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PUBLISHED FRI, SEP 8 2023

Gold firmed on Friday as the dollar came off six-month highs but bullion was still en route to a weekly fall on chances of one more U.S. interest rate hikes this year.

Spot gold was up 0.2% to $1,922.94 per ounce but was set for a 0.8% weekly fall. U.S. gold futures rose 0.2% to $1,947.10.

The dollar’s strength, and a rebound in Treasury yields given expectations of the Federal Reserve raising rates in November, is pressuring gold, said Carlo Alberto De Casa, analyst at Kinesis Money.

But while “the overall scenario is very challenging,” gold is still seeing solid demand, De Casa said, adding the ECB was unlikely to raise interest rates given economic concerns.

The dollar eased 0.1% but was headed for its longest weekly winning streak in nine years, bolstered by recent strong U.S. economic data, including a drop in jobless claims.

Markets priced in an around 93% chance of the Fed keeping rates unchanged at its Sept. 19-20 meeting, but bet on 45% odds of one more hike before 2024, according to the CME FedWatch tool.

Higher rates dull appetite for zero-yield gold since they boost returns on competing safe-haven Treasury bonds, which are set for a weekly rise.

Three Fed officials on Thursday suggested the Fed could skip a rate hike in September but maintained that there was more work to be done to curb inflation.

“If the Fed ends up needing to hold longer, that becomes the worst of all possible worlds for gold because that means higher yields and a stronger dollar,” said Ilya Spivak, head of global macro at Tastylive.

PUBLISHED THU, SEP 7 2023

Oil prices hovered above $90 a barrel on Friday, on track to end the week higher as investors chose to focus on tighter supply, despite broader macroeconomic uncertainty.

Both oil benchmarks hit 10-month highs this week after Riyadh and Moscow extended their voluntary supply cuts of a combined 1.3 million barrels per day (bpd) to the end of the year.

However, both benchmarks ended Thursday slightly lower amid volatile trade on multiple signals warning of weaker demand in the coming months.

Traders who took some profit yesterday are back as they believe that the path of least resistance is certainly skewed to the upside, and oil prices are well on track to close another week in positive territory, said Naeem Aslam of Zaye Capital Markets.

Saudi Arabia will probably find it difficult to end its cuts at the end of the year without triggering an unwanted price slide, Commerzbank analysts added in a note.

Brent crude futures were up 71 cents to $90.63 a barrel, while U.S. West Texas Intermediate crude (WTI) futures were up 65 cents to $87.52 a barrel.

Both benchmarks close up about 2% last week – at $88.49 a barrel for Brent and $85.02 a barrel for WTI – in anticipation of the cut announcements.

On the demand side, a key concern is China, the world’s largest oil importer. The country has frustrated markets due to its sluggish post-pandemic recovery, while stimulus pledges have fallen short of expectations.

Data on Thursday showed overall exports and imports in the world’s second-largest economy fell in August, as sagging overseas demand and weak consumer spending squeezed businesses.

However, even in times of lackluster economic activity, China tends to bolster its storage capacity, particularly with the availability of cheap Russian crude. Last month, Chinese crude imports rose nearly 31%.

Demand for crude could also benefit from workers going on strike at projects in Australia which produce about 5% of the world’s supply of liquefied natural gas (LNG).

Meanwhile, questions remain about whether central banks in the United States and Europe will continue their aggressive interest rate hike campaigns to tame persistent inflation.

“Riyadh is acutely aware of the tightrope it walks between tightening the market and upsetting any up-and-until-now progress achieved by central banks in taming price-rise driven inflation,” said John Evans of oil broker PVM

Canadian Natural Resources Ltd CNQ-T +0.47%increase, a major shipper on the Trans Mountain oil pipeline expansion (TMX), expects the project will be delayed until at least the second quarter of 2024, the company said in a letter to Canadian regulators on Thursday.

