Blog

By Paul Carsten

LONDON (Reuters) -Oil prices were steady on Monday as worries persisted around crude oversupply despite OPEC+ cuts and softer fuel demand growth next year.

Brent crude futures dipped 6 cents to $75.78 a barrel by 1427 GMT. U.S. West Texas Intermediate crude futures were down 7 cents at $71.16.

Both contracts jumped more than 2% on Friday but were down for a seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

“There is little doubt that the oil complex remains in a state of vulnerability,” oil broker PVM’s John Evans said in a note on Monday.

Despite a pledge by the OPEC+ group, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to cut 2.2 million barrels per day (bpd) of crude oil production in the first quarter, investors remain sceptical about compliance.

Output growth in non-OPEC countries is expected to lead to excess supply next year.

RBC Capital Markets expects stock draws of 700,000 bpd in the first half, but only 140,000 bpd for the full year.

“Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts,” RBC analysts said in a note.

With cuts not implemented until next month, oil faces a volatile two months before clarity from any quantifiable compliance data, the analysts said.

The latest consumer price index data from China, the world’s biggest oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the country’s economic recovery.

Chinese officials on Friday pledged to spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week investors are watching for guidance on interest rate policies from meetings at five central banks, including the U.S. Federal Reserve, as well as U.S. inflation data to assess the potential impact on the global economy and oil demand.

Recent price weakness drew demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024.

“We know the Biden Administration is in the market looking to refill the SPR, which will provide support,” IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.

Meanwhile, a draft of a potential climate deal at the COP28 summit on Monday suggested a range of options countries could take to reduce greenhouse gas emissions, but omitted the “phase out” of fossil fuels many nations have demanded.

U.N. Secretary General Antonio Guterres said a central benchmark of success for COP28 would be whether it yielded a deal to phase out coal, oil and gas use fast enough to avert disastrous climate change.

(Reporting by Paul Carsten; editing by David Evans)

By Paul Carsten

LONDON (Reuters) -Oil prices dipped on Monday as worries persisted around crude oversupply despite OPEC+ cuts and softer fuel demand growth next year.

Brent crude futures fell 43 cents to $75.41 a barrel by 1221 GMT. U.S. West Texas Intermediate crude futures were down 47 cents at $70.76.

Both contracts jumped more than 2% on Friday but were down for a seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

“There is little doubt that the oil complex remains in a state of vulnerability,” oil broker PVM’s John Evans said in a note on Monday.

Despite a pledge by the OPEC+ group, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to cut 2.2 million barrels per day (bpd) of crude oil production in the first quarter, investors remain sceptical about compliance.

Output growth in non-OPEC countries is expected to lead to excess supply next year.

RBC Capital Markets expects stock draws of 700,000 bpd in the first half, but only 140,000 bpd for the full year.

“Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts,” RBC analysts said in a note.

With cuts not implemented until next month, oil faces a volatile two months before clarity from any quantifiable compliance data, the analysts said.

The latest consumer price index data from China, the world’s biggest oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the country’s economic recovery.

Chinese officials on Friday pledged to spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week investors are watching for guidance on interest rate policies from meetings at five central banks, including the U.S. Federal Reserve, as well as U.S. inflation data to assess the potential impact on the global economy and oil demand.

Recent price weakness drew demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024.

“We know the Biden Administration is in the market looking to refill the SPR, which will provide support,” IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.

In the longer term for crude, U.N. Secretary-General Antonio Guterres on Monday said that one key to success of the COP28 climate summit was for nations to reach agreement on the need to phase out fossil fuels, though his comments met with resistance from OPEC.

(Reporting by Paul Carsten in London and Mohi Narayan and Florence TanEditing by David Goodman)

By Paul Carsten

LONDON (Reuters) -Oil prices held steady on Monday as U.S. efforts to replenish strategic reserves provided support, though concerns persist about oversupply and softer fuel demand growth next year.

Brent crude futures edged up 2 cents to $75.86 a barrel by 0913 GMT. U.S. West Texas Intermediate crude futures were up a single cent at $71.22.

Both contracts jumped more than 2% on Friday but were down for a seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

The recent price weakness drew demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024.

“We know the Biden Administration is in the market looking to refill the SPR, which will provide support,” IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.

