(Bloomberg) -- Oil slid amid a surging dollar, while weak U.S. economic indicators pointed to concerns over an economic rebound.Futures in New York fell as much as 3.1% and the Bloomberg Dollar Spot Index rose 0.7%, reducing the appeal of commodities priced in the currency. U.S. consumer sentiment cooled more than forecast in January, data released Friday showed. Meanwhile, President-elect Joe Biden said he will ask Congress for $1.9 trillion to fund immediate relief for the U.S. economy that has been pummeled by the pandemic. Still, the large price tag and inclusion of initiatives opposed by many Republicans set up the aid package for a drawn out legislative battle.“The dollar strength is putting pressure on crude,” said Bob Yawger, head of the futures division at Mizuho Securities. Meanwhile, Republican opposition facing Biden’s virus aid proposal means “it may get chopped up and pushed out piecemeal, which is less than ideal. That’s been weighing on all risk assets, including oil.”Vaccine breakthroughs and a recent pledge by Saudi Arabia to deepen output cuts have driven oil 50% higher since the end of October. Commodities are showing all the signs of a structural bull market, according to Goldman Sachs Group Inc. JPMorgan Chase & Co. said a “nasty deficit” could emerge in the oil market later this year.“A bit of a pullback is just natural,” said Helge Andre Martinsen, senior oil market analyst at DNB Bank ASA. A strong dollar, a decline in equities and Brent’s recent overbought run are spurring the current drop, he said.This week has seen the annual commodity index rebalancing take place -- a move that was expected to see as much as $9 billion flow into the oil market. Since it began last Friday, there’s been a surge in so called trading-at-settlement volumes, an instrument often used by participants with index exposure. For Brent, average volumes over the last five days have reached a record.See also: Why the South China Sea Is Key to Blacklisted Oil Giant CnoocThe market’s structure has also softened. Brent’s prompt timespread briefly dipped into contango on Friday, a bearish move where nearby prices are cheaper than later ones. That compares with backwardation a week ago and indicates renewed concerns over supplies.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
France's Total SE on Friday became the first major global energy company to quit the main U.S. oil and gas lobby due to disagreements over its climate policies and support for easing drilling regulations. Total said it would not renew its 2021 membership with the American Petroleum Institute (API) following a review of the lobby's climate positions, describing them as being only "partially aligned" with Total's. Its withdrawal from the API, the most powerful U.S. oil and gas lobby, comes ahead of sweeping changes in policy direction in the United States, with incoming President Joe Biden promising to tackle climate change and bring the country to net-zero emissions by 2050.
(Bloomberg) -- China is considering accepting some stranded Australian coal cargoes, an effort that would help ease a logjam of vessels that have stacked up off its coast for months.The shipments that could be cleared are those that arrived before a ban on Australian coal went into effect, said a person familiar with the situation, who asked not to be identified as the discussions are private.Deliberations are at an initial stage and any decision would need the approval of more senior Chinese leaders, the person said. The broader prohibition on Australian coal remains in place, and ideally the cargoes would be resold to buyers in other countries, the person said.China’s customs administration didn’t immediately respond to a fax seeking comment.The opaque nature of the Australian ban, which has never been publicly acknowledged by Beijing, makes pinpointing its start date difficult. The government was rumored to have ordered its five biggest utilities to halt Australian purchases as early as May, while in October, power stations and steel mills were told to stop using Australian coal.November HaltIn November, Beijing ordered traders to halt purchases of a raft of the country’s commodities, including coal. Relations between the two trading partners have deteriorated since Huawei Technologies Co. was barred from building Australia’s 5G network in 2018.China has strengthened its safety and environmental protection checks on coal imports from Australia to defend the interests of Chinese companies, consumers and the environment, Foreign Ministry spokesman Zhao Lijian said when asked about the status of the stranded cargoes during a press briefing in Beijing on Friday. But he added that the measures weren’t aimed at any specific country or product.Why China Is Falling Out With Australia (and Allies): QuickTakeMost of the stranded coal is the type used to make steel, while a smaller portion is used for power generation, according to data intelligence firm Kpler. About 70 ships are waiting to discharge according to shipping data compiled by Bloomberg.Some shipowners and charterers are pushing for the cargo owners to allow them to divert to foreign ports to relieve an estimated 1,400 mariners who remain trapped on the ships. Humanitarian concerns have deepened as the standoff lengthens: a seafarer on the Anastasia stranded off China’s coast attempted suicide, Seatrade Maritime News reported Jan. 6.The Jag Anand vessel, which arrived to China in June, is en route to Japan to relieve its crew, according to Cargill Inc., which is the vessel’s original charterer. Some of the seafarers on the vessel have been working about 20 months without a break, according to the National Union of Seafarers of India.China has had to contend with record prices for both types of coal this winter. The worst winter freeze in decades has driven heating demand to an all-time high, and thrown the country’s energy markets into tumult. At the same time, China’s steel mills are churning out record quantities to feed a state-funded infrastructure boom to rescue the economy after the ravages of the pandemic.Coking coal for May on the Dalian Commodity Exchange pared gains to close up 3.7%, after earlier rising as much as 6%.China’s coal imports from all countries surged to record levels in December, lifting the annual total for coal above 300 million tons to its highest since 2013. In past years, Australia has been the country’s second-biggest supplier after Indonesia.China’s authorities are also surveying the stranded carriers to identify shipowners, crew nationalities, and end users of the coal, the person said.(Updates with foreign ministry spokesman comment in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.