April 21, 2021

Weaker dollar pushes gold price to 7-week high

Spot gold was trading at $1,783.88 per ounce, which is its highest level since February 25. US gold futures were also up 0.3% at $1,788 per ounce.

“The fact that we managed to break above $1,765 and close above on Friday is likely to have attracted some renewed speculative buying from trend and momentum players,” Saxo Bank analyst Ole Hansen was quoted as saying by Reuters.

“Most of these [players] are price-driven, so when the price tells them that there’s a change in the outlook, they have to get involved,” while fundamentally, gold is being driven by the continued drop in bond yields, Hansen added.

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Benchmark US 10-year Treasury yields edged lower towards the multi-week lows touched last week. The dollar index also dropped, to a more than six-week low against its rivals, making gold less expensive for other currency holders. 

The dollar’s weakening and the Treasury yields retreat followed as the US Federal Reserve reiterated its view that any spike in inflation was likely to be temporary.      

Gold could be on the brink of another rally, analysts say, as it tops key resistance levels and moves towards $1,800 an ounce. Its precious metal counterpart, silver, also rose 0.4% to $26.05 per ounce after hitting a near-one-month high in the last session. Palladium surged 1.7% to $2,827.20, while platinum gained 1% to $1,213.50.

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Oil price could rise to $74 with historic global surplus subsiding

The International Energy Agency (IEA) said that barely a fifth of the surplus that flooded into the storage tanks of developed economies when oil demand crashed last year remained as of February. Oil inventories stood just 57 million barrels above their 2015-2019 average, down from a peak of 249 million in July, the IEA estimates.

“Commercial oil inventories across the OECD [Organisation for Economic Co-operation and Development] are already back down to their five-year average,” Ed Morse, head of commodities research at Citigroup, told the media. “What’s left of the surplus is almost entirely concentrated in China, which has been building a permanent petroleum reserve.”

Total stockpiles of crude and products subsided in late February to 1.28 billion barrels – a level last seen before the pandemic – and continue to hover there, according to the US’ Energy Information Administration. Last week, US East Coast stockpiles plunged to their lowest level in at least 30 years.

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“We’re starting to see refinery runs pick up in the US, which will be good for potential crude stock draws,” said Mercedes McKay, a senior analyst at consultants FGE. 

The oil surplus that gathered on the world’s seas, where ships were turned into makeshift floating depots when onshore facilities grew scarce last year, is also diminishing. The volumes have plunged, tumbling by about 27% in the past two weeks to 50.7 million barrels – the lowest in a year, according to IHS Markit.

The Organization of Petroleum Exporting Countries and allied producers have consistently said that the key objective is to normalize swollen inventories. The alliance cut output by 10 million barrels a day last April, or roughly 10% of global supplies, and is now in the process of carefully restoring some of the halted barrels.

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As demand picks up further, global inventories will decline at a rate of 2.2 million barrels a day in the second half of the year, propelling Brent crude to $74 a barrel or even higher, according to Citigroup projections. “Gasoline sales are ripping in the US,” said Morse. “Demand across all products will hit record levels in the third quarter, pushed up by demand for transport fuels and petrochemical feed-stocks.”

International benchmark Brent crude was trading at $66.69 a barrel as of 09:10 GMT on Monday. The price of West Texas Intermediate stood at over $63 per barrel.

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China says it has no plans to oust US dollar with digital yuan

“For the internationalization of the renminbi, we have said many times that it’s a natural process, and our goal is not to replace the US dollar or other international currencies. I think our goal is to allow the market to choose, to facilitate international trade and investment,” the head of the central bank said on a panel at the Boao forum on Sunday.

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He added that the latest efforts to create a blockchain-enabled, digital version of China’s national currency were aimed at domestic use.

“The motivation for the e-yuan, for now at least, is focusing primarily on domestic use,” Li said, adding that global “interoperability is a very complex issue, and we are not in a hurry to reach any particular solution yet.”

The e-yuan is currently in a limited test phase in various pilot programs across the country, and the authorities hope to have a sovereign digital currency ready in time for the 2022 Winter Olympics. China is the first nation in the world to test digital currency on a national level.

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Last week, US government officials reportedly raised concerns about China’s progress toward the virtual yuan, due to its potential to challenge the dominance of the US dollar as the world’s reserve currency. The White House is also worried that the new currency might be used to dodge US sanctions.