Despite the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, having pledged to cut 2.2 million barrels per day (bpd) of production in the first quarter, investors remain sceptical about compliance. Output growth in non-OPEC countries is expected to lead to excess supply next year.

RBC Capital Markets expects stock draws of 700,000 bpd in the first half, but only 140,000 bpd for the full year.

“Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts,” RBC analysts said in a note.

With cuts not implemented until next month, oil faces a volatile two months before clarity from any quantifiable compliance data, the analysts said.

The latest consumer price index data from China, the world’s biggest oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the country’s economic recovery.

Chinese officials on Friday pledged to spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week investors are watching for guidance on interest rate policies from meetings at five central banks, including the U.S. Federal Reserve, as well as U.S. inflation data for their impact on the global economy and oil demand.

In the longer term for crude, U.N. Secretary-General Antonio Guterres on Monday said that one key to success of the COP28 climate summit was for nations to reach agreement on the need to phase out fossil fuels, albeit with countries possibly moving at different rates.

(Reporting by Paul Carsten in London and Mohi Narayan and Florence TanEditing by David Goodman)

(Reuters) -Rapid advances in artificial intelligence (AI) such as Microsoft-backed OpenAI’s ChatGPT are complicating governments’ efforts to agree laws governing the use of the technology.

Here are the latest steps national and international governing bodies are taking to regulate AI tools:

AUSTRALIA

* Planning regulations

Australia will make search engines draft new codes to prevent the sharing of child sexual abuse material created by AI and the production of deepfake versions of the same material.

BRITAIN

* Planning regulations

Leading AI developers agreed on Nov. 2, at the first global AI Safety Summit in Britain, to work with governments to test new frontier models before they are released to help manage the risks of the developing technology.

More than 25 countries present at the summit, including the U.S. and China, as well as the EU, on Nov. 1 signed a “Bletchley Declaration” to work together and establish a common approach on oversight.

Britain said at the summit it would triple to 300 million pounds ($364 million) its funding for the “AI Research Resource”, comprising two supercomputers which will support research into making advanced AI models safe, a week after Prime Minister Rishi Sunak had said Britain would set up the world’s first AI safety institute.

Britain’s data watchdog said in October it had issued Snap Inc’s Snapchat with a preliminary enforcement notice over a possible failure to properly assess the privacy risks of its generative AI chatbot to users, particularly children.

CHINA

* Implemented temporary regulations

Wu Zhaohui, China’s vice minister of science and technology, told the opening session of the AI Safety Summit in Britain on Nov. 1 that Beijing was ready to increase collaboration on AI safety to help build an international “governance framework”.

China published proposed security requirements for firms offering services powered by generative AI in October, including a blacklist of sources that cannot be used to train AI models.

The country issued a set of temporary measures in August, requiring service providers to submit security assessments and receive clearance before releasing mass-market AI products.

EUROPEAN UNION

* Planning regulations

EU lawmakers and governments reached on Dec. 8 a provisional deal on landmark rules governing the use of AI, including governments’ use of AI in biometric surveillance and how to regulate AI systems such as ChatGPT.

The accord requires foundation models and general purpose AI systems to comply with transparency obligations before they are put on the market. These include drawing up technical documentation, complying with EU copyright law and disseminating detailed summaries about the content used for training.

FRANCE

* Investigating possible breaches

France’s privacy watchdog said in April it was investigating complaints about ChatGPT.

G7

* Seeking input on regulations

The G7 countries agreed on Oct. 30 to an 11-point code of conduct for firms developing advanced AI systems, which “aims to promote safe, secure, and trustworthy AI worldwide”.

ITALY

* Investigating possible breaches

Italy’s data protection authority plans to review AI platforms and hire experts in the field, a top official said in May. ChatGPT was temporarily banned in Italy in March, but it was made available again in April.

JAPAN

* Planning regulations

Japan expects to introduce by the end of 2023 regulations that are likely closer to the U.S. attitude than the stringent ones planned in the EU, an official close to deliberations said in July.

The country’s privacy watchdog has warned OpenAI not to collect sensitive data without people’s permission.

POLAND

* Investigating possible breaches

Poland’s Personal Data Protection Office said in September it was investigating OpenAI over a complaint that ChatGPT breaks EU data protection laws.

