Norway's Equinor profit hits record on gas price gains - Reuters

• Summary
• Companies

• Q3 earnings before tax $24.3 bln vs forecast $23.5 bln
• Equinor has overtaken Gazprom as Europe's top gas supplier
• Raises dividend, slightly cuts output guidance

OSLO, Oct 28 (Reuters) - Equinor (EQNR.OL) landed a record third-quarter profit on Friday, driven by all-time-highs in European gas prices, and raised its dividend payout despite a lower 2022 output forecast.

The Norwegian oil and gas producer's adjusted earnings before tax for July-September rose to $24.3 billion from $9.77 billion a year earlier, beating the $23.5 billion predicted in a poll of 26 analysts compiled by Equinor.

"The Russian war in Ukraine has changed the energy markets, reduced energy availability and increased prices," Chief Executive Anders Opedal said in a statement.

"High production combined with continued high price levels resulted in very strong financial results," he added

Equinor, majority-owned by the Norwegian government, became Europe's largest supplier of natural gas this year as Russia's Gazprom (GAZP.MM) cut deliveries amid Western support for Ukraine.

Equinor's previous profit before tax record was $18 billion and was set in the first quarter.

It now expects its output to grow by 1% in 2022 compared to last year, down from a previous projection of 2% as the Johan Sverdrup Phase 2 development was set to come on stream later in the fourth quarter than originally planned.

Equinor blamed operational issues at several other fields, but did not elaborate on when the Sverdrup increase could occur.

Junior partner Aker BP (AKRBP.OL) earlier this week said it expected Sverdrup Phase 2 to come on stream in early December, two months later than it had previously predicted.

Phase 2 is expected to increase Sverdrup's production capacity by 220,000 barrels of oil equivalent per day (boed) just as the European Union's ban on Russian seaborne crude imports comes into an effect in December.

Equinor lifted its extraordinary dividend, paid as a result of high oil and gas prices, to $0.70 per share for the third quarter from $0.50 in the second, corresponding to an increased payment of about $640 million.

The company kept its regular quarterly dividend payment at $0.20 per share and maintained plans for share buybacks of $6 billion in 2022.

Europe's benchmark TTF front-month wholesale gas contract soared to a record 343.08 euros per megawatt hour (MWh) in August, but has since fallen to 106.5 euros/MWh due to falling demand, full storages, mild weather and rising LNG supply.

It remains more than four times higher than before Russia began to throttle supplies last year.

Equinor has said it sells most of its gas output on a day-ahead or month-ahead price basis.

"Of course, the (gas) prices in Europe are very high. We have offered long-term contracts to make sure we can have commercial deals that can keep prices more stable," Opedal told Norwegian broadcaster NRK.

The EU has said it plans to coordinate some of its gas purchases in the hope of bringing down prices.

"We will cooperate with those buying institutions planned in the EU and negotiate gas prices in the future," Opedal said.

Equinor, which makes most of its profit from production in Norway, paid $17 billion in taxes during the third quarter and is not subject to additional windfall payments to the government, which owns 67% of its shares.

Equinor's net profit for the quarter amounted to $6.72 billion, while larger European rivals Shell (SHEL.L) and TotalEnergies (TTEF.PA) on Thursday each reported profits of more than $9 billion.

Equinor's Oslo-listed stocks have risen 59% year-to-date, outperforming a 24% rise in European petroleum stocks (.SXEP) thanks to its big gas reserves.

Editing by xxxxx

Our Standards: The Thomson Reuters Trust Principles.