Trans Mountain Corp (TMC), the Canadian government-owned corporation building the long-delayed project, has said the expanded pipeline will start shipping oil late in the first quarter of next year.

Canadian Natural said it expected the pipeline’s start date to be delayed because TMC is asking regulators for a route deviation on a 1.3-km (0.8 mile) section just south of Kamloops, British Columbia.

“Although Canadian Natural hopes for an earlier Commencement Date, unfortunately, it is probable that the Commencement Date will be delayed into Q2 or later in 2024,” the letter to the Canada Energy Regulator (CER) said.

TMC did not immediately respond to a request for comment.

TMX will treble the flow of oil sands crude from Alberta to Canada’s Pacific Coast to 890,000 barrels per day, but the expansion has been dogged by years of regulatory delays and environmental opposition.

It was bought by the Canadian government in 2018 to ensure it got built, but has seen costs quadruple to C$30.9-billion. TMC is currently locked in a dispute with oil shippers over higher-than-expected tolls.

Canadian Natural’s submission to the CER was one of a number of letters from TMX shippers, including Cenovus Energy and Suncor Energy, filed on Thursday.

The companies argued TMX’s proposed interim tolls are excessive and called for a review of why the cost of the pipeline escalated so much during construction.

Canada’s economy gained a much greater than expected net 39,900 jobs in August and the unemployment rate remained at 5.5 per cent, official data showed on Friday, a sign of underlying strength despite high rates.

Analysts polled by Reuters had forecast a net gain of 15,000 jobs and for the unemployment rate to edge up to 5.6 per cent from July.

Statistics Canada said full-time positions grew by 32,200 jobs while part-time jobs posted a more modest gain of 7,800.

The labour market has been resilient even as the Bank of Canada raised its key overnight rate 10 times since March 2022 to cool the economy. Monthly employment growth is averaging 25,000 so far this year.

“Always a little bit wary about putting too much weight on individual jobs numbers, but this certainly comes down on the hawkish side of the scale and it will keep the Bank of Canada on pins and needles ahead of that October meeting,” said Andrew Kelvin, chief Canada strategist at TD Securities.

The average hourly wage for permanent employees, a figure the central bank watches closely, rose by 5.2 per cent from August 2022 compared to a year-on-year increase of 5.0 per cent in July.

The Bank of Canada has repeatedly expressed concern that it will be hard to fully curb inflation if wages maintain their current patterns of rising between 4 per cent and 5 per cent annually.

The bank stayed on the sidelines on Wednesday but said on Thursday it might have to tighten monetary policy further. Its next rate announcement is due on Oct. 25.

Employment in the goods sector fell by a net 2,500 jobs in August, largely in manufacturing, while the services sector gained a net 42,400 jobs, mostly in professional, scientific and technical services.

Published: 9/6/2023 12:35 PM ET

The Canadian market is down firmly in negative territory in early afternoon trades on Wednesday, weighed down by losses in healthcare and utilities sectors.

Several stocks from industrials, materials, consumer discretionary and financials sectors are also notably lower.

Investors are digesting the Canadian central bank’s interest rate decision. The Bank of Canada today held its main interest rate unchanged at 5% after two back-to-back rises. The central bank cited a shift in the economy to a weaker phase and easing labor-market pressures as the reason for its decision.

The central bank, which said it will continue to monitor inflation dynamics, has not ruled out further tightening.

The benchmark S&P/TSX Composite Index is down 177.10 points or 0.88% at 20,236.66 about half an hour past noon.

By RTTNews Staff Writer   ✉  | Published: 9/6/2023 12:35 PM ET

The Canadian market is down firmly in negative territory in early afternoon trades on Wednesday, weighed down by losses in healthcare and utilities sectors.

Several stocks from industrials, materials, consumer discretionary and financials sectors are also notably lower.

Investors are digesting the Canadian central bank’s interest rate decision. The Bank of Canada today held its main interest rate unchanged at 5% after two back-to-back rises. The central bank cited a shift in the economy to a weaker phase and easing labor-market pressures as the reason for its decision.

