U.S. crude inventories fall more than expected in week -EIA

U.S. crude stocks fell more than expected last week even as refineries cut output, government data showed on Wednesday, but a build of 5 million barrels in combined inventories of gasoline and distillates raised questions about demand.

Crude inventories fell 4 million barrels in the last week, data from the Energy Information Administration showed. Analysts had expected a decrease of just 2.8 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell 1.5 million barrels, EIA said.

The weekly refinery utilization rate held steady at 93.8 percent, EIA data showed.

U.S. gasoline demand over the past four weeks fell 1 percent to 9 million barrels.

"Refiners are still refining oil like crazy, especially in the Midwest," said Phil Flynn, analyst at the Price Futures Group in Chicago. "What seems to be taking away a little of the bullish momentum is that we saw a build in gasoline supply and distillate."

Refinery crude runs fell by 28,000 barrels per day, EIA data showed.

Gasoline stocks rose by 3.4 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3-million-barrel gain.

Distillate stockpiles , which include diesel and heating oil, rose by 1.64 million barrels, versus expectations for a 2.1-million-barrel increase, the EIA data showed.

U.S. crude rose after the data, and was up 82 cents a barrel at $103.21 by 11:30 a.m. EDT (1530 GMT).

"The crude draw bought a little buying, but when you keep utilization up at these high levels, you keep piling fuel into the storage tanks and that’s not a strong sign for demand," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Source: Reuters

Facebook's unintentional success speaks for itself

 Facebook's unintentional success pretty much speaks for itself. Founder Mark Zuckerberg stated unequivocally in February 2012 when the social network set out its plan to go public that he had embarked on a social mission from his Harvard dorm room, not to create a company. That probably explains his understated response to the impressive second-quarter results. Some $190 billion of market value later, though, it's clear Facebook's significance lies squarely in the commercial realm.

"We had a good quarter," was the laconic quote from Zuckerberg that accompanied the latest results on Wednesday. Active users grew to equal the size of China's population and Facebook is wringing ever more advertising dollars from each of them. Revenue grew 61 percent from a year ago, to $2.9 billion. And even though the company is spending more, its operating margin is steadily rising. It reached an enviable 48 percent in the quarter. Earnings more than doubled. Hefty investment in Instagram, WhatsApp, video advertising and other services should set the stage for further lucre.

While Facebook's prosperity is unquestionable, its services are also being used more and more on a practically begrudging basis. Complaints about algorithms that suppress status updates, enlisting users unwittingly to be guinea pigs in a social experiment, and the growing number and poor quality of ads fill the namesake site. Privacy matters remain an ongoing concern as do demographic questions.

Zuckerberg's goal of changing how people relate to each other, government and social institutions, as he put it in his letter in the initial public offering documents, seems increasingly out of reach. He can shrug off the capitalist success all he likes, but it may turn out to be his crowning if accidental achievement.
Source: Reuters

China July factory activity at 18-month high on new orders

China's factory activity expanded at its fastest pace in 18 months in July as new orders surged, a preliminary HSBC survey showed on Thursday, the latest indication that the economy is picking up as government stimulus measures kick in.

The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 52.0 in July from June's final reading of 50.7, beating a forecast of 51.0 in a Reuters poll.

It was the highest reading since January 2013, and above the 50-point level that separates growth in activity from contraction for the second consecutive month.

"Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through," said Qu Hongbin, chief economist for China at HSBC.

"We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery."

Mainland China stocks <.CSI300> jumped after the PMI report while shares in the rest of Asia edged higher. The Australian dollar hit a three-week high on prospects of stronger exports to China.

A breakdown of the survey showed most of 11 sub-indices that measure output, domestic and foreign demand improved substantially from June.

A sub-index measuring new orders, a gauge of demand at home and abroad, hit a 18-month high of 53.7, while the sub-index for output also rose to a 16-month high in June.

The employment index also improved from May, though it was still a shade under 50, which implies that jobs are still being lost in the manufacturing sector.

Any marked weakening in the labour market would raise alarm bells for China's government, which regards healthy employment levels as a top policy priority and an important condition for social stability.

Premier Li Keqiang said last week that economic growth of slightly more or less than 7.5 percent this year would be acceptable as long it still led to new jobs and higher wages.

China's economy grew slightly faster than expected in the second quarter as the burst of official stimulus paid dividends, but some analysts say the recovery appears largely dependent on government assistance.

