Oil Majors Flirt With Electricity -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is down 1% to $79.34 a barrel.

--European benchmark gas is up 3.9% to EUR49.73 a megawatt-hour.

--Gold futures are up 0.2% to $2,753.30 a troy ounce.

--LME three-month copper futures are down 0.1% at $9,259.50 a metric ton.

TOP STORY:

Oil Majors Flirt With Electricity

Artificial intelligence has suddenly made electricity a hot commodity. No wonder major oil companies want a piece of it.

Both Exxon Mobil and Chevron said last month that they are talking to potential data-center customers on deals to supply natural-gas-fired power paired with carbon-capture technology. Exxon is working on a power-plant design with at least 1.5 gigawatts of capacity--enough to power more than a million homes. TotalEnergies, which has a power business, last year bought 1.5 GW of natural-gas-fired power plants near Dallas and Houston in Texas.

Exxon and Chevron have shied away from the wind and solar business for good reason: They have no experience in it and the expected returns are too low. But gas-fired power seems like a natural fit.

OTHER STORIES:

Orsted Shares Plunge on $1.7 Billion Impairment

Orsted shares sank to the bottom of the Stoxx Europe 600 index Tuesday after the company announced a $1.7 billion fourth-quarter impairment amid higher costs at its U.S. Sunrise Wind project and increased financing costs.

The Danish renewable-energy company said late Monday that its Sunrise Wind project off the coast of New York is navigating supply chain and construction challenges, which have resulted in delays and increased costs and led to an impairment of 4.3 billion kroner ($600.3 million).

After experiencing delays in installing wind turbines and issues relating to chartering installation vessels at another U.S. offshore project, Orsted has factored in similar construction delays at Sunrise Wind. A defect found in an electrical cable is also holding things up as the problem has required a redesign and remanufacture, it said.

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Dorado Oil Project Stalls After JV Partner Says FPSO Purchase on Ice

SYDNEY--One of the largest new oil developments in Australia is effectively on hold after majority owner Santos decided not to begin preliminary engineering work or advance a deal to buy a vessel to pump and store crude on site.

Carnarvon Energy outlined the status of the Dorado oil project in Western Australia to investors on Tuesday after being informed by Santos of its decision. Santos owns 80% of the venture, with Carnarvon and a unit of Taiwan's CPC Corp. each owning 10%.

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Dynacor Group's December Gold Sales Brings Full-Year Output to Top End of Guidance

Dynacor Group reported strong sales in December, bringing the company's full-year performance to the top end of its range.

The Canadian gold ore processing company said Tuesday that gold sales reached $30.2 million in the last month of the year, up from $20.3 million in the prior year period.

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Olam Set to Announce Sale of Agribusiness Unit to Saudi Arabia Firm, Sources Say

Singapore-based Olam Group is close to announcing a deal to sell the remainder of its stake in its agricultural products business to the state-owned Saudi Agricultural and Livestock Investment Company, people familiar with the situation said.

The negotiations are in advanced stages, and people said a potential deal to sell the Olam Agri business could be announced by the end of this month or early February.

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Berry Corp. Names Jeff Magids as Chief Financial Officer

Berry Corp. has hired Jeff Magids as the upstream energy company's new vice president and chief financial officer.

MARKET TALKS:

Gold Futures Rise, Recouping Losses On Safe-haven Demand -- Market Talk

1551 GMT - Gold futures rise, reversing losses incurred earlier in the session. Futures are up 0.1% at $2,751.20 a troy ounce. Investors have turned to gold as a safe-haven given the lack of clarity around new U.S. President Trump's planned tariffs. Trump's statements on potential new tariffs on Canada and Mexico and further tariffs on China have raised market fears of a potential new wave of global trade wars, XS.com's Rania Gule writes. These developments have raised gold demand, as such crises often lead investors to seek protection from economic fluctuations, Gule says in a note. At the same time, recent U.S. economic data suggests potentially slowing inflation, supporting market bets on greater interest rate cuts from the Federal Reserve, Gule adds. Lower interest rates are typically a boon for non-interest bearing bullion. ([e-mail])

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Grain Traders Build Up Long Corn Positions -- Market Talk