The central bank, which said it will continue to monitor inflation dynamics, has not ruled out further tightening.

The benchmark S&P/TSX Composite Index is down 177.10 points or 0.88% at 20,236.66 about half an hour past noon.

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Shares of Enbridge Inc (ENB.TO) are down more than 5%. The company announced it has signed a deal to purchase utilities in the U.S. from Dominion Energy for $14 billion.

Docebo Inc (DCBO.TO), TC Energy Corporation (TRP.TO), Bombardier Inc (BBD.B.TO), Restaurant Brands International (QSR.TO), BRP Inc (DOO.TO), Kinaxis Inc (KXS.TO), Premium Brands Holdings Corporation (PBH.TO), WSP Global (WSP.TO), goeasy (GSY.TO) are down 1 to 3%.

Parkland Corporation (PKI.TO) is climbing more than 5%. Canadian Apartment Properties Real Estate (CAR.UN.TO), FirstService Corporation (FSV.TO) and Linamar Corporation (LNR.TO) are up 1 to 1.5%.

Tropical Storm Lee is expected to rapidly intensify into an “extremely dangerous” hurricane in the Atlantic Ocean by this weekend, the National Hurricane Center said Tuesday as the season approaches its typical early September peak.

Lee could become a hurricane Wednesday then a major category 3 storm or stronger by Friday, with the Leeward Islands of the Caribbean feeling its impacts over the weekend, forecasters said.

Its winds could reach 150 mph on Sunday evening, according to the hurricane center.

The tropical storm is now churning maximum sustained winds of 50 mph and moving about 1,230 miles east of the Leeward Islands, which include the Virgin Islands, Saint Martin, and Antigua and Barbuda, according to the National Hurricane Center’s 11 p.m. ET Tuesday update.

Though its exact path is still uncertain, Lee will track generally west-northwest across the tropical Atlantic through the end of the week and make a close pass at the Leeward Islands over the weekend as a hurricane.

But any shifts along its track as it nears the islands could bring more of an impact there and beyond. Anyone in the eastern Caribbean – including the Leeward Islands, Puerto Rico and Hispaniola – as well as the Bahamas will need to keep a close eye on the forecast.

It’s too soon to know whether this system will directly impact the US mainland, but even if the hurricane stays out at sea, dangerous surf and rip currents could once again threaten the East Coast. One person was killed in a rip current in New Jersey over the Labor Day weekend.

Lee became a tropical storm Tuesday after forming earlier in the morning in the central tropical Atlantic and moving through extremely warm waters, according to the National Hurricane Center, which predicts the storm will strengthen rapidly.

Rapid intensification is when a storm’s winds strengthen quickly over a short amount of time. Scientists have defined it as a wind speed increase of at least 35 mph in 24 hours or less – a phenomenon aided by warm ocean waters.

As Lee moves steadily west-northwest this week, it will enter conditions increasingly favorable for strengthening: Plenty of moisture, low wind shear and abnormally warm water stretch nearly the entire length of the potential cyclone’s projected path.

Possible Hurricane Lee: The Atlantic’s next major hurricane is expected by this weekend | CNN

• India’s imports of Russian crude is a win-win situation for the world’s oil markets, said Oil and Natural Gas Corporation Ltd (ONGC), India’s No. 1 oil company.
• By importing from Russia, ONGC said that India has helped the global economy by freeing up some oil on the Gulf for other countries to import.

India importing Russian oil is win-win for global economy, says ONGC (cnbc.com)

Oil prices ticked up in Asian morning trade on Monday, as market sentiment was buoyed by positive China and U.S. economic data, as well as expectations of ongoing crude supply cuts from major producers.

Brent crude was up 17 cents, or 0.2%, at $88.72 a barrel at 0015 GMT. U.S. West Texas Intermediate crude rose 25 cents, roughly 0.3%, to $85.80.

