1,845.30.
—A metric tonne of three-month copper is now trading at $8,862.50, down 1.7%.
—Wheat futures have decreased by 0.1% to $7.85 a bushel.
BEST STORY:
Asia to Drive Up Oil Demand As China reopens this year, the IEA says
The International Energy Agency increased its predictions for both supply and demand of oil this year as Russian production proved remarkably robust to Western sanctions and China's openness sparked a spike in air travel throughout Asia.
The Paris-based energy watchdog predicted in a monthly study that the world's oil consumption will reach a record high of 101.9 million barrels per day this year, largely due to increased demand in Asia. This quantity exceeds the IEA's prediction from last month, which was also a record amount, by 200,000 barrels per day.
Following record 2022 earnings, Glencore will give shareholders back $7.1 billion.
Glencore PLC reported record 2022 earnings on the strength of considerable growth in its marketing and energy sectors, and the company said on Wednesday that it will return $7.1 billion to shareholders.
The Anglo-Swiss commodity mining and trading corporation announced payouts totalling $5.6 billion and a share repurchase programme of $1.5 billion.
This is the result of improved profitability and a net debt decrease to $75 million, which is a considerable improvement over the market consensus of net debt of about $386 million. RBC Capital Markets stated in a research note that the net debt amount should instead imply total shareholder returns of almost $9 billion, making the actual outcome a severe miss.
According to FactSet and based on 13 analysts' forecasts, Glencore posted record adjusted earnings before interest, taxes, depreciation, and amortisation for 2022 of $34.06 billion, up from $21.32 billion in 2021 and barely over the market average of $33.94 billion.
Chinese President Xi Jinping Promises to Increase Investment and Consumption
In order to stabilise economic expectations and raise corporate confidence, Chinese President Xi Jinping has promised to increase domestic consumption and investment, according to a piece published on Wednesday by the official Communist Party newspaper Qiushi.
By maximising the domestic market's potential and raising the income of citizens, particularly those in low- and middle-income groups, the government should prioritise the recovery and expansion of consumption, according to a speech made by Xi in December at the nation's annual key economic work conference.
Chinese policymakers typically set growth goals for the upcoming year during this year-end summit, among other important economic choices. During its annual parliamentary gathering early the following month, China will reveal its economic goals.
First-Half Net Profit at Fortescue Dropped 15%; Dividend Cut
Due to a decline in iron ore prices and rising production costs, Fortescue Metals Group Ltd. reported a 15% drop in first-half profit on Wednesday and reduced its interim dividend.
The fourth-largest producer of iron ore in the world reported a net profit of US$2.37 billion for the six months ending in December, down from US$2.78 billion in the same time last year. According to 12 analyst predictions published by Vuma Financial, that exceeded market expectations of a US$2.34 billion profit.
The intermediate dividend was reduced from 86 Australian cents per share to 75 Australian cents (US$0.52) by the board of directors.
Ebitda, or underlying earnings before interest, tax, depreciation, and amortisation, decreased from US$4.76 billion in the same time last year to US$4.35 billion this year.
THE MARKET:
Platinum Supply in Peril Due to Power Struggles in South Africa
1043 GMT - According to a note from Bank of America, the world's largest producer of platinum, South Africa, is dealing with worsening power problems that are straining refiners and miners, putting the supply of platinum at danger this year. "In the end, the availability of power has a significant impact on the mining industry. no production, no electricity "According to BofA, Eskom, the state-owned energy company that supplies 90% of South Africa's power, has been using load shedding for several months to try and reduce grid stress. BofA anticipates a 3.5% decrease in South African PGM output this year and a deficit in platinum. According to the U.S. bank, palladium is still less stressed as a result of the weak vehicle market. Wednesday's futures are lower.
Prices of Malaysian palm oil are declining and may soon trade sideways.
1004 GMT - The price of crude palm oil in Malaysia decreased somewhat on Wednesday. Because most importing nations have already stocked up on vegetable oils, UOB Kay Hian analysts Leow Huey Chuen and Jacquelyn Yow predict that the commodity would continue to trade sideways despite weak demand. Due to significant flooding in Malaysia, output in February is probably going to stay low, but a lack of robust demand may make it difficult for prices to stabilise, they add. The benchmark contract for April delivery on the Bursa Malaysia Derivatives Exchange closed MYR21 lower at MYR3,935 per metric tonne.
Oil Prices Fall Amid US Demand Concerns
0845 GMT - As reports point to a significant growth in U.S. crude oil inventories, oil prices fall. WTI crude oil loses 1.2% to $78.10 per barrel and Brent crude oil drops 1.1% to $84.61 per barrel. According to estimates from the American Petroleum Institute, U.S. crude stockpiles increased by 10.5 million barrels in the week ending February 10. Positive expectations regarding China's expanding demand for crude oil are being undermined by indications of sluggish U.S. consumption. "Though we are a little more circumspect than most, we anticipate an increase in China's demand for oil and gas. However, U.S. demand and whether the largest major oil-consuming economy plunges into a deep recession remain the wild cards "According to a letter from Stephen Innes, managing partner at SPI Asset Management.
Metal costs decrease when the dollar strengthens
0844 GMT - Early trade has seen a decline in metal prices, with the rising dollar once more acting as a drag on commodity prices. Aluminum is down 0.4% at $2397.50 per metric tonne, while three-month copper is down 1.5% to $8,884 per metric tonne. At a 10-week low of $1,846.20 per troy ounce, gold is currently down 1%. In light of recent positive employment and inflation data, Deutsche Bank has increased its estimate of the Federal Reserve's two further rate hikes by 25 basis points. In a note, DB analyst Jim Reid writes, "These all support our base case for a recession rather than a gentle landing," adding that a more hawkish stance from the Fed is still likely.
Earnings for Glencore in 2022 Despite a drag on working capital, seen as solid
0747 GMT - According to Citi, Glencore has released a strong set of 2022 results, with Ebitda soaring 60% to a record $34.1 billion, mostly due to coal. Given the ongoing growth in the second half, the working capital of the commodity mining and trading company has been a drag on free cash flow, although this has been largely offset by stronger profitability in its marketing sector, according to Citi analysts in a research note. According to the American bank, "we anticipate that markets are likely to look past the working capital build in the context of improved EBIT in marketing." The stock continues to have a 700 pence target price and a buy rating from Citi. Tuesday's share price was 515.9 pence.
Source: Trading View
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