US economic growth slows to 1.6pc in 1Q
The US economy in the first quarter grew at a 1.6pc annual pace, slower than expected, while a key measure of inflation accelerated.
Growth in gross domestic product (GDP) slowed from a 3.4pc annual rate in the fourth quarter, the Bureau of Economic Analysis (BEA) reported on Thursday. The first-quarter growth number, the first of three estimates for the period, compares with analyst forecasts of about a 2.5pc gain.
Personal consumption slowed to a 2.5pc annual rate in the first quarter from a 3.3pc pace in the fourth quarter, partly reflecting lower spending on motor vehicles and gasoline and other energy goods. Gross private domestic investment rose by 3.2pc, with residential spending up 13.9pc after a 2.8pc expansion in the fourth quarter. Government spending growth slowed to 1.2pc from 4.6pc. Private inventories fell and imports rose, weighing on growth.
The core personal consumption expenditures (PCE) price index, which the Federal Reserve closely follows, rose by 3.7pc following 2pc annual growth in the fourth quarter, although consultancy Pantheon Macroeconomics said revisions to the data should pull the index lower in coming months.
The Federal Reserve is widely expected to begin cutting its target lending rate in September following sharp increases in 2022 and early 2023 to fight inflation that surged to a high of 9.1pc in June 2022.
By Bob Willis
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Nigeria offers 12 oil blocks in 2024 licensing round
Nigeria offers 12 oil blocks in 2024 licensing round
Lagos, 10 May (Argus) — Nigeria has offered 12 oil blocks in a new licensing round. It plans to complete it in tandem with a previous round for seven blocks that stalled following last year's change in government. The 12 blocks in the new round were carefully selected to attract international investors with financial resources and technical expertise and are spread across three geological terrains, upstream regulator NUPRC's chief executive Gbenga Komolafe said. Norwegian geophysical services company PGS, which is providing seismic data support for the licensing round, said two of the blocks on offer are onshore in the Niger delta, six are on the continental shelf and the other four are in deep water. The round will span nine months and conclude with ministerial consent and contracting in January 2025. Entry fees will be competitive as part of government measures to support the commercial viability of investments, according to Komolafe. "The era of front-loaded, huge signature bonuses is over," he said. Nigeria's oil minister Heineken Lokpobiri echoed Komolafe's point about minimal barriers to entry but noted that the round is designed to bind successful bidders to strict timelines, suiting investors that are "able to do exploration almost immediately". Lokpobiri also revealed that Nigeria plans to award licences for seven offshore blocks offered in a 2022 licensing round in tandem with the 2024 round. "The 19 oil blocks presented for bidding are strictly reserved for capable investors," he said. The round for the seven offshore blocks started in December 2022 and had been scheduled to be completed in May 2023. NUPRC said in April last year that the schedule had been pushed back to July because of concerns about concluding "the bid process before transition to the new government". President Bola Tinubu's administration took office on 29 May last year but progress on the 2022 licensing round stalled. Tinubu has set a target to raise Nigeria's crude production to 2.6mn b/d by 2027. The country's current target under the Opec+ agreement is just 1.5mn b/d. Nigeria started an international roadshow for the new licensing round in the US on 7 May in Houston, Texas, and the next stop is scheduled for Miami, Florida on 14 May. By Adebiyi Olusolape Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Korea's Kogas seeks short-term, long-term LNG from 2025
Korea's Kogas seeks short-term, long-term LNG from 2025
Singapore, 10 May (Argus) — South Korea's major importer Kogas is seeking short-term and long-term LNG through two separate tenders. The firm is seeking at least 700,000 t/yr of LNG for delivery over 2025-27, through a tender that will close on 3 June. Offers can be linked to a northeast Asian spot LNG price, Brent or Henry Hub. Kogas is also separately seeking 700,000 t/yr, 1.4mn t/yr or 2.1mn t/yr of LNG over a duration of 7-15 years, starting from 2027 or 2028. The firm is seeking offers on a fob or des basis, although it has specified a minimum vessel size of 135,000m³ for fob offers. Offers can be linked to either Brent or Henry Hub, and the deadline for submission is at 12am Korea time (3pm GMT) on 10 June. The firm's latest long-term requirement comes on the heels of another long-term agreement that it signed with BP just last month, for up to 9.8mn t of LNG over 11 years from mid-2026. This also comes after South Korea's trade, industry and energy ministry (Motie) announced on 2 May that Kogas will continue to seek new term import contracts for the super-chilled fuel, to stabilise prices and meet higher domestic gas demand. The renewed focus on securing term supply has come at an interesting time with spot LNG prices in a downward trend since late last year, right in the middle of the winter season when prices typically peak. The front half-month of the ANEA — the Argus assessment for spot LNG deliveries to northeast Asia — was last assessed at $10.165/mn Btu on 10 May, a drop of 40pc since prices peaked on 23 October 2023. More LNG importers are also seeking term volumes over 2025-27, which is widely deemed to be a period during which LNG supply could be tighter as it is just before the new US liquefaction capacity fully hits the market. Higher nuclear availability in South Korea over the upcoming northern hemisphere summer season could weigh on LNG demand over the season. The country may also further trim its LNG use in the years to come, as it increases its reliance on nuclear power generation. By Rou Urn Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Tata Steel UK unions vote to strike