The sustained upward price movement comes after both contracts settled at their highest levels in more than half a year last week, breaking a two-week losing streak.

On the demand side, China’s manufacturing activity unexpectedly expanded in August, data from Caixin’s manufacturing PMI survey indicated, leading to renewed optimism about the economic health of the world’s largest oil importer.

A series of economic support measures announced by Beijing last week, such as deposit rate cuts at some of the country’s largest state-owned banks and an easing of borrowing rules for home buyers, have also supported prices.

However, investors continue to await more substantial moves to prop up the country’s embattled property sector, which has been one of main drags on the Chinese economy since its emergence from the pandemic.

In the U.S., employment data was higher than expected on Friday, with nonfarm payrolls increasing by 187,000 jobs last month.

A broader cooling of the U.S. labor market, as seen in slowing job growth, reduced the chances of further rate hikes by the Federal Reserve in the immediate future, analysts said.

Expectations of tightening oil supplies have grown after Russian Deputy Prime Minister Alexander Novak’s remarks on Thursday that Russia had agreed with partners in the Organization of the Petroleum Exporting Countries on the parameters for continued export cuts. An official announcement with details of the planned cuts is expected this week.

Russia has already said it will cut exports by 300,000 barrels per day, or bpd in September, following a 500,000 bpd cut in August. Saudi Arabia is also expected to roll over a voluntary 1 million bpd cut into October.

 Enbridge Inc. has signed a US$14 billion cash-and-debt deal that represents a major vote of confidence by the Canadian company in the future of natural gas.

The Calgary-based energy infrastructure giant said Tuesday it will purchase three U.S.-based utility companies— The East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and the Public Service Company of North Carolina — all of which are owned by Virginia-based Dominion Energy Inc.

Enbridge, which plans to finance the deal through a combination of US$9.4 billion of cash consideration and US$4.6 billion of assumed debt, said the deal will double the scale of its gas utility business and will serve to balance its asset mix evenly between natural gas and renewables, and liquids.

In a presentation for investors Tuesday afternoon, Enbridge CEO Greg Ebel said the company’s earnings mix is currently about 60 per cent weighted towards crude oil and liquids, and 40 per cent weighted towards natural gas and renewable energy. (Enbridge is currently the only major pipeline company in North America that owns a regulated utility. Enbridge Gas Inc. currently serves about 75 per cent of Ontario residents.)

Following the Dominion deal, which remains subject to regulatory approval and is expected to close in 2024, that balance will be closer to 50-50, Ebel said. The deal will give Enbridge gas utility operations in Ohio, North Carolina, Utah, Idaho and Wyoming, representing a significant presence in the U.S. utility sector.

The acquisition is expected to double the scale of Enbridge’s gas utility business to approximately 22 per cent of Enbridge’s total adjusted earnings before interest, taxes, depreciation, and amortization.

While the purchase is larger than the more modest “tuck-in” acquisitions Enbridge has been pursuing in recent years, the scale and price of the Dominion assets made them a “once in a generation” opportunity that couldn’t be passed up, Ebel said. 

The purchase also fits with the company’s previously stated bullish outlook on natural gas — even as the world aims to reduce emissions from fossil fuels to tackle climate change.

“We remain firmly of the view that all forms of energy will be required for a safe and reliable energy transition,” Ebel said in Tuesday’s investor presentation. 

“This transaction helps us to achieve greater balance and gives us more exposure to natural gas, which is and will continue to be a critical fuel to help us realize our lower-carbon emissions.”

Enbridge said following the transaction, its gas utility business will be the largest by volume in North America with a combined rate base of over C$27 billion and about 7,000 employees delivering over nine billion cubic feet per day of gas to approximately seven million customers.

Ebel said the purchase will be accretive to Enbridge’s earnings within the first year, and the utilities will offer long-term, low-risk, predictable cash flow growth. 

This report by The Canadian Press was first published Sept. 5, 2023.