Former People’s Bank of China Governor Zhou Xiaochuan confirmed that initial plans for a digital currency weren’t motivated by the idea of cross-border use, as it could affect monetary policy independence.

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Renewables dominate the headlines, but oil and gas remain king

Yet, for all the enthusiastic talk, it seems that we are nowhere near accomplishing the transition—and it may already be too late to do anything about climate change anyway, according to some climate scientists.

“Embedded power structures and support for a dying industry”: these are the factors that are keeping oil and gas as the world’s main sources of energy, according to the chief executive of one environmental nonprofit organization.

Speaking to CNBC, Carroll Muffett from the Institute for Environmental Law said, “It is not a matter of the absence of the technology or the inability to do it. If you actually look at what are the cheaper sources of the energy supply right now, it is not really even a matter of economics. It is much more about embedded power structures and continued support of dying industry.” 

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It is very likely that Muffett is referring to government subsidies for the oil and gas industry in countries such as the United States or the UK, as well as many developing nations. What he doesn’t mention in the above comment, however, is the fact that the US government—and many others—also have substantial subsidies for renewable power, and plans to boost these in a bid to encourage wider adoption. As Muffett puts it, the energy transition is “primarily a matter of political will and economic choices.”

Indeed, it is a matter of political choices. Virtually every reputable energy authority has repeatedly said that it is up to the politicians to make sure the transition occurs by encouraging renewables and discouraging oil and gas. This, however, begs one question and the question is this: if renewables were as economical as their proponents say, wouldn’t the private sector be embracing them on its own for the profit opportunities, rather than waiting for the subsidies to be granted before venturing into the field?

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There is also another question: if renewables are the economic choice, why are the emerging—meaning poorer—economies of Asia investing so heavily in fossil fuel generation capacity that demand for oil there could jump by as much as 25% by 2040, according to Wood Mackenzie? Even China, the indisputable global leader in renewable energy capacity, is building new coal power plants despite celebrations of solar becoming as cheap as coal two years ago. These are not questions that the most vocal advocates of renewable energy like to discuss. They interfere with the narrative that solar and wind are not only emission-free, but they are also as cheap as fossil fuels. If that were the case, it would certainly make fossil fuels irrelevant. After all, if two sources of energy cost the same, but one is renewable and the other one is finite, it would make the best economic sense to bet on the first and not the second, from a purely pragmatic point of view, even without factoring in emissions.

And yet, poorer economies are betting on fossil fuels while richer ones are investing billions in renewable energy generation and storage capacity, and in electric cars. It seems there is a disconnect in the logical sequence of arguments for the energy transition. On the one hand, solar and wind are cheaper—and hydrogen and EVs will soon get cheaper—so it would make sense for everyone to get on board with them. Yet on the other, wealthy nations are the ones being the most generous with wind and solar adoption, and support for hydrogen and EVs.

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“Human activity is driving climate change,” Colm Sweeney, the lead scientist for the Earth System Research Lab Aircraft Program of the US National Oceanic and Atmospheric Administration, told CNBC.

 “If we want to mitigate the worst impacts, it’s going to take a deliberate focus on reducing fossil fuels emissions to near zero — and even then, we’ll need to look for ways to further remove greenhouse gases from the atmosphere,” he said.

Fossil fuel emissions account for the vast majority of greenhouse gas emissions from human activity on the planet. The increase in their use reflects an increase in energy demand, and the world’s energy demand is expected to continue growing as the global population grows, driven, once again, by emerging economies. Growing energy demand appears to be incompatible with the Paris Agreement targets given the above factors regarding the cost of different energy sources and their relative reliability, which is motivating investment decisions.

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What this means is that the only way we could conceivably expect to progress towards limiting greenhouse gas emissions in any meaningful way is by curbing our energy demand. Indeed, one recent academic report from the UK calls for just that.

UK FIRES, a research program involving scientists from several reputable universities and businesses from resource-intensive sectors, said in the report that net zero was not enough and we should strive for absolute zero, to be achieved, among other measures, by people reducing their energy consumption to 60 percent of today’s levels.