Tata Steel UK unions vote to strike
London, 9 May (Argus) — Workers at Tata Steel's Port Talbot plant in south Wales have voted to strike in response to the company's plan to stop iron-making and cut thousands of jobs. Over 3,000 members of Community Union have been balloted, with more than 85pc in favour of industrial action — this is despite the company threatening to withdraw its proposed support package in the event of strikes. "It should be noted this resounding mandate has been delivered in spite of the company's bullying and unacceptable threats to slash redundancy payments," Alun Davies, Community's national officer for steel, said. He urged Tata to "get back around the table" to prevent a major industrial dispute. Workers at Unite the union have already voted in favour of strike action, which is set for 30 May. Unions — and the Syndex consultancy that has represented them in talks with Tata — have called the company's agreement with the government a "bad deal". They have requested more financial support to help Tata with decarbonisation, and for a blast furnace to be maintained. The government is giving Tata £166/t towards its decarbonisation — less than many European competitors receive from their governments. The low level of state support played into Tata's decision to move to one large electric-arc furnace, which has been roundly criticised by unions. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US delays return of SPR crude until 2026
US delays return of SPR crude until 2026
Washington, 9 May (Argus) — President Joe Biden's administration has delayed by up to two years a requirement for oil companies and traders to return about 15.3mn bl of crude that have been loaned out from the US Strategic Petroleum Reserve (SPR). Oil companies and traders were initially scheduled to return up to 19mn bl of crude to the SPR from June-September and to return up to 8mn bl of additional crude over the following year. The US Department of Energy (DOE) loaned out most of that crude in 2022 because of supply shortages related to the war in Ukraine and a temporary shutdown of the Keystone pipeline. DOE had loaned the crude using a mechanism called an "exchange," under which companies agree to return the crude to the SPR at a later date, along with an in-kind payment in exchange for the loan. But over the last two months, DOE has modified at least nine contracts with ExxonMobil, Shell and other companies that had borrowed the crude, delaying the return of about 15.3mn bl of the borrowed crude to the SPR until 2026, according to contract modifications Argus Media obtained after filing a request under the Freedom of Information Act. DOE said it delayed the return of the exchange crude in support of a separate SPR program, where it has directly purchased more than 27mn bl of crude that will be added the SPR's Big Hill storage site in Texas. That purchase program will inject about 3mn bl/month to the SPR through the first nine months of this year, and DOE last week restarted efforts to buy more crude for the SPR for delivery starting in October. "These actions strategically moved back exchange returns to take advantage of stable crude oil market windows to directly purchase oil at a good price for taxpayers, while having consistently available capacity to drawdown in the event of an emergency," DOE said. The nine contract modifications were signed between 26 March and 16 April, at a time when Nymex WTI spot prices briefly surged past $80/bl, to the highest price in more than five months. Delaying the return of the exchanges will effectively free up crude that would otherwise have been injected into the SPR in June-September, during the peak of the summer driving season. Nearly all of the revised contracts will delay the return of "all remaining exchange oil" until July-October 2026. Republicans have repeatedly attacked the administration's management of the SPR, which they argue is dangerously low after Biden ordered the emergency sale of 180mn bl of crude from the reserve in 2022 in response to the war in Ukraine. Republicans have pushed the administration to prioritize refilling the SPR, which is at about half of its design capacity with 367.2mn bl of crude, given the value the reserve could have in mitigating supply shortages. US energy secretary Jennifer Granholm, in congressional testimony in March, said the administration was carrying out a plan to refill the SPR to "essentially where we would have been" if the emergency sales had never happened. DOE has already been able to cancel 140mn bl of congressionally mandated SPR sales and lined up the purchases of more than 30mn bl of crude. DOE also has said it "accelerated" the return of 4mn bl of crude exchanges. By Chris Knight SPR crude injections from exchanges mn bl Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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