SPAIN

* Investigating possible breaches

Spain’s data protection agency in April launched a preliminary investigation into potential data breaches by ChatGPT.

UNITED NATIONS

* Planning regulations

The U.N. Secretary-General António Guterres on Oct. 26 announced the creation of a 39-member advisory body, composed of tech company executives, government officials and academics, to address issues in the international governance of AI.

UNITED STATES

* Seeking input on regulations

The U.S., Britain and more than a dozen other countries on Nov. 27 unveiled a 20-page non-binding agreement carrying general recommendations on AI such as monitoring systems for abuse, protecting data from tampering and vetting software suppliers.

The U.S. will launch an AI safety institute to evaluate known and emerging risks of so-called “frontier” AI models, Secretary of Commerce Gina Raimondo said on Nov. 1 during the AI Safety Summit in Britain.

President Joe Biden issued an executive order on Oct. 30 to require developers of AI systems that pose risks to U.S. national security, the economy, public health or safety to share the results of safety tests with the government.

The U.S. Federal Trade Commission opened an investigation into OpenAI in July on claims that it has run afoul of consumer protection laws.

(Compiled by Alessandro Parodi and Amir Orusov in Gdansk; Editing by Milla Nissi and Emelia Sithole-Matarise)

By Abigail Summerville

(Reuters) -An investor group consisting of Arkhouse Management and Brigade Capital has made a $5.8 billion offer to take department store chain Macy’s private, according to a person familiar with the matter on Sunday.

Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, submitted a proposal to acquire the Macy’s stock they don’t already own for $21 a share on Dec. 1, the person said. The Wall Street Journal reported the offer earlier Sunday afternoon.

The offer for the Bloomingdale’s parent is a 20.76% premium from its closing at $17.39 on Friday.

The group already has a big stake in Macy’s through Arkhouse-managed funds and has discussed the proposal with the department store chain, whose board subsequently met to discuss the offer. It isn’t clear how the retailer views the proposal, the person familiar with the matter said.

Arkhouse and Brigade believe Macy’s is undervalued in the public markets and have indicated a willingness to raise the offer subject to due diligence, the WSJ report said, adding that an investment bank has provided a letter supporting the group’s ability to raise the necessary financing to get through the deal.

Macy’s declined to comment, while Arkhouse and Brigade did not respond to a Reuters request for comment.

The retailer crushed analysts’ estimates for quarterly profit on lower inventories and strong demand for beauty products in November, signaling that attempts to trim inventory from 2022 highs were finally working ahead of the all-important holiday shopping season.

Macy’s has a market capitalization of about $4.77 billion and its shares are down nearly 15.79% this year.

It’s unclear whether Arkhouse and Brigade have the resources to execute on a deal of such a size, given that they have not previoulsy done anything of this magnitude.

A $2.4 billion bid that a group of investors led by Arkhouse submitted two years ago for real estate investment trust Columbia Property Trust was unsuccessful. Pimco subsequently acquired Columbia Property for $3.9 billion.

(Reporting by Abigail Summerville in New York; Additional reporting by Juby Babu in Bengaluru; Editing by Diane Craft and Lisa Shumaker)

By Florence Tan

SINGAPORE (Reuters) – Oil prices inched higher on Monday, extending gains for a second session as U.S. efforts to replenish strategic reserves provided some support, although concerns of crude oversupply and softer fuel demand growth next year lingered.

Brent crude futures rose 11 cents, or 0.2%, to $75.95 a barrel by 0119 GMT, while U.S. West Texas Intermediate crude futures were at $71.30 a barrel, up 7 cents, or 0.1%.

Both contracts jumped more than 2% on Friday but fell for the seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

The recent price weakness drew demand from the U.S., which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) for delivery in March 2024.

“We know the Biden Administration is in the market looking to refill the SPR, which will provide support,” IG analyst Tony Sycamore said in a note, adding that prices are also being supported by technical chart indicators.

Despite the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, having pledged to cut 2.2 million barrels per day (bpd) in the first quarter, investors remain sceptical supply will drop, with output growth in non-OPEC countries seen leading to excess supply next year.

RBC Capital expects stock draws of 700,000 bpd in the first half but only 140,000 bpd for the full year.

Latest consumer price index data from China, the world’s top oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the economic recovery.

