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Oil prices rise on nagging fears of fuel shortages

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Oil prices settled higher on Tuesday, as lingering fears of gasoline shortages due to an outage at the largest U.S. fuel pipeline system after a cyber attack brought futures back from an early drop of more than 1%.

Brent crude futures rose 23 cents, or 0.3%, to settle at $68.55 a barrel while U.S. West Texas Intermediate (WTI) crude futures rose 36 cents, or 0.6%, to end the session at $65.28.

Benchmark gasoline futures prices ended the session 0.3% higher at $2.1399 a gallon.

On Monday, Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said it was working to restore much of its operations by the end of the week.

“While the short-term risk is being played down, the market is still visibly shaken by the event, given the nature of the attack and the scale of the infrastructure,” said Rystad Energy’s oil markets analyst Louise Dickson.

“The market is now concerned about the likelihood of such an event being repeated and about the severity of future attacks.”

Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks.

“With little information forthcoming from the private company, the market appears to be proceeding on the assumption that normal flows will resume by the upcoming weekend and since no operational problems appear to exist, this guidance would appear correct.” said Jim Ritterbusch, president of Ritterbusch and Associates.

Traders booked at least four tankers to store refined oil products off the U.S. Gulf Coast refining hub after a cyber attack that knocked out the pipeline, shipping data showed on Tuesday.

North Carolina, the U.S. Environmental Protection Agency and Department of Transportation issued waivers allowing fuel distributors and truck drivers to take steps to try to prevent gasoline shortages.

OPEC on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India.

Meanwhile, the rapid spread of infections in India has increased calls to lock down the world’s second-most populous country and the third-largest oil importer and consumer.

India’s top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday.

On the bullish side for crude, analysts are expecting data to show U.S. inventories fell by about 2.3 million barrels in the week to May 7 after a drop of 8 million barrels the previous week, a Reuters poll showed.

Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.

 

(Additional reporting by Devika Krishna Kumar, Julia Payne and Shadia Nasralla in London; Shu Zhang and Sonali Paul; Editing by Gabriela Baczynska, David Goodman and David Gregorio)

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Toronto Stock Exchange hits record high on energy boost

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Toronto Stock Exchange

Energy shares pushed Toronto Stock Exchange index to a record high on Tuesday, as investors eyed the U.S. Federal Reserve’s meeting this week for cues on the tapering of its monetary policy.

* The energy sector climbed 1% tracking crude prices, which were buoyed by expectations that demand will recover rapidly in the second half of 2021. [O/R]

* The Fed kicks off its two-day meeting on Tuesday, and officials are faced with ongoing tension between their two main goals, as inflation rises faster than expected even with millions of Americans still unemployed.

* At 9:38 a.m. ET (1338 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 77.55 points, or 0.38%, at 20,235.2, an all-time high.

* Producer prices in Canada most likely rose 3.1% in May from April, pushed higher mainly by softwood lumber, Statistics Canada said in a preliminary flash estimate.

* The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4%.

* On the TSX, 163 issues were higher, while 61 issues declined for a 2.67-to-1 ratio favoring gainers, with 17.47 million shares traded.

* The largest percentage gainer on the TSX was BRP Inc, which jumped 4.6%, after the insurance distribution company issued a $350 million worth substantial issuer bid.

* Its gains were followed by Aritzia Inc, which rose 4.5%, after the apparel retailer acquired 75% of the athletic apparel maker Reigning Champ in deal worth $63 million

* Miners First Quantum Minerals Ltd and Hudbay Minerals Inc, fell the most on the TSX, down 4.1% and 3%, respectively.

* The most heavily traded shares by volume were Canadian Natural Resources Limited, BCE Inc and Auxly Cannabis Group Inc.

* The TSX posted 18 new 52-week highs and no new low.

* Across all Canadian issues there were 102 new 52-week highs and five new lows, with total volume of 32.21 million shares.

 

(Reporting by Amal S in Bengaluru; Editing by Amy Caren Daniel)

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Canadian dollar hits 7-week low

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Canadian dollar

The Canadian dollar weakened against its U.S. counterpart on Tuesday as investors weighed prospects of the Federal Reserve turning less dovish, with the commodity-linked currency extending its pullback from a recent six-year high.

The loonie was trading 0.4% lower at 1.2192 to the greenback, or 82.02 U.S. cents, after earlier touching its weakest level since May 6 at 1.2204. Earlier this month, it touched its strongest in six years at 1.2007.

“We’ve had such a strong move with commodity currencies and that trade has been slowly getting unwound,” said Edward Moya, a senior market analyst at OANDA in New York.

