Joe Biden Ready to Reopen US Oil Stockpile If Petrol Prices Surge Again

Economic

Commodity

Summary:

President’s top energy adviser Amos Hochstein says fuel costs ‘still too high for many Americans’.

The Biden administration is ready to release more oil from its strategic stockpile to halt any jump in petrol prices this summer, as the White House battles to contain inflation ahead of the November election.

Amos Hochstein, President Joe Biden’s closest adviser on energy, said that prices at the pump were “still too high for many Americans” and he would like to see them “cut down a little bit further”.

“We will do everything we can to make sure that the market is supplied well enough to ensure as low price as possible for American consumers,” Hochstein told the Financial Times.

“I think that we have enough in the SPR if it’s necessary,” he added, referring to the country’s Strategic Petroleum Reserve.

Hochstein’s comments come as Biden tries to overcome voter anxiety about his handling of the economy with less than five months to go before the election.

The Biden administration has pledged measures including curbs on healthcare costs and banking fees in a bid to reduce inflation, which has fallen by about 60 per cent since hitting multi-decade highs in 2022.

Any decision in the coming months to draw more barrels from the SPR — which Biden has tapped more than any of his predecessors — would anger Republicans who have accused him of “political abuse and misuse” of the stockpile.

US petrol prices averaged $3.45 a gallon on Sunday, according to the AAA motoring group, down slightly from a year ago but still more than 50 per cent higher than when Biden succeeded Donald Trump as president in 2021.

Despite his limited ability to influence prices, many motorists blame the Democratic president for the squeeze at the pump.

“I don’t like Biden,” said David Gonzales Broche, an Uber driver in Las Vegas, Nevada, where prices averaged $4.05 a gallon on Sunday. “For gasoline I’m paying almost $5 a gallon. Before, it was $2-something — when we had Trump.”

Joe Biden Ready to Reopen US Oil Stockpile If Petrol Prices Surge Again_1

The former president has used petrol prices as an attack line against Biden in his campaign for the White House, claiming the administration’s clean energy and climate polices have constrained US oil output.

“We’re going to drill, baby drill,” Trump told supporters at a rally in Las Vegas last weekend. “We’re going to bring down your energy costs.”

The US under Biden has hit new record high levels of oil and gas output, and is exporting more than when Trump was president.

The SPR was set up almost half a century ago as a buffer against jumps in oil prices in times of supply disruption. Biden announced releases from the reserve in late 2021 and again in 2022 as petrol prices rose following Russia’s full-scale invasion of Ukraine. Joe Biden Ready to Reopen US Oil Stockpile If Petrol Prices Surge Again_2

Joe Biden Ready to Reopen US Oil Stockpile If Petrol Prices Surge Again_2

Opec+ this month extended oil supply cuts in a bid to bolster prices. Brent crude settled at $82.62 a barrel on Friday, having risen 7 per cent in the past two weeks. Goldman Sachs expects the benchmark to reach $86 a barrel next quarter.

“Any president facing a tough re-election, especially in a fragile economy, is going to be anxious about the risk of a gasoline price spike,” said Bob McNally, a former energy adviser to George W Bush and head of consultancy Rapidan Energy.

In a letter sent last month to energy secretary Jennifer Granholm, senior Republican politicians called on the administration to “ensure that the SPR is not abused for political purposes in this election year” and described Biden’s SPR release in 2022 as “a transparent attempt to influence the midterm elections”.

The administration has gradually refilled the SPR since it was drained under Biden to its lowest levels since 1983, arguing it has done so at a good rate of return for taxpayers by selling the oil at higher market prices and buying barrels back at lower levels.

Hochstein said the administration would keep replenishing the reserve until the oil was needed again.

“We will continue to purchase into next year, until we think that the SPR has the volume that it needs again to serve its original purpose of energy security,” he said.

Source:Financial Times

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Cohen

Commodity

Economic

The combination of a recent market rally and prospects of a good wheat crop in Texas and Oklahoma should offer a bit of harvest optimism.

Mark Welch, Texas A&M AgriLife Extension marketing specialist, College Station, says although markets have backed off in recent days opportunities are still “a buck better than we thought they would be in April.”

He says a rally lost some steam and as much as $1 off its high. “But we’re still at $6.50. We were looking at a price with a 4 in front of it, so we have had some opportunities and are in much better shape than we were.”

It's unusual for markets to rally this close to harvest. And that market coincides with what looks to be a good crop.