Chinese officials pledged on Friday they would spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week, investors are watching out for guidance on interest rate policies from meetings at five central banks, including the Federal Reserve, and data on U.S. inflation, for their impact on the global economy and oil demand.

(Reporting by Florence Tan; Editing by Sonali Paul)

By Abigail Summerville

(Reuters) -An investor group consisting of Arkhouse Management and Brigade Capital has made a $5.8 billion offer to take department store chain Macy’s private, according to a person familiar with the matter on Sunday.

Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, submitted a proposal to acquire the Macy’s stock they don’t already own for $21 a share on Dec. 1, the person said. The Wall Street Journal reported the offer earlier Sunday afternoon.

The offer for the Bloomingdale’s parent is a 20.76% premium from its closing at $17.39 on Friday.

The group already has a big stake in Macy’s through Arkhouse-managed funds and has discussed the proposal with the department store chain, whose board subsequently met to discuss the offer. It isn’t clear how the retailer views the proposal, the person familiar with the matter said.

Arkhouse and Brigade believe Macy’s is undervalued in the public markets and have indicated a willingness to raise the offer subject to due diligence, the WSJ report said, adding that an investment bank has provided a letter supporting the group’s ability to raise the necessary financing to get through the deal.

Macy’s declined to comment, while Arkhouse and Brigade did not respond to a Reuters request for comment.

The retailer crushed analysts’ estimates for quarterly profit on lower inventories and strong demand for beauty products in November, signaling that attempts to trim inventory from 2022 highs were finally working ahead of the all-important holiday shopping season.

Macy’s has a market capitalization of about $4.77 billion and its shares are down nearly 15.79% this year.

It’s unclear whether Arkhouse and Brigade have the resources to execute on a deal of such a size, given that they have not previoulsy done anything of this magnitude.

A $2.4 billion bid that a group of investors led by Arkhouse submitted two years ago for real estate investment trust Columbia Property Trust was unsuccessful. Pimco subsequently acquired Columbia Property for $3.9 billion.

(Reporting by Abigail Summerville in New York; Additional reporting by Juby Babu in Bengaluru; Editing by Diane Craft and Lisa Shumaker)

WASHINGTON (Reuters) – Microsoft said in a statement on Friday that it does not own any part of OpenAI, an artificial intelligence powerhouse.

“While details of our agreement remain confidential, it is important to note that Microsoft does not own any portion of OpenAI and is simply entitled to share of profit distributions,” said company spokesman Frank Shaw.

(Reporting by Diane Bartz)

A look at the day ahead in U.S. and global markets from Mike Dolan

With investors trying to read recessionary warnings from softening U.S. labor market signals all week, the outsize importance of the November payrolls report to next week’s Federal Reserve meeting has frozen frenetic markets in advance.

It’s hard to imagine the numerous employment soundings this week showing a loosening of the labor market will be contradicted by the overall employment report. However, the extent of markets’ rate cut euphoria means it will all be a matter of degrees.

The standing consensus forecasts are for a 180,000 rise in non-farm payrolls last month, an unchanged jobless rate at 3.9% and a cooling of annual wage growth to 4.0%.

But this week’s private sector jobs report for the same month was below forecast, weekly jobless crept higher, layoffs are rising sharply, job openings fell faster than expected for October and employment costs were revised down.

But a curious twist this month centres the closely-watched ‘Sahm rule’ threshold, that has historically shown recession is underway when the three-month rolling average unemployment rate rises half a point above the low of the prior 12 months.

Developed by Fed economist Claudia Sahm before the pandemic as a potential rule of thumb for triggering benefit payments – the gauge hit 0.33% last time out for the first time since March 2021 and could sound the alarm if November’s jobless rate tops 4%.

An added complication reading the report is the ending of the autoworkers and actors’ strikes that have distorted jobless readings somewhat.

About 25,300 members of the United Auto Workers union ended their strikes against Detroit’s “Big Three” car makers on Oct. 31, which had depressed manufacturing payrolls that month. Payrolls also likely got a lift from 16,000 members of the SAG-AFTRA actors union going back to work.

All of which has markets consolidate the week’s strong bond and stock gains on Friday, driven largely by headlong market bets on Fed easing next year. Fed futures now see more than a 50% chance of the first Fed rate cut in the cycle coming by March, two quarter point cuts by June and 125 bps of easing by the end of next year.