Economists believe Beijing will likely need to offer further support to meet its growth target of around 7.5 percent for the full year, particularly if the already cooling property market begins to deteriorate more sharply.

Since April, China has steadily loosened policy by reducing the amount of cash that some banks have to hold as reserves, instructing regional governments to quicken their spending, and hastening the construction of railways and public housing.
Source:Reuters

Alibaba, lenders team up for SME financing

Alibaba Group Holding Ltd teamed up with seven banks on Tuesday, jointly offering loans of up to 10 million yuan ($1.6 million) to China's small and medium-sized enterprises as the e-commerce conglomerate looks to further build a credit rating system based on online transaction histories.

The cooperation involves Bank of China Ltd, China Construction Bank Corp, Ping An Bank Co Ltd, China Merchants Bank Co Ltd, Bank of Shanghai Co Ltd, Postal Savings Bank of China Co Ltd and Industrial Bank Co Ltd.

According to the Hangzhou-based e-commerce giant, companies that had export transactions of more than $100,000 through Alibaba's online platforms over the past six months can apply for such loans. They can get 1 yuan worth of bank credit for every $1 in exports.

The online transaction record is the only thing required for the loan.

Wu Minzhi, vice-president of Alibaba Group, said that about 89 percent of SMEs in China find it difficult to get loans because they can not satisfy banks' requirements.

"As an e-commerce company with lots of transaction data on our platforms, we want to make it easy for all of the export-focused companies to do business," Wu said.

By narrowing the credit gap between SMEs and banks, Alibaba is looking at the bigger picture of building an environment based on big data that can facilitate every aspect of trade, from information to data and logistics, he said.

Wei Qiang, general manager of Shenzhen One Touch Business Services Co Ltd, Alibaba's export service subsidiary, said that more than half of the export-focused companies are expected to move their brick-and-mortar trade business to online platforms in the next 10 years.

"That will create a trade service market that is estimated to be as big as 10 trillion yuan," he said.

As they cope with rising production costs in China, many Chinese exporters are keen to get financing services. He Guodong, manger of Shenzhen Xingjisheng Electronics Co Ltd, said he secured a loan of 5 million yuan from China Construction Bank through the financing service offered by Alibaba.

"My company had an export volume of 260 million yuan in 2013. In the past, banks rarely lent to us, because they didn't trust the financial data we offered," he said. He said transaction records provided by Alibaba are very convincing, as it acts as the third party for such transactions.

Li Ye, an analyst at the Internet consultancy Analysys International, said traditional banks can actually benefit from the financing service provided by Alibaba.

"The costs for banks to do due diligence in order to grant loans to SMEs are very high. There are so many SMEs and the amounts they want to borrow aren't much compared with big enterprises. So big data can be used as an important way for banks to control credit risks without making heavy investments," she said.

Source: China Daily

Corn, wheat and soybeans bounce following heavy falls

U.S. corn rose on Wednesday, bouncing off a new contract low hit on prospects of bumper U.S. crops, while wheat rallied after dropping to its lowest in more than a week.

Soybeans moved up, snapping four sessions of decline on expectations that buyers would emerge after the soy market plunged to a contract low on Tuesday.

Chicago Board Of Trade December corn rose 0.1 percent to $3.68-3/4 a bushel at 1029 GMT, bouncing from a contract low of $3.67-1/4 a bushel hit earlier on Wednesday.

Front-month September wheat rose 0.1 percent to $5.25 a bushel after earlier hitting $5.20-1/4, its lowest since July 14. November soybeans rose 0.2 percent to $10.60-1/4 a bushel, after sliding 1.3 percent on Tuesday to hit a contract low of $10.57 a bushel.

"I think the markets are starting to look a little oversold especially when you look at the chart RSIs (relative strength indexes) which could be generating some bottom-level buying to pick the markets up from these extremely low levels," said Ole Hansen, head of commodity strategy at Saxo Bank.

"But fundamentally I do not see any changes to the positive harvest outlooks, especially in the United States, so it may be that the bounce is short-lived."

Grains have been hammered by expectations of excellent U.S. crops this week.

The U.S. Department of Agriculture (USDA) on Monday rated 76 percent of the U.S. corn crop in good to excellent condition, the highest ratings for this time of year in a decade.  Some analysts expect a U.S. national corn yield of 170 bushels per acre, above the USDA's current forecast for a record high 165.3 bushels per acre.