“The wheat yield spokespersons I’ve talked to are talking about how good the wheat is,” Welch says. He voices some concern of wheat up the I-35 corridor to Temple and Hillsboro and up near Dallas because of so much rain and hail. “A lot of wheat could have been knocked down. I have not heard of quality issues, and farmers can still get that wheat, even if it’s laid down, but quality is a concern.

“But the general feeling is that the Texas wheat crop is in really good shape. Oklahoma wheat conditions are better than our rating. For Kansas, the jury is still out. The USDA estimate puts the Kansas yield at 38 bushels. That’s a pretty big setback, but after the Kansas wheat tour, estimates put yield at 46.5 bushels.”

Welch explains the USDA lower estimate results from dry conditions in West Kansas along with some freeze damage, which might not be as bad as expected. USDA could make adjustments and that could change the national yield estimate.

Surprising crop

“Wheat is that way. A lot of the time we do not know until the combine runs. A low spot, a high spot, or freeze damage can be variable across the area. At this point, the market tells us this is a good crop.”

Welch says the recent market rally was spurred mainly by concerns about the Kansas crop and uncertainty about Russia’s production.

“Southern Russia got dry and cold at critical point in the reproduction cycle when wheat is susceptible to frost and freeze injury. How bad did it hurt Russia’s crop? It’s a waiting game until they run the combines.”

Muddled market

Russia’s status muddles the global market picture,” Welch says. “Will a Russian production cut be compensated by a good crop in the U.S.? India has good crop. Australia's crop is likely better than we thought it was going to be. Europe has been too wet; it's been too dry. How that pans out could mean we have enough adjustments to the top side to compensate for any downward revisions on the Russian crop.”

Welch says that although the U.S. produces only 6% of the world’s wheat, we are still a major exporter.

“Reports from USDA and other sources are important for U.S. wheat producers. The market was back down over the last week or so, down 20 cents for July to $6.45, a dollar better than month ago but off a dollar from the rally. The market is not as bad as we thought it could be.”

He said the U.S. winter wheat crop appears to be a good one. “And conditions for spring wheat look fantastic early.

“The U.S. wheat outlook is more positive than the global outlook, which has areas of concern but better crops in other locations can compensate."

In June, July, and August the scenario will unfold.

Welch says the harvesttime rally “was a gift. We have better market opportunities now than we did a few weeks ago. We’ve seen a little setback but rallies later could be driven by how serious the Russian situation is and how well other producers globally do. We usually get a February rally and fall off at harvest following a May rally. If we reverse from that, it will be because global conditions in the market are worse than we thought.”

Optimism for Texas

Texas remains on the upswing. “The drought map shows a better picture than it has over the last few years. We’re seeing a nice U.S. wheat production rebound.”

Welch cautions farmers to watch export reports. “We have a lot of competition, but look at how wheat moves out of the Gulf and down into Mexico. That will help cash wheat prices for Texas growers.

“The wheat stocks report shows wheat is not backed up. It is important to see wheat keep moving.”

Take a look at this gallery to view photos from this year's Texas and Oklahoma wheat harvest.

Source:Farm Progress

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Alex

Economic

Commodity

Advanced economies’ central banks expect gold’s share of global reserves to rise at the expense of the US dollar, as these institutions look to follow the lead of emerging markets in buying bullion.

Almost 60 per cent of rich countries’ central banks believe that gold’s share of global reserves will rise in the next five years, up from 38 per cent of respondents last year, according to an annual survey conducted by the World Gold Council, an industry promotion group.

Around 13 per cent of advanced economies plan to increase their gold holdings in the next year, up from around 8 per cent last year and the highest level since the survey began. That follows the lead of emerging market central banks, which have been the main purchasers of gold since the 2008 global financial crisis.

Meanwhile, a rising proportion of advanced economies — 56 per cent, up from 46 per cent last year — also think the dollar’s share of global reserves will fall over the next 5 years. Among emerging market central banks, 64 per cent share this view.

The demand for gold, which comes despite a sharp rise in the price of the yellow metal this year, highlights how allocations to the dollar have been declining as central banks have sought to diversify their holdings through alternative currencies and assets, especially after the US weaponised its currency in sanctions against Russia.

“This year we’ve seen much stronger convergence. More advanced countries are saying that gold is going to occupy more of global reserves and the dollar will be less,” said Shaokai Fan, global head of central banks at the WGC.

