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U.S. Producer Prices Unchanged in October on Weak Services

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Producer Prices
  • U.S. Producer Prices Unchanged in October on Weak Services

U.S. producer prices were unexpectedly flat in October as a rise in the cost of goods was offset by declining services costs.

The Labor Department said on Wednesday that the unchanged reading in its producer price index for final demand last month followed a 0.3 percent increase in September.

In the 12 months through October, the PPI increased 0.8 percent, the biggest gain since December 2014. That followed a 0.7 percent rise in September.

Economists polled by Reuters had forecast the PPI rising 0.3 percent last month and accelerating 1.2 percent from a year ago.

Longer-dated U.S. Treasury bonds erased losses after the report, while the dollar fell to session lows against the euro and the yen.

Goods prices, including energy, increased 0.4 percent last month after rising 0.7 percent in September. The cost of services declined 0.3 percent after edging up 0.1 percent in September.

Declining goods prices have been the main force keeping inflation benign. The drop has been driven by the a surge in the dollar from mid-2014 through January this year, as well a collapse in oil prices.

With the dollar’s rally appearing to have peaked and oil prices having bounced off multi-decade lows, the disinflationary impulse is easing, which could allow overall inflation to gradually rise toward the Federal Reserve’s 2 percent target.

Inflation could push higher in the coming years if president-elect Donald Trump presses ahead with his agenda to boost infrastructure and defense spending at a time when the economy is expected to be at full employment.

Last month, energy prices rose 2.5 percent after a similar gain in September. Wholesale food prices fell 0.8 percent after rising 0.5 percent in September.

The drop in prices for services last month was led by declining prices for the volatile trade services, which measure changes in margins received by wholesalers and retailers. They fell for a fourth straight month.

Healthcare costs increased 0.3 percent last month after edging up 0.1 percent in September. The cost of hospital care rose 0.3 percent, adding to September’s 0.4 percent gain.

These healthcare costs feed into the Fed’s preferred inflation measure, the core personal consumption expenditures index.

A key gauge of underlying producer price pressures that excludes food, energy and trade services dipped 0.1 percent after rising 0.3 percent in September.

The so-called core PPI increased 1.6 percent in the 12 months through October, the largest rise since September 2014. That followed a 1.5 percent increase in September.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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