“We are starting to see a little bit more of an expectation that you are going to have a slightly less dovish Fed tomorrow and the commodity trade could continue to get undone a little bit,” Moya added.

In a new policy statement and economic projections due on Wednesday, the Fed is expected to acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program launched last year.

The program has supported global economic recovery, boosting commodity prices. Canada is a major producer of commodities, including copper and oil.

Copper fell 4%, extending its pullback from a record high in May. Oil settled 1.8% higher at $72.12 a barrel.

Canadian housing data for May was mixed. Housing starts climbed 3.2% compared with the previous month, while home sales were down for a second month after a blazing start to the year.

Canadian consumer price data is due on Wednesday, which could offer clues on the Bank of Canada policy outlook.

The Canadian 10-year yield was little changed at 1.389%. On Monday, it touched its lowest intraday level in more than three months at 1.365%.

 

(Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

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G7 nations to boost climate finance

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G7 leaders agreed on Sunday to raise their contributions to meet an overdue spending pledge of $100 billion a year by rich countries to help poorer countries cut carbon emissions and cope with global warming, but only two nations offered firm promises of more cash.

Alongside plans billed as helping speed infrastructure funding in developing countries and a shift to renewable and sustainable technology, the world’s seven largest advanced economies again pledged to meet the climate finance target.

But climate groups said the promise made in the summit’s final communique lacked detail and the developed nations should be more ambitious in their financial commitments.

In the communique, the seven nations – the United States, Britain, Canada, France, Germany, Italy and Japan – reaffirmed their commitment to “jointly mobilise $100 billion per year from public and private sources, through to 2025”.

“Towards this end, we commit to each increase and improve our overall international public climate finance contributions for this period and call on other developed countries to join and enhance their contributions to this effort.”

After the summit concluded, Canada said it would double its climate finance pledge to C$5.3 billion ($4.4 billion) over the next five years and Germany would increase its by 2 billion to 6 billion euros ($7.26 billion) a year by 2025 at the latest.

There was a clear push by leaders at the summit in southwest England to try to counter China’s increasing influence in the world, particularly among developing nations. The leaders signalled their desire to build a rival to Beijing’s multi-trillion-dollar Belt and Road initiative but the details were few and far between.

Johnson, host of the gathering in Carbis Bay, told a news conference that developed nations had to move further, faster.

“G7 countries account for 20% of global carbon emissions, and we were clear this weekend that action has to start with us,” he said as the summit concluded.

“And while it’s fantastic that every one of the G7 countries has pledged to wipe out our contributions to climate change, we need to make sure we’re achieving that as fast as we can and helping developing countries at the same time.”

PLEDGE OVERDUE

Some green groups were unimpressed with the climate pledges.

Catherine Pettengell, director at Climate Action Network, an umbrella group for advocacy organisations, said the G7 had failed to rise to the challenge of agreeing on concrete commitments on climate finance.

“We had hoped that the leaders of the world’s richest nations would come away from this week having put their money their mouth is,” she said.

Developed countries agreed at the United Nations in 2009 to together contribute $100 billion each year by 2020 in climate finance to poorer countries, many of whom are grappling with rising seas, storms and droughts made worse by climate change.

That target was not met, derailed in part by the coronavirus pandemic that also forced Britain to postpone the U.N. Climate Change Conference (COP26) until later this year.

The G7 also said 2021 should be a “turning point for our planet” and to accelerate efforts to cut greenhouse gas emissions and keep the 1.5 Celsius global warming threshold within reach.

European Commission President Ursula von der Leyen said the G7 leaders had agreed to phase out coal.

The communique seemed less clear, saying: “We have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitment.”

The also pledged to work together to tackle so-called carbon leakage – the risk that tough climate policies could cause companies to relocate to regions where they can continue to pollute cheaply.

But there were few details on how they would manage to cut emissions, with an absence of specific measures on everything from the phasing out of coal to moving to electric vehicles.

Pettengell said it was encouraging that leaders were recognising the importance of climate change but their words had to be backed up by specific action on cutting subsidies for fossil fuel development and ending investment in projects such as new oil and gas fields, as well as on climate finance.

British environmentalist David Attenborough appealed to politicians to take action.

“We know in detail what is happening to our planet, and we know many of the things we need to do during this decade,” he said in a recorded video address to the meeting.

“Tackling climate change is now as much a political and communications challenge as it is a scientific or technological one. We have the skills to address it in time, all we need is the global will to do so.”

($1 = 1.2153 Canadian dollars)

(Reporting by Elizabeth PiperAdditional reporting by William James and Kate Abnett in Brussels and Andreas Rinke in BerlinEditing by William Maclean, Raissa Kasolowsky and Frances Kerry)

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