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MARKET MOVEMENTS:
–Brent crude oil is down 1.7% at $72.66 a barrel
–European benchmark gas is up 4.6% at 42.16 euros a megawatt-hour
–Gold futures are down 0.6% at $2,653.00 a troy ounce
–LME three-month copper futures are down 0.8% at $8,991.50 a metric ton
TOP STORY:
Biden Administration Agrees to Record $15 Billion Loan to PG&E
The Biden administration will provide a record $15 billion low-interest loan commitment to California utility company PG&E to support hundreds of projects aimed at fighting the effects of climate change and improving the electrical grid.
The loan by the Energy Department’s Loan Programs Office is slated to fund projects that refurbish PG&E’s hydroelectric infrastructure and upgrade power lines to support renewable-energy projects, data centers and electric vehicles.
The loan office had planned to provide a $30 billion loan to PG&E a few weeks ago, according to people familiar with the matter. The amount was cut in half, in part because of PG&E concerns about the hefty upfront payments such a large loan would have required.
OTHER STORIES:
Tech-Loving Hedge Funds Have a Crush on Utility Stocks
Hedge-fund firms such as Coatue Management that are known for investing in next-generation technology companies have lately been piling into a sleepier sector.
Old-school power companies such as Vistra, Constellation Energy and Talen Energy have become darlings among hedge-fund firms thanks to their starring role in the artificial-intelligence boom. Such companies command the scarcest resource in the generative-AI supply chain: the extra electricity that fuels the data centers needed to train large language models and answer prompts from users of AI chatbots such as ChatGPT.
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Equinor Makes Oil and Gas Discovery in North Sea
Equinor made a new oil and gas discovery in the North Sea, with recoverable resources estimated at between 2 million and 13 million barrels of oil equivalent.
The Norwegian energy major said the discovery will probably not be commercial for development in isolation, but it is the second recent discovery in the area and the company plans to further explore the area.
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Tullow Oil Shares Plunge After Kosmos Energy Drops Takeover Bid
Shares in Tullow Oil dropped after its larger U.S. rival Kosmos Energy said it won’t make an offer for the company.
Dallas-based Kosmos said on Tuesday that it doesn’t intend to make a firm offer for its London-listed oil-and-gas peer at this time.
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Kazatomprom Gets New JV Partners as Russia Sells Uranium Stakes to China
Kazatomprom will get new joint-venture partners at some of its domestic uranium operations as Russia divests stakes to Chinese companies.
The world’s largest uranium producer said Tuesday that Uranium One Group, a subsidiary of Russia’s state uranium corporation Rosatom, has sold its 49.979% share in JV Zarechnoye to SNURDC Astana Mining, which is owned by China’s State Nuclear Power Technology Corp., or SNPTC.
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EVgo Shares Drop 19% on Secondary Stock Offering
Shares of EVgo dropped after the company said that EVgo Holdings, an affiliate of LS Power Equity Partners IV, is launching a secondary offering of up to 23 million shares of Class A common stock.
The stock was down 19% to $5.15 in postmarket trading. Through Monday’s close, shares have surged 81% over the past 12 months.
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Sierra Metals to Mull Offer From Alpayana It Considers Low, Opportunistic
Sierra Metals said that it has formed a special committee to consider the Alpayana takeover proposal but noted that the offer appears to be opportunistically low.
On Monday, the privately held Peruvian miner Alpayana said it would launch a bid to buy up all of Sierra Metals’ shares for 85 Canadian cents (60 cents) apiece and was taking its offer directly to Sierra shareholders.