While two-year Treasury yields have been a bit more reserved this week, 10-year yields tested 4.1% for the first time since June – before backing up about 7 bps today ahead of the jobs report. But the big swings in Treasuries have spurred volatility gauges to the highest since October.

Wall St stock futures were steady before the bell after a strong rally on Thursday led by tech stocks and a 5% surge in Alphabet after it said its new artificial intelligence model could help narrow the gap in a race with Microsoft-backed OpenAI.

The dollar perked up a bit on Friday too, even against the electrified Japanese yen – which soared almost 4% at one point on Thursday on a sudden bout of speculation that the Bank of Japan could tighten monetary policy again as soon as this month.

However, that chatter was dampened by a sharp downward revision to Japanese economic growth data for the third quarter.

Japan’s economy contracted 2.9% – faster than the 2.1% drop first estimated as the household sector faced growing headwinds and complicating the central bank’s efforts to phase out its super easy monetary policy.

Dollar/yen pushed back above 144, having hit a low of 141.70 at one point on Thursday. Tokyo’s benchmark Nikkei underperformed largely firmer world stocks and lost more than 1% on Friday.

The waning U.S. crude oil price – now down 27% since the peaks of September and encouraging disinflation and rate cut hopes – steadied and tried to get a toehold back above $70 per barrel.

Key developments that should provide more direction to U.S. markets later on Friday:

* U.S. November employment report, University of Michigan Dec consumer sentiment and inflation expectations survey

* ECOFIN EU finance ministers meet on blocs fiscal rules, attended by European Central Bank board member Luis de Guindos

* U.S. corporate earnings: Hello Group, Johnson Outdoors, HashiCorp

(By Mike Dolan; Editing by Toby Chopra)

By Noel Randewich and Shristi Achar A

(Reuters) – The Nasdaq ended sharply higher on Thursday after Alphabet and Advanced Micro Devices sparked a megacap rally on fresh optimism about artificial intelligence.

Shares of Alphabet jumped 5.3% as analysts cheered the launch of the Google-parent’s newest AI model, while AMD soared nearly 10% after the company estimated the potential market for its data center AI chips could reach $45 billion this year.

Other heavyweight tech-related stocks also gained, with Nvidia and Meta Platforms rising over 2%, Amazon up 1.6% and Apple 1% higher.

The Philadelphia semiconductor index jumped 2.8%, increasing its 2023 gain to 48%, much of that fueled by bets about the future of AI.

“Today it’s an AMD-Google rally. There’s a contagion effect across the market. Everyone wants to get on the bandwagon,” said Jay Hatfield, CEO of Infrastructure Capital Management in New York.

“We’re kind of in this weird market, a tag-team market, where one day tech leads, and then the next day value and the broad market lead.”

The S&P 500 has steadily climbed since the end of October on expectations the Federal Reserve has finished its campaign of interest rate hikes and that it could begin cutting rates in March.

The S&P 500 climbed 0.80% to end the session at 4,585.59 points, with 1.8 stocks in the index gaining for each one that fell.

The most traded stock in the S&P 500 was Tesla, with $25.7 billion worth of shares changing hands during the session. The shares rose 1.37%.

The Nasdaq Composite jumped 1.37% to 14,339.99 points, while Dow Jones Industrial Average rose 0.18% to 36,117.57 points.

Volume on U.S. exchanges was relatively heavy, with 11.2 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.

Traders have almost fully priced in the likelihood of the Fed keeping rates unchanged at its meeting next week.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased less than expected last week to a seasonally adjusted 220,000 for the week.

A Labor Department jobs report due on Friday could hint at how quickly the U.S. economy is softening and may sway expectations about when the Fed is likely to begin cutting rates. Non-farm payrolls are expected to have increased by 180,000 jobs last month after rising by 150,000 in October.

Interest rate futures imply a nearly 64% chance of a rate cut as soon as March, according to the CME Group’s FedWatch tool.

Limiting gains in the Dow, shares of Merck fell 1.7% after the drugmaker’s immunotherapy combination failed in a lung cancer study.

(Reporting by Amruta Khandekar and Shristi Achar A in Bangalore and by Noel Randewich in Oakland, Calif.; Editing by Saumyadeb Chakrabarty, Anil D’Silva and Richard Chang)