The USDA rated 73 percent of the U.S. soybean crop good to excellent, up 1 percentage point from last week and the highest rating at this time since 1994.

Bearish news for wheat came as big spring wheat yields were projected in southern North Dakota as abundant soil moisture and cool weather helped foster crop development, scouts on an annual crop tour found.

But expectations low prices could tempt more buyers into the market supported soybeans and wheat.

The USDA on Monday reported hefty sales of 120,000 tonnes of U.S. soybeans to China for delivery in the 2013/14 marketing year ending on Aug. 31.

Traders are expecting U.S. wheat to win some business as it has become competitive in the global market after losing about a quarter of its value since the beginning of May.

"We think Chicago wheat is undervalued relative to a lot of other origins," a Melbourne-based analyst said. "We think soft red winter wheat has potential to win some of the tender business at these levels." Grains prices at 1029 GMT

Thai sugar prices flip to discount on rising Brazilian supply -traders

Thai sugar prices flipped to a discount this week versus premiums earlier this month, as rising supply from a rapidly progressing cane crush in top producer Brazil eroded demand for the sweetener from the Southeast Asian country, traders said.

Dealers noted a big lineup of sugar vessels at Brazilian ports in June and July for Asian destinations, notably to China and India, while queues in Thailand were thin.
Thai 2013/14 raw sugar for prompt shipment was traded at 10 points below New York October raw sugar futures this week, the traders said on Wednesday, compared with offers of 10-20 points premium seen earlier this month.

At this level, sugar from the world's No.2 exporter was still more expensive than supplies from Brazil, they said.

"In fact, buyers bid as low as 50 points below New York prices, but (Thai) sellers were reluctant to sell at that low," a trader from an international trading firm said on the sidelines of an industry conference in Bangkok.

A surplus from the current 2013/14 crop is dragging on the global sugar market. New York sugar prices , currently at 17.16 cents a lb, have gained 5 percent this year, up slightly from a sharp 49 percent drop seen over the past three years.

While the international sugar market is expected to swing to a deficit in the year to September 2015, after four years of surplus, gain in global prices of the sweetener will be capped by higher carried-over stocks, Platts Kingsman said on Tuesday.

The data provider reiterated its forecast for a 2014/15 sugar deficit of 2.1 million tonnes and cautioned that risks to production in Thailand and top producers Brazil and India remained.

But as of now, Brazilian raw sugar is seen seizing market share from Thai exports due to narrowing price differentials.

"Some lots of Brazilian sugar were offered as low as 30 points below New York prices and that was much more competitive compared to Thai prices," said another Thai trader.

Source: Reuters

Zinc near 3-year peak as stocks fall, supply tightens

Still, some investors question whether zinc can maintain its strength, because while inventories have fallen they remain substantial and easily available.

Zinc held near a three-year peak on Wednesday with supply set to tighten while aluminium dipped from multi-month highs but could turn higher again as inventories fall and demand rises.

Still, some investors question whether zinc can maintain its strength, because while inventories have fallen they remain substantial and easily available.

"At the moment, it's pure momentum after the technical signals got sparked. But fundamentally there are questions," said analyst Dominic Schnider of UBS Wealth Management in Singapore.

"We still have a modest overweight in zinc, but it can overshoot. At $2,450-$2,400 that risk for an overshoot is still there. But as we reach these levels I'm really wondering, where is the upside? We still have inventories around."

Benchmark three-month zinc on the London Metal Exchange was $2,365 per tonne in official rings after hitting its highest level since August 2011 at $2,376 earlier in the session. It closed at $2,362 on Tuesday.

LME zinc prices are up 15 percent this year, gaining around half of that in July, as global exchange stocks fall and amid a dearth of new mining projects to replace the world's biggest zinc mine, Century in Australia, which is drying up.

But while zinc inventories in LME-monitored warehouses have fallen more than 20 percent since March, they remain a hefty 655,000 tonnes.

There are also no lengthy waiting times to access zinc, unlike aluminium stored in some LME-monitored warehouses where buyers have to wait for months.

In its quarterly metals report, broker Sucden Financial said the market has been anticipating for almost a year that zinc supply will tighten in the second half of 2015 and into 2016,

"suggesting prices may be running ahead of events".

Higher zinc prices are also likely to encourage a pick-up in production in China, the Sucden report said.