MARKET TALKS:
SovEcon Cuts Outlook for 2025 Russian Wheat Crop — Market Talk
1007 ET – Black Sea agricultural research firm SovEcon forecasts a smaller Russian wheat crop in 2025, one that is below the average size of recent years and the smallest wheat crop in four years. The firm says that the overall Russian crop is expected to tally 78.7 million metric tons, with the winter wheat crop in particular being hurt by unhelpful weather conditions. “Crop conditions in Russia, the world’s number one wheat exporter, are the worst in decades,” says Andrey Sizov of SovEcon in a note. Sizov forecasts global wheat prices to rise as a result. “The global wheat supply and demand balance sheet remains tight,” he says. “We believe these factors are not yet priced in by the market.” Most-active wheat is down 0.8% in early trading. ([email protected])
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Natural Gas Prices Fall Amid Mild Temperatures — Market Talk
0938 ET – Warm U.S. weather drives down natural gas prices, despite some expectation of lower temperatures in January providing a respite. “Rising daily demand over the next week could also lend physical support” to prices, EBW Analytics says. “We note that extreme warmth into year-end may not be fully priced-in yet, however.” The January contract falls more than 2% to $3.134. ([email protected]; @ptrevisani)
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Cocoa Hovers Near Record Levels on Harvest Concerns — Market Talk
1356 GMT – Cocoa continues to hover around record highs after soaring in the previous trading session amid growing concerns over adverse weather in West Africa. Futures in New York currently trade 0.7% lower at $11,738 a metric ton after rising to $11,857 a ton earlier. “Cocoa farmers in Ivory Coast are expecting smaller harvest volumes in February and March,” Commerzbank Research’s Carsten Fritsch says. Dry winds coming from the Sahara between December and March could further hit the harvest, at a time when global stocks are already at their lowest in more than a decade. Meanwhile, low open interest has reduced liquidity and increased price volatility, as many market participants had to close their positions in view of the sharp rise in costs. ([email protected])
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Aluminum Falls After China Reports Production Increase — Market Talk
1049 GMT – Aluminum prices fall below the $2,600-a-metric-ton mark on concerns over weak winter demand and rising output in China. “The official data released this week showed that Chinese aluminum production reached record highs last month, at a time when demand is expected to experience a seasonal lull as construction activities slow during the winter months,” ING analysts say in a note to clients. In November, Chinese production rose to 3.71 million metric tons, which equates to an annualized output of 45.3 million tons, according to market watchers. LME three-month aluminum is currently down 1.2% at $2,533.50 a ton. ([email protected])
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Palm Oil Falls on Weaker Sentiment — Market Talk
1028 GMT – Palm oil closed lower in the Asian session. Sentiment has been under pressure amid a decline in prices of competing edible oils as well as weak export data from Malaysia, analysts at Kenanga Futures said in a note. However, concerns about declining production and potential bargain hunting could have capped losses, it added. The Bursa Malaysia Derivatives contract for March delivery fell 34 ringgit to 4,724 ringgit a ton. ([email protected])
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Europe’s Gas Price Edges Higher But Remains Well Below December Peak — Market Talk
0949 GMT – European natural-gas prices regain a little ground after dropping below 40 euros a megawatt hour in the previous trading session. The benchmark Dutch TTF is up 0.4% at 40.44 euros a megawatt hour, but has lost around 18% since its early-December peak of 49 euros a megawatt hour. Weather forecasts point to milder temperatures across northwest Europe next week, which could provide some relief to inventory withdrawals, while higher LNG imports are helping the region meet heating demand. Meanwhile, “demand for gas pipeline capacity through Bulgaria and Turkey has also increased for January 2025, hinting that market participants are preparing for alternatives if Russian gas flow via Ukraine stops as scheduled,” ING analysts say. ([email protected])
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Oil Eases Amid Chinese Demand Concerns — Market Talk
0910 GMT – Oil prices ease further after a disappointing batch of data from China fueled concerns over demand and as traders await the Federal Reserve’s last policy meeting of the year. Brent crude is down 0.8% at $73.30 a barrel, while WTI falls 1% to $70 a barrel. According to ANZ Research, China’s oil refining slid its lowest since June due to seasonal maintenance, while year-to-date oil demand was down 3.3% to 14 million barrels a day. Fears of sluggish demand in the top crude importer and prospects of a global supply surplus next year have been putting significant pressure on prices in recent months. Investors now wait for cues on the U.S. interest rate outlook for next year, as lower rates typically boost demand for oil. ([email protected])
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Gold Eases Ahead of Fed Meeting — Market Talk
0931 GMT – Gold prices slide ahead of the Federal Reserve’s policy meeting, with traders cautiously waiting for cues on the U.S. central bank’s outlook for 2025. Futures trade 0.4% lower at $2,652.75 a troy ounce. A widely anticipated 25-basis-point rate cut is already fully priced into markets, according to analysts, but further cuts are less certain. Meanwhile, U.S. PMI data showed the services sector rose at a faster-than-expected pace. “The resilience of the U.S. economy supports our view that the Fed’s 2025 rate cutting cycle is likely to be shallow,” ANZ Research analysts say. “We expect a signal that future moves will be gradual.” ([email protected])
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Oil Prices Fall as Global Supplies Are Forecast to Increase — Market Talk
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12-17-24 1141ET