“It wasn’t the emerging market countries evaluating these factors less but advanced markets catching up to how emerging markets feel about gold,” he added.

The survey — one of the few insights into the thinking of publicity-shy reserve managers — found that a record share of central banks since the survey began five years ago intend to increase their gold reserves over the next 12 months, at 29 per cent of respondents. Of the emerging market respondents, nearly 40 per cent plan to raise their holding.

The main reasons cited by central banks for holding gold are its long-term value, performance during a crisis and its role as an effective diversifier.

Central banks added more than 1,000 tonnes of gold to their reserves in both 2022 and 2023, according to the WGC. US sanctions on Russia’s dollar-denominated assets prompted a rush among non-western official financial institutions for bullion — the value of which does not rely on any government or bank, unlike fiat currencies.

The consecutive years of record buying, the pace of which has continued into this year, has been a driving factor behind gold’s rally to nearly $1,450 per troy ounce last month. It is up 42 per cent since the Israel-Hamas conflict began in October.

The dollar’s share of global foreign exchange reserves — excluding gold — has plummeted from more than 70 per cent in 2000 to around 55 per cent last year, stripping out the effect of US dollar appreciation, according to research from the IMF this month. Including gold, the dollar’s share has dropped below half, the WGC says.

Although the Chinese renminbi has made some gains as a reserve currency, the uncertainty hanging over the country’s economy has meant that the percentage of central banks expecting it to increase its share of global reserves fell from 79 per cent last year to 59 per cent this year.

Source:Financial Times

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Warren Takunda

Stocks

Economic

A gauge of global stocks rose for the first time in three sessions on Monday, powered by a rally in U.S. equities, while U.S. Treasury yields climbed after a sharp drop in the prior week as investors awaited comments from Federal Reserve officials.

On Wall Street, U.S. stocks slowly gained steam after a sluggish start to the session to send the Nasdaq Composite and S&P 500 to record highs, led by gains in technology and consumer discretionary shares.

Economic data showed manufacturing activity in the New York region improved in June, but remained in contraction territory with a reading of negative 6. Investors will closely eye retail sales data for May on Tuesday for signs of consumer health.

Stocks, U.S. Yields Gain as Data, Fed Comments Eyed _1

Empire State

"There really isn't an appetite to be a real seller right now because there is a perception that momentum is going to continue, and stocks are going to continue winning," said Daniela Hathorn, senior market analyst at Capital.com.

"The fact that the rally has been driven mostly by a select few stocks, that would mean that the pullback could be even deeper."

The Dow Jones Industrial Average rose 188.94 points, or 0.49%, to 38,778.10, the S&P 500 gained 41.63 points, or 0.77%, to 5,473.23 and the Nasdaq Composite gained 168.14 points, or 0.95%, to 17,857.02.

Goldman Sachs raised its year-end S&P 500 price target to 5,600 from the prior 5,200, while Evercore ISI lifted its price target to 6,000 from 4,750.

U.S. equities had pushed to record levels last week following several inflation readings that indicated price pressures may be ebbing, even as the Federal Reserve adjusted its economic projections to only include one rate cut for the year.

In Europe, stocks edged higher, with banks and technology stocks rebounding from losses last week after markets were startled by political uncertainty in France. The STOXX 600 index closed up 0.09%, while Europe's broad FTSEurofirst 300 index rose 2.52 points, or 0.12%

MSCI's gauge of stocks across the globe rose 3.53 points, or 0.44%, to 800.79, bouncing from earlier lows and following two straight sessions of declines.

FED OFFICIALS

U.S. Treasury yields rose, with the 10-year note coming off its biggest weekly drop of the year in response to inflation data that boosted hopes the Fed would be able to cut rates by at least 25 basis points in September.

Markets are currently pricing in a 61.5% chance for a 25 basis point cut in September, according to CME's FedWatch Tool down from about 70% in the prior session.

The yield on benchmark U.S. 10-year notes rose 6.8 basis points to 4.281%.

"The Empire State helped a little bit, but it's more than that," said Stan Shipley, managing director and fixed income strategist at Evercore ISI in New York. "Yields came down a lot last week and so some people are taking profits here."

Investors will hear from a host of Fed officials this week, including Governor Lisa Cook later on Monday.

Philadelphia Fed President Patrick Harker said on Monday the central bank would be able to cut rates one time this year should his forecast play out.