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Voluntary energy consumption cuts are highly unlikely, so this, too, would require political action. Some are already calling political action for renewable energy a form of government abuse. Imagine what they would call policies forcing people to consume less energy than they are used to consuming.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/521408-renewables-oil-gas-domination/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia sees record share of cash-free transactions as it moves closer to cashless society

According to Sberbank data, the share of non-cash spending among Russians surged to 59.4% in the first three months of 2021, setting a new all-time high. Cash-free sales were up 3.5% quarter-on-quarter and 6.3% compared to a year ago. 

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The first quarter usually sees a growth in non-cash sales, but this year’s increase was still the biggest since 2018, exceeding even the growth rate during the first wave of the coronavirus outbreak, the bank noted. 

“The higher share of non-cash sales should not be attributed to a temporary change in consumer preferences amid the pandemic,” Sberbank said in its research. The analysts at the bank added that the Covid-19 could have led to a new consumption pattern, with even more conservative part of the population turning away from cash. 

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People in some Russian regions are getting rid of cash faster than in others. Sberbank statistics show that more than 65% of transactions in eight northern regions were non-cash, while the leader among all Russian regions was Nenets autonomous district in the Arctic, which beat its earlier record with 72.8% in non-cash transactions.

For the whole of last year, the share of cashless payments amounted to around 70%, according to Russia’s central bank. The regulator now wants to increase the share of non-cash transactions to 75% by 2023, it said earlier this week. However, it acknowledged that this would not be an easy task. According to First Deputy Governor Olga Skorobogatova, every percentage point after the 70% level is harder to gain due to the specifics of the development of cashless payment instruments. She added that it took many countries more time to climb from 70% to 80% in cashless transactions than it did for them to get to the 70% level.

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China’s back on gold-buying spree, opens borders to $8.5 BILLION worth of shiny metal – reports

People familiar with the matter told the media that the nation’s central bank controls how much gold enters China through a system of quotas given to commercial banks. It usually allows enough metal in to satisfy local demand but sometimes restricts the flow. In recent weeks the regulator has given permission for large amounts of bullion to enter, the sources said.

“We had no quotas for a while. Now we are getting them… the most since 2019,” said a source at one of the banks moving gold into China.

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The sources also said that around 150 tons of gold worth $8.5 billion at current prices are likely to be shipped. They added that the bullion could be shipped in April or May. The bulk of China’s gold imports typically come from Australia, South Africa and Switzerland.

Chinese customs data show that since February 2020, the country has on average imported gold worth around $600 million a month, or roughly 10 tons. In 2019 its imports stood at about $3.5 billion a month, or roughly 75 tons.

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The dramatic return to the global bullion market follows a strong rebound of the country’s economy since the second half of last year. The Chinese appetite for gold jewelry, bars and coins has also recovered, and since January domestic prices have been higher than global benchmark rates, making it profitable to import bullion.

According to Standard Chartered analyst Suki Cooper, the recovery of gold demand in China and India is “critical in setting the floor for gold” and should stop prices from falling further over the coming months.

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Bitcoin crashes 15% as global regulators hesitate to greenlight crypto for commercial use

The token fell by 9.72% to $56,074 as of 7am GMT, after having dropped by as much as 15.1% to $51,707.51 earlier. Other digital assets are also trading in the red. Ether, the second-largest cryptocurrency, fell more than 10% to $2,216. Ripple dropped to $1.35, losing about 20%.

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Last week, bitcoin hit a record high of $64,870 ahead of the debut trade for the cryptocurrency exchange Coinbase Global on the Nasdaq. Market capitalization of the world’s most valued cryptocurrency topped $1 trillion after a surge of more than 800% in the past year.

Bitcoin extended its 4% loss recorded earlier this week shortly after Turkey’s central bank banned the use of cryptocurrencies and crypto assets for buying goods and services. According to the regulator, the use of digital currencies would cause “irreparable” damage and transaction risks.

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The latest crash may reportedly be attributed to speculation that the US Treasury is planning to crack down on money-laundering practices carried out via digital assets, among other factors.

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Russian e-commerce giant Wildberries launches sales in US

At the end of February, Wildberries launched sales in France, Italy and Spain. In January 2020, the company kicked off sales in Poland, making it the first European country in which it operates. The retailer is already operating in Slovakia, Ukraine, Israel, Germany, Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia.

According to the firm, US online shoppers may place an order both via a separate website us.wildberries.ru and with the help of the mobile application. “The website and the application work in English and Russian languages,” it said.