ALUMINIUM SENTIMENT TURNS

Sentiment towards aluminium has turned quite bullish, the Sucden report said, with inventories falling and premiums - the amount paid over LME prices for spot metal - remaining high.

Benchmark LME aluminium was $2,030 a tonne in rings after touching $2,054 on Tuesday, the highest level since February last year. It is still up 13 percent so far this year.

"Yesterday we had quite strong gains in the aluminium market mainly because fundamentals have supported prices in the last few trading sessions," said Myrto Sokou, senior research analyst with Sucden Financial.

"However, today it seems there is a small correction lower within the recent range. It could just be a healthy correction lower following the recent gains."

She said demand for the metal, used in drinks cans and automobiles, is picking up and inventories in LME-monitored warehouses are falling.

LME stocks have fallen to 4.930 million tonnes, LME data shows, their lowest level since September 2012.

In other metals, LME copper was $7,070 a tonne in rings from $7,040 at Tuesday's close.

Underlining expectations of improving copper supply, BHP Billiton said copper production increased to 1.7 million tonnes in fiscal 2014 and would rise to 1.8 million in the current year. [ID:nL4N0PX61F]

Traders have been watching Indonesian elections for signs a new government may relax minerals export laws that since January have halted shipments of nickel, bauxite and copper ores and concentrates, tightening global supplies and lifting prices.

New Indonesian President Joko "Jokowi" Widodo said he wants to sit down with mining companies and other parties in a bid to resolve a row over mining policies that has halted $500 million of metal exports per month.
Under Jokowi, Indonesia's regulatory environment might become more accommodating for foreign investment and mining in general, consultancy WoodMackenzie said in a research note.

"Mining-friendly regulatory change is possible, however it is likely to be incremental rather than exponential," it said.

Benchmark LME lead was $2,210.50 a tonne from $2,217 at the close on Tuesday and nickel was $19,060 from $19,000. Tin , untraded in rings, was bid at $22,150 a tonne from $22,125.

Reuters

Brent oil rises towards $108 on global tensions, dollar caps gain

Brent crude rose towards $108 a barrel on Wednesday as threats to supplies from oil-producing regions overshadowed weak demand and a stronger dollar.

The European Union threatened Russia with harsher sanctions on Tuesday after the downing of the Malaysian airliner in Ukraine, straining the EU's relationship with the world's second-largest oil exporter.

"When the U.S. and the EU impose more sanctions on Russia, that will impact the mid-term production profile of the Russian oil industry," said Andy Sommer, senior oil analyst at Axpo Trading in Dietikon, Switzerland.

Brent crude for September delivery was up 45 cents at $107.78 a barrel by 1135 GMT, after slipping 35 cents in the previous session. U.S. crude for September delivery was 13 cents higher at $102.52 a barrel.

U.S. crude's discount to Brent was $5.26, close to a three-month low as traders waited for U.S. government data on domestic oil stocks due later in the day. [EIA/S]

Brent has fallen by about 7 percent since mid-June as weak demand from refineries in Europe amid low profit margins has crimped consumption.

In Libya, oil production fell to around 450,000 barrels per day (bpd), a drop of nearly 20 percent, with escalating violence threatening a hard-won deal to restore oil exports.

The OPEC country's exports could increase, however, with the Brega oil port expected to be operating in a few days after the government reached a deal with protesting security guards.

Traders were also monitoring fighting in the Gaza strip. Top U.S. and United Nations diplomats are seeking talks on halting the conflict that has claimed more than 600 lives.

The euro slipped to an eight-month low against the dollar on diverging interest rate outlooks for the United States and euro zone, with fears that further sanctions on Russia could damage Europe's economy.

A stronger dollar tends to weigh on commodities priced in the U.S. unit as it makes them more expensive for holders of other currencies.


U.S. EIA DATA

Energy traders will focus their attention on the weekly crude oil inventory report from the U.S. Energy Information Administration (EIA) due at 1430 GMT. Stocks are expected to have declined by 2.8 million barrels in the week to July 18, according to a Reuters survey.

Domestic crude stocks fell by 7.5 million barrels the previous week in their biggest drawdown since January, reflecting a sharp increase in refinery activity. 

The American Petroleum Institute, an industry group, said on Tuesday that U.S. crude inventories fell 555,000 barrels last week to 374.7 million, with stocks at the Cushing, Oklahoma, delivery point of the U.S. crude contract down 1.4 million barrels. 

Source: Reuters