1007 ET - Grain traders continue to question what the global outlook for corn supply and demand will look like in 2025, but fund traders continue to land firmly on the side of price-positive for CBOT corn. Friday's Commitment of Traders report from the CFTC showed managed money traders increasing their exposure to long positions by nearly 26,000 contracts, this while cutting over 13,000 short contracts. The net long held by these traders now rests at nearly 300,000 contracts as of Jan 14., says Daniel Flynn of Price Futures Group in a note. Traders also added long exposure to soybean futures, while pulling back on longs in wheat. Most-active CBOT corn is up 0.7% early, while soybeans are up 2.2% and wheat rises 2.6%. ([e-mail])

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Argentina Crop Weather Doesn't Deliver Expected Rains -- Market Talk

0935 ET - Expectations of strong rainfall in Argentina over the weekend didn't pan out, which has CBOT grains climbing in early trading. "Markets are trading higher across the board this morning with beans leading the charge following disappointing weekend rains in Argentina and a forecast for the next couple weeks that has limited rains to ease their dryness concerns," says Doug Bergman of RCM Alternatives in a note. The Rosario Board of Trade in Argentina says that an ongoing drought would result in lower yield estimates for the country's corn and soybeans. ([e-mail])

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Soybeans Lead Grains Higher on Post-Inauguration Optimism -- Market Talk

0927 ET - Soybean futures are leading CBOT grains higher pre-market, with the most-active contract up 2.1% following Trump's inauguration. A call between Trump and Chinese President Xi on Friday helped bolster the sentiment that a new trade war between the two sides isn't necessarily at hand--which has fund traders pivoting into long positions in soybeans, says Tomm Pfitzenmaier of Summit Commodity Brokerage in a note. But Pfitzenmaier adds that there's a lot of unknowns that remain in place. "There is still a lot of uncertainty about tariffs, biofuel policy and Argentine weather," he says. Soybeans are up 2.1%, while wheat rises 1.8% and corn climbs 0.8%. ([e-mail])

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U.S. Natural Gas Futures Lower After Long Weekend -- Market Talk

0852 ET - Natural gas futures are lower returning from the holiday weekend in which spot prices soared with extreme cold moving across much of the U.S. "Still, while today should be the coldest day of the winter, pipeline nominations suggest that freeze-offs at 6-8 Bcf/d are not as bad as feared-likely allowing physical pricing to beat a rapid retreat," Eli Rubin of EBW Analytics says in a note. In the coming week, increasing visibility into moderate February weather and returning supply offer a bearish outlook, although "bullish technicals and mammoth EIA draws suggest a bumpy road lower," he adds. The Nymex front month is down 3.6% at $3.807/mmBtu. ([e-mail])

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Metal Prices Fall as Relief Rally on Delayed U.S. Tariffs Damped -- Market Talk

1419 GMT - Base metal prices slide, with LME three-month copper down 0.6% at $9,211.50 a metric ton and LME three-month aluminum down 1.8% at $2,639.50 a ton. Copper prices had risen on Monday's session when President Trump indicated he wanted to review tariff effects rather than immediately implementing them, but the relief rally has already been curtailed, Commerzbank analysts say. The first tariff increases on neighboring countries could come as soon as Feb. 1, they say in a note. That said, even if Trump's trade policy and possible global economic consequences are likely to be the main topic in the coming weeks, fundamental data shouldn't be neglected. Production growth in China is still being limited by a shortage of copper ore, and Chinese ore imports rose some 12% on-month in December, the analysts add. ([e-mail])

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Tariff Threats Hit Oil More Than 'Drill Baby Drill' -- Market Talk

0817 ET - Tariff talk and the impact on global growth are pushing down oil futures more than President Trump's "drill baby drill" narrative, TP ICAP's Scott Shelton says in a note. "My general thought is that tariffs are bearish, and we are trading that this morning and accelerating lower on long positioning," he says in a note. Trump plans to speed up permitting to raise U.S. output, and said his administration will refill the Strategic Petroleum Reserve "right to the top." He held off imposing tariffs on Inauguration Day, but said he plans 25% tariffs on imports from Mexico and Canada on Feb. 1. Most-active WTI is off 2.5% at $75.49 a barrel and Brent is down 1.7% at $78.83 a barrel. ([e-mail])

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Oil Falls Further on Trump's Plans to Boost Production -- Market Talk

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01-21-25 1135ET