US Crude-Oil Stockpiles Likely Declined in DOE Data, Analysts Say -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil edged up 0.5% to $75.26 a barrel.

--European benchmark gas rose 2.4% to EUR33.03 a megawatt hour.

--Gold futures weakened 0.1% to $1,991.50 a troy ounce.

--LME three-month copper futures rose 1.2% to $8,217.50 a metric ton.

--Wheat futures edged down 0.2% to $6.46 a bushel.

TOP STORY:

U.S. Crude-Oil Stockpiles Likely Declined in DOE Data, Analysts Say

U.S. crude-oil inventories are expected to have decreased slightly from the previous week in data due Wednesday from the Energy Department, according to a survey by The Wall Street Journal.

The average of estimates from eight analysts and traders showed U.S. commercial oil stockpiles are projected to have fallen by 800,000 barrels for the week ended May 12, with five analysts forecasting a decline and three predicting an increase. Forecasts range from a decrease of 2.5 million barrels to an increase of 2.5 million barrels.

The forecasts for only a small weekly decline are due partly to a DOE report Monday indicating it sold another 2.4 million barrels of crude last week from the nation's Strategic Petroleum Reserve to the commercial side. That brings those emergency crude supplies down to a nearly 40-year low of 360 million barrels.

The American Petroleum Institute, an industry group, said Tuesday its data for the week showed a 3.7 million-barrel increase in crude supplies, a 2.5 million-barrel fall in gasoline stocks and an 886,000-barrel decline in diesel inventories, according to a source.

OTHER STORIES:

Overhauling Energy Permitting Is a Heavy Lift in Debt Talks

The bipartisan debt-ceiling talks have raised the prospect that an agreement could include a provision to ease the federal permitting process, potentially resolving one of Capitol Hill's thorniest policy problems and speeding the construction of energy projects.

Participants in the talks said Tuesday that permitting is one of the topics under consideration, along with spending caps, clawing back unspent Covid-19 requirements and additional work requirements for benefits programs. The government could run out of cash to pay its bills by June 1 unless Congress raises the debt limit, according to the Treasury Department.

Speeding up permitting "will help America build and help us compete around the world," said House Speaker Kevin McCarthy (R., Calif.). "Cut the red tape so we can build the things that we desire.

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UK Picks Dassault Systemes Software to Develop Fusion Energy Prototype Plant

The U.K. Atomic Energy Authority has chosen Dassault Systemes' software platform to develop a prototype fusion energy plant that aims to generate electricity from fusion and put it on the national grid.

The French software company said Wednesday that its so-called 3D experience platform is able to provide "a unified virtual environment and a single source of information through all phases of the plant's life cycle," overcoming inefficiencies caused by entrenched data.

MARKET TALKS:

Oil Declines After US Stocks Seen Building

0737 GMT - Oil prices slip following a surprise build foreseen in U.S. crude stocks and mixed Chinese economic data. Brent crude oil falls 0.9% to $74.23 a barrel. WTI declines 1% to $70.15 a barrel. API figures pointed to a 3.7 million barrel build in U.S. crude stockpiles when analysts had been forecasting an 800,000 barrels drop. Chinese data also suggested a slowing of fixed-asset investments while industrial output contracted. Still, expectations of robust demand from China are limiting losses, ANZ says, pointing to forecasts from the IEA on Tuesday of 2.2 million barrels a day of growth in demand this year thanks largely to China. ([e-mail])

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Base Metals Recover After US Debt Worries, Sluggish China Demand Hit Prices

0725 GMT - Metals prices are mixed, with worries over the U.S. debt ceiling and Chinese demand continuing to hit markets. Three-month copper is up 0.3% to $8,146.50 a metric ton, having shed 1.9% on Tuesday. Nickel, meanwhile, is 1.1% higher at $21,245 a ton while gold is flat at $1,992.60 a troy ounce, having slipped 1.1% this week. Worries over the U.S. debt market added to the bearish mood, Ed Meir, president of Commodity Research Group, says in a note. However, "the overarching bearish influence on the markets has mainly centered on the speed and depth of China's recovery," he says. Property investment slipped in April 16.2% year-on-year, while coal, aluminum and steel production fell, too, Meir added. ([e-mail])

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China's Steel Output Caps to Hurt Iron Ore, Coking Coal

0702 GMT - Beijing's plans to limit steel production this year will place a lid on demand for the commodities used to make it, like iron ore, affecting exporting countries, BMI says in a note. The caps, aimed at mitigating a tepid postpandemic industrial recovery and steel oversupply, will keep production stagnant this year versus 2022, the research firm says. Demand, and therefore prices, of iron ore and coking coal will follow suit, and BMI expects China's imports of the two materials to either remain flat or fall throughout the rest of the year. Countries like Australia that rely heavily on exporting these commodities to China will need to find alternative markets, or bear the consequences of the decline in demand, BMI says. ([e-mail])

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Palm-Oil Prices Fall, Weighed by Lower Crude Oil

0241 GMT - Palm-oil prices are lower in early Asian trade, weighed by lower crude oil, Phillip Capital says in a note. Cheaper crude oil discourages the use of biofuels derived from vegetable oils. A stronger palm-supply outlook and lower Indonesian palm oil reference price also contribute to the bearish trend for palm oil, it adds. Phillip Capital pegs support for CPO futures at MYR3,200 and resistance at MYR3,600. The Bursa Malaysia Derivatives contract for August delivery is MYR73 lower at MYR3,384 a ton. ([e-mail])

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Iron-Ore Futures Gain Amid Hopes for Rate Cut

0212 GMT - Chinese iron-ore futures edge up in the Asian morning session, as China's weak April economic data boosted hopes for an interest-rate cut, which could lead to demand for raw materials. Iron ore has fallen sharply in the early period, and its valuation has retreated, making it ready for a rebound, say analysts from Guangfa Securities. Iron-ore contracts on the Dalian Commodity Exchange are mixed across the board, with the most-traded September contract up 0.3% at CNY728.5 a ton, while futures contracts after October move into backwardation. ([e-mail])

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Rio Tinto Could Turn to M&A to Develop Lithium Business

0055 GMT - Rio Tinto's ambition to play a bigger role in supplying metals essential to the energy transition has UBS pondering whether the miner could turn to M&A. In a note, analyst Lachlan Shaw says Rio Tinto's two lithium projects in its pipeline--Rincon in Argentina and Jadar in Serbia--are relatively high risk. "As a result, we see potential for Rio Tinto to grow in lithium through M&A (albeit M&A is not without risk either)," Shaw says. "This has become more likely over the last six months with lithium prices falling more than 60% from all-time highs (from $80/kg in December 2022 to $30/kg) and with the lithium industry consolidation accelerating." ([e-mail]; @dwinningWSJ)

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(END) Dow Jones Newswires

05-17-23 0719ET