Chevron, Workers Back Brokered Deal to End LNG Strikes — Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil gains 0.8% to $94.03 a barrel

--European natural gas rose 1.9% to EUR39.85 a megawatt hour

--Gold futures edged up 0.3% to $1,946.10 a troy ounce

--LME three-month copper futures rose 0.5% to $8,262 a metric ton

--Wheat futures gained 0.5% to $5.79 a bushel

TOP STORY:

Chevron, Workers Back Brokered Deal to End LNG Strikes

U.S. energy giant Chevron and workers at two of its large natural-gas operations have agreed on a deal recommended by Australia's workplace arbiter to end strikes affecting plants that account for roughly 7% of global liquefied-natural-gas supply.

The labor dispute at the Gorgon and Wheatstone liquefied-natural-gas facilities in Australia rattled global gas markets in recent weeks, at times jolting prices sharply higher, as representatives of Chevron and local unions struggled to find common ground. Australia rivals Qatar as the world's largest exporter of LNG.

On Thursday, a recommendation from Australia's Fair Work Commission was put to both Chevron and its workers. The U.S. oil company said later that day that it had accepted the recommendation and, on Friday morning in Australia, Offshore Alliance union representatives said workers had also endorsed it.

"The unions have advised Chevron Australia and the Fair Work Commission that industrial action has been suspended," a Chevron spokesperson said in emailed remarks on Friday. The spokesperson said the company has continued to meet its supply commitments to customers locally and globally.

OTHER STORIES:

European Battery Companies Face Uphill Battle to Meet Surging EV Demand

European battery startups are grappling with how to make less-expensive batteries at scale as they race to meet demand from an electrifying car industry, and while investors are still buying in, there is less enthusiasm than a few years ago.

Battery production capacity to meet demand from car makers, whose electrification march is fueled by European Union climate policies, simply doesn't exist yet in the EU, said Gert Meylemans, the general manager of Eurobat, an association that represents automotive and industrial battery manufacturers. Eurobat commissioned a study in 2019 that suggested battery supply would match demand by 2024. Now, the group says that parity won't even happen by 2030.

Meanwhile, the penetration of fully electric cars in the EU automotive market hit an all-time high of 20% of all new sales in August, according to the European Automobile Manufacturers' Association.

Investments in Europe's battery industry continue, but Eurobat says investor enthusiasm has been dampened by the war in Ukraine, pandemic effects, supply-chain disruptions, higher raw materials and energy prices, and a complex regulatory framework in the EU. Europe is also competing with the U.S. and its attractive subsidies for the industry through the Inflation Reduction Act, which the EU hasn't matched.

"These things have really disrupted the whole industry, in a way, both for the established players but also for the newcomers," Meylemans said.

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Weyerhaeuser Cleared on Forest-Carbon Offsets

Weyerhaeuser, the forest-products firm that is the largest private U.S. landowner, said it has gained approval from an organization that vets environmental credits to proceed with its first sale of forest-carbon offsets.

The company, which owns about 11 million acres of U.S. timberland, is set to join the ranks of forest owners that have agreed to leave trees standing and absorbing carbon dioxide from the atmosphere instead of cutting them down in exchange for payments from companies looking to offset their greenhouse-gas emissions.

MARKET TALKS:

Russia Diesel Export Ban to End Quickly, Says JPMorgan

1030 GMT - Russia's ban on diesel exports will likely only last two weeks, until the nation's harvest ends, believes JPMorgan. Domestic fuel prices have surged to record levels in September, likely spurring the move, the bank's analysts say. But fuel shortages are localized in the wheat-producing regions of Krasnodar and Rostov, causing pain for farmers who use the fuel for harvesting and sowing winter crops. Adding to that, a lack of storage facilities could mean the diesel ban will force Russian refineries to export more crude oil, something that would harm Moscow's relations with OPEC+ members, Saudi Arabia in particular, the bank says in a note. (william.horner@wsj.com)

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Palm Oil Snaps Four-Day Decline

1025 GMT - Palm oil prices rose slightly after four sessions of declines. The CPO market is under pressure amid high inventories in Malaysia and Indonesia after increased buying by importers last month, says Abdul Hameed, director of sales at Pakistan-based Manzoor Trading. Despite bearish sentiment, the market tone is expected to recover in October after holidays in China and ahead of festivals in India, he adds. The Bursa Malaysia Derivatives contract for December delivery ended MYR2 higher at MYR3,680 a ton. (jiahui.huang@wsj.com)

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European Diesel Prices Spike After Russia Bans Exports

1022 GMT - Russia's move to ban diesel exports has sent European diesel prices sharply higher. Diesel cracks jumped almost 16% to $42.62 a barrel Thursday, according to data from OPIS. Russia said the ban is temporary but gave no end date. Analysts say the ban is aimed at bringing down high diesel prices within the country. Still, it is hard to ignore the broader geopolitical tensions between the West and Russia, notes Callum Macpherson, head of commodities at Investec. Moscow's move to reduce natural-gas flows also began as temporary measures, he notes. "It might be a coincidence that this ban has been announced the day after Russia had a tough time at the UN, or it might be a broadening of the policy of using energy as a weapon." (william.horner@wsj.com)

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Oil Gains on Russian Diesel Export Ban

0804 GMT - Oil prices edge higher, paring a weekly loss, after Russia said it would ban exports of diesel. Brent crude oil gains 0.4% to $93.62 a barrel. Despite the gains, Brent is set for its first weekly loss following three weeks of consecutive increases. Fed officials' view that rates would likely stay higher for longer capped the rally, but Russia's temporary ban on diesel and gasoline exports has refocused concerns on market tightness. Russia ships around 1 million barrels a day of diesel and the ban will likely raise already elevated diesel prices, says ING. "How severe of an impact the loss of Russian diesel has on the global market will really depend on how long the export ban is in place," the bank says in a note. (william.horner@wsj.com)

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Iron Ore Prices Edge Lower Amid Divergent Signals

0303 GMT - Iron ore prices edge lower in early Asian trade as market participants continue to assess negative cues from the FOMC meeting and potential China demand. In the near term, iron ore prices could be supported by possible demand for steel during China's upcoming peak construction season, Huatai Futures analysts say in a research note. Market participants will likely keep an eye on steel industry policies and the recovery of steel scrap supply, the analysts add. The most actively traded January 2024 iron ore contract on the Dalian Commodity Exchange is down 0.2% at CNY862.5 a ton. (jiahui.huang@wsj.com)

(END) Dow Jones Newswires

September 22, 2023 08:11 ET (12:11 GMT)

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