Central banks in Australia, Norway and Britain are all expected to leave their interest rates unchanged at meetings this week, though the Swiss National Bank could ease given the recent strength of the Swiss franc.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.19% at 105.34, with the euro up 0.29% at $1.0731.

Against the Japanese yen , the dollar strengthened 0.22% at 157.71, while sterling strengthened 0.14% at $1.27.

U.S. crude settled up 2.4% to $80.33 a barrel and Brent rose to end at $84.25 per barrel, up 2% on the day, building on the prior week's gains as investors turned more optimistic on demand growth in the months ahead.

Source: Reuters

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Samantha Luan

Economic

Cryptocurrency

The Bitcoin ETF Debacle

Last week, Bitcoin ETFs recorded net outflows of $621 million. A dizzying drop, especially after an exceptional week in which these same funds had gained nearly $2 billion.

This brutal oscillation is mainly attributed to the position of the Federal Reserve. Indeed, the predictions of Fed leaders, particularly through the famous “dot plot”, have sown doubt among institutional investors. Their expectations of just one rate cut in 2024, instead of the initially planned three, have had a chilling effect.

High interest rates are traditionally unfavorable to risky assets like cryptocurrencies and stocks.

They rather favor fixed-income assets, such as Treasury bonds, which offer increased security. This preference has led to a marked disaffection for Bitcoin ETFs, now considered too volatile during economic uncertainty.

The Global Impact on Crypto Funds

Beyond Bitcoin ETFs, the entire crypto fund industry has also suffered. Total outflows from all crypto ETFs reached $600 million last week, an unprecedented situation since March. Investors seem to have lost confidence, fearing a too unstable market. Exchange-traded products (ETPs), which encompass ETFs and ETNs, have been particularly affected.

In the United States, ETPs saw the largest net outflows, totaling $565 million. In contrast, Germany showed surprising resilience with net inflows of $17 million. Among the biggest losses, Grayscale’s GBTC fund stands out, with a massive outflow of $274 million. The ARKB fund from Ark Invest and 21Shares also saw a significant outflow of nearly $150 million. However, not everything is bleak: BlackRock’s IBIT fund saw an inflow of $41.6 million, while ProShares’ EETH fund, investing in Ethereum futures contracts, recorded $16.85 million in inflows.

Hidden Opportunities in the Turmoil

Despite this alarming situation, some see this crisis as a golden opportunity. Price fluctuations, though destabilizing, are perceived by some bold investors as buying opportunities. MicroStrategy, for example, announced an increased fundraise to $786 million, largely intended for the acquisition of bitcoins. This strategy shows unwavering confidence in the long-term resilience of bitcoin.

Furthermore, international investment firm Bernstein has raised its price target for bitcoin in 2025, from $150,000 to $200,000. This adjustment reflects an optimistic view of bitcoin’s future value despite current turbulence. This encouraging perspective could revive investor interest and stabilize the market in the medium term.

The current crisis of Bitcoin ETFs and crypto funds is a brutal reminder of the whims of the financial market. The position of the Federal Reserve and high interest rates have undoubtedly shaken investor confidence. However, in this turmoil, opportunities emerge for the bold. Fluctuations can serve as a springboard for those who believe in the longevity of cryptocurrencies.

Bitcoin, despite its recent misadventures, continues to fascinate and attract. The road to widespread adoption and price stabilization is fraught with challenges, but optimistic predictions for 2025 offer a glimmer of hope. The evolution of the situation will depend on future economic decisions and investors’ ability to navigate this volatile environment. What does the future hold? Only time will tell, but one thing is certain: the world of crypto never ceases to surprise.

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Source:cointribune

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Warren Takunda

Economic

Bond yields were little changed early Tuesday as traders awaited the U.S. retail sales report for May.

What's happening

The yield on the 2-year Treasury added less than 1 basis point to 4.778%. Yields move in the opposite direction to prices.The yield on the 10-year Treasury rose less than 1 basis point to 4.290%.The yield on the 30-year Treasury climbed less than 1 basis point to 4.411%.

What's driving markets

The U.S. retail sales report for May is likely to be the main bond market driver on Tuesday, with investors keen to see if households are starting to struggle in the face of the Federal Reserve keeping interest rates at a 23-year high.

After April saw zero retail sales growth, economists expect May spending will have risen by 0.2%.