Wildberries offers about 5.5 million items provided by more than 40 thousand brands. Those include clothing, shoes and accessories, beauty products, toys, electronics, books and stationery, sporting goods and household items.

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“The online platform brings together manufacturers and sellers from different countries – Russia, Germany, France, Poland and many others. We are open to expanding cooperation with American entrepreneurs, including small and medium-sized businesses,” said Vyacheslav Ivashchenko, director of development at Wildberries.

Founded by the former English teacher Tatyana Bakalchuk in 2004, Wildberries became Russia’s number one online retailer in 2017. The company’s trade volume reached 437.2 billion rubles ($5.6 billion) in 2020, with sales outside Russia soaring 95% to 23.7 billion rubles ($306 million).

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Ant Group explores options for Jack Ma to exit, as Beijing unsheathes its sword against China’s big tech

The talks between the Chinese state regulator and Ant Group that took place between January and March signaled to the company that Ma’s exit could help draw a line under Beijing’s scrutiny of its business, according to sources familiar with the matter, as cited by Reuters.

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Earlier this year, officials from the People’s Bank of China and the financial regulator, China Banking and Insurance Regulatory Commission, held a series of meetings with Ma and Ant Group, respectively. A source familiar with the regulator’s thinking and another with close ties to the company told Reuters that the parties discussed the possibility of the billionaire’s exit.

The company has denied that the prospect of Ma’s quitting was ever under consideration, however. “Divestment of Mr. Ma’s stake in Ant Group has never been the subject of discussions with anyone,” a spokesman said in a statement.

According to one of the sources, the corporation hopes that Ma’s multi-billion-dollar stake could be sold either to existing investors in Ant Group or its former parent company, Alibaba Group Holding, without involving any external entity.

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Transferring Ma’s stake to a Chinese investor affiliated with the state is reportedly seen as another option. Another source assured the agency that Ma was told the regulators would not allow him to sell the stake to any entity or individual close to him.

The unconfirmed news comes a week after China’s antitrust regulators hit Alibaba Group, the world’s largest e-commerce corporation, with an 18.23 billion yuan ($2.8-billion) fine for abusing its dominant market position in China’s online retail platform service market.

Alibaba and its affiliate became the subject of intense scrutiny by Beijing after Ma, who founded both organizations, publicly criticized the Chinese regulator, accusing officials of having a “pawnshop mentality” that stunted business growth and innovation.

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Ant Group owns China’s largest digital payment platform, Alipay, which serves more than a billion users and 80 million merchants, with a total payment volume totaling 118 trillion yuan ($17 trillion) in June 2020.

Ant’s initial public offering, which was about to raise an estimated $37 billion – the world’s largest IPO – was abruptly halted last year over regulatory concerns.

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US production rebound will lead to new oil price war, shale executive says

Last year, the OPEC+ group broke up their production pact in March after demand started crashing in the pandemic and US crude oil production had hit 13 million bpd in the weeks prior to the start of the pandemic.

“OPEC and Russia were upset that we grew too much,” Scott Sheffield said at the summit. “If we ever start growing again too much, we’re going to have another price war,” the shale executive added.

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Sheffield continues to believe — as he did earlier this year when Saudi Arabia surprised the market with an extra cut of 1 million bpd — that US oil production will not surge again because operators are very much aware of the consequences of soaring output and will continue to keep disciplined spending.

“If we grow another million barrels a day next year, we’re going to have another price war in my opinion going into ‘23,” Sheffield told the BloombergNEF summit.

One million bpd growth is basically the increase the EIA predicts for US crude oil production in 2022 compared to the average for Q2 2021. As per EIA’s latest estimates, US oil production is set to increase from an average 10.9 million bpd in the second quarter to nearly 11.4 million bpd by the fourth quarter. In the fourth quarter next year, US oil production is expected to average above 12 million bpd — at 12.18 million bpd.

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Pioneer’s Sheffield, however, said he was “totally against” that forecast, noting that he believes US shale would maintain the pledges to not rush to boosting output.

Large listed producers promise restraint, and the market, and even OPEC+, believe restraint will indeed be the case for the US oil industry this year. However, $60 oil makes boosting production too tempting for the private operators, since higher production and cash flows help them grow and pay off debts, without Wall Street breathing down their necks whether they are spending within their means.

This article was originally published on Oilprice.com

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