"This could ease some concerns about the strength of the consumer after the weaker than expected University of Michigan consumer confidence report for June, which fell to its lowest level since November last year," said Kathleen Brooks, analysts at XTB.

There is also a raft of talk from Fed officials on Tuesday, including the first speech as a Fed official for St. Louis Fed President Alberto Musalem. Here's a list of the potential market catalysts for the coming session.

8:30 a.m. Eastern. U.S. retail sales for May.9:15 a.m. U.S. industrial production for May.9:15 a.m. U.S. capacity utilization for May.10:00 a.m. U.S. business inventories for April.10:00 a.m. Richmond Fed President Tom Barkin podcast interview.11:40 a.m. Susan Collins, Boston Fed President gives keynote address.1:00 p.m. Treasury auctions $13 billion of 20-year bonds.1:00 p.m. Dallas Fed President Laurie Logan speaks at Headliners Club in Austin.1:00 p.m. Fed Governor Adriana Kugler talks on the economy and monetary policy.1:20 p.m. St. Louis Fed Pres. Alberto Musalem talks on the economy and monetary policy.2:00 p.m. Chicago Fed Pres. Austan Goolsbee talks on the economy and monetary policy.2:00 p.m. Congressional Budget Office releases updated fiscal year budget forecast.4:00 p.m. Treasury international capital flows for April.4:40 p.m. Susan Collins, Bank of Boston Fed Pres., takes part in Yahoo! Finance interview.

Ahead of all that, markets are pricing in a 91.7% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on July 31st, according to the CME FedWatch tool.

The chances of at least a 25 basis point rate cut by the subsequent meeting in September is priced at 61.5%, up from 52.8% a week ago.

The U.S. Treasury market will be closed on Wednesday for the Juneteenth public holiday.

Meanwhile, in France the 10-year government bond yield was little changed around 3.150% as anxiety over the country's looming election faded somewhat.

Source: MarketWatch

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Warren Takunda

Cryptocurrency

Bitcoin saw new one-month lows on June 18 as a push past $67,000 failed to sustain. Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_1

BTC/USD 1-hour chart. Source: TradingView

BTC price weakness sees $64,000 return

Data from Cointelegraph Markets Pro and TradingView captured volatile BTC price conditions returning during the prior day’s Wall Street trading session.

This produced a trip to local highs of $67,250, but momentum soon stalled as sellers took control to send Bitcoin to $64,050 hours later.

This marked the pair’s lowest level since May 15, and reacting, market observers had little by way of good news to share.

“As we can see here the bounce was led by coinbase spot primarily and some buying from bitfinex,” popular trader Skew explained in market coverage on X.

“Spot Binance spot still seeing sell pressure. I think $66K - $67K key area to gauge if there's ongoing absorption else lower prices will come with price bleeding.”

BTC/USDT order book changes on Binance. Source: Skew

Skew nonetheless reasoned that sweeping lows in the style seen in recent days was “not uncommon” behavior.

“Good sign here is spot premiums & pretty low funding,” he added, referring to current funding rates across exchanges.

Data from monitoring resource CoinGlass meanwhile showed fluctuating liquidity conditions on BTC pairs after the latest lows hit. Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_3

Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_3

BTC liquidation heatmap (screenshot). Source: CoinGlass

“Funding rates are slightly positive, showing bullish. Buy the dip,” the platform told X subscribers on the day.

Eyeing whether the price could go lower still, fellow popular trader Credible Crypto delineated what he called a “dream” zone for going long BTC beginning at around $63,500.

The chances of this becoming available to buy, however, were mixed.

“Yes, we can still technically go lower into the ‘dream long’ zone below, but as I’ve previously said it would not surprise me to see that zone front run,” part of X commentary read, telling followers to “watch for a low timeframe impulse” move. Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_4

Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_4

BTC/USD chart. Source: Credible Crypto

Bitcoin short-term holders near breakeven point

That area coincided with a key bull market support trendline now on the radar for analysts, including Checkmate, lead on-chain analyst at Glassnode.

As Cointelegraph continues to report, the short-term holder realized price (STH-RP), currently at $63,700, has traditionally buoyed BTC price action ever since the bull market began at the start of 2023.

For Checkmate, price preserving that level dictated sentiment.

“It is hard for me to be too scared of Bitcoin price action when unrealised losses look like this. It could deteriorate for sure...but it hasn’t yet,” he wrote alongside an explanatory chart. Buy the Dip? Bitcoin Price Drops to New 1-Month Lows of $64K_5