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US Loosens Plans for the Oil-Price Cap It Pushed on Brussels - Bloomberg

[unable to retrieve full-text content]

1. US Loosens Plans for the Oil-Price Cap It Pushed on Brussels  Bloomberg
2. Western officials finalizing plans for Russia oil-price cap  Reuters
3. U.S. waters down plan for Russia oil price cap - Bloomberg (NYSEARCA:USO)  Seeking Alpha
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Breakingviews - Tesla's China price cut plays offence and defence - Reuters

HONG KONG, Oct 27 (Reuters Breakingviews) - Tesla’s (TSLA.O) China price cut is a double-edged sword. The $700 billion carmaker says lower production overheads prompted it to lop up to 9% off the cost of new vehicles in the country. But it also smacks of a price war.

The reduction is an aggressive manoeuvre. China is increasingly important for Tesla and its investors, accounting for around a quarter of the electric-car maker’s top line in the first nine months of 2022. If sales reach nearly $120 billion next year as forecast by Refinitiv, a 9% cut would equate to around $2.5 billion in revenue. But if it doesn’t affect the bottom line, it sends a strong message that Tesla is making use of its formidable economies of scale.

It is also a defensive move. Elon Musk’s marque remains China’s most popular foreign brand for battery-powered cars by a long chalk. Chinese drivers, though, are starting to snub international badges in favour of home-grown alternatives, especially for electric and premium models. Chery Automobile, Geely Automobile (0175.HK) and GAC (601238.SS) Aion are increasing their share of the EV segment, according to Bernstein. Shenzhen-based BYD (002594.SZ), (1211.HK) has taken Tesla’s top spot as the world’s best-selling brand of electric cars this year, thanks to triple-digit growth in sales of battery-powered and hybrid models, multiple research groups report.

At the same time, China’s car market could slow as incentives designed to gin up Covid-stricken sales wind down. And President Xi Jinping’s power play creates new risks. Hong Kong-listed shares in Nio (9866.HK), Xpeng (9868.HK) and Li Auto (2015.HK) lost an average 10% in value on Monday, the day after Xi picked members for his 24-strong Politburo who seem more focused on political control than economic growth. Nio and Xpeng have since rallied.

Price cuts are not the only sign of insecurity: Tesla faces up to the possibility of flagging demand, with Reuters reporting last month that Tesla is rethinking its China sales strategy, and keeping its vast Shanghai plant running below full capacity despite recent upgrades.

If others are also nervous, Tesla’s tactics and the chunky discount could set the tone. Smaller competitors such as Nio, which lack Tesla’s scale and profitability, have yet to make cuts and would struggle to take a huge hit to the top line. But larger groups such as Geely could retaliate. Musk might want to buckle up.

Follow @KatrinaHamlin on Twitter

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CONTEXT NEWS

Electric-car maker Tesla has cut starter prices for its Model 3 and Model Y cars by as much as 9% in China, reversing a trend of increases across the industry amid signs of softening demand in the world's largest vehicle market. The company posted the price cuts on its China website on Oct. 24.

Tesla told Reuters it was adjusting prices to reflect lower production costs, saying that capacity utilisation at its Shanghai Gigafactory has improved, while the supply chain remains stable despite the impact on the economy of China's stringent zero-Covid restrictions.

Tesla’s U.S. shares fell 1.49% to $211.25 on Oct. 24.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

Editing by Antony Currie and Thomas Shum

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Katrina Hamlin

Thomson Reuters

Katrina Hamlin is global production editor, based in Hong Kong. She is also a columnist, writing on topics including environmental policy, cleantech and green finance, as well as the gambling industry in Macau and Asia. Before joining Reuters in 2012, Katrina was deputy managing editor of Shanghai Business Review magazine. She graduated from the University of Oxford with an MA in Classics, and earned a Masters of Journalism with distinction from the University of Hong Kong.

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Halloween candy prices soar by the most since at least 1999 - CNN

New York CNN Business  — 

Halloween may feel more like trick than treat this year.

Candy prices are estimated to be 14% higher than last year, according to a recent report from S&P Global Market Intelligence. That’s the highest increase since the firm started tracking Halloween candy prices in 1999.

“A 14% increase in candy prices is the largest on record by a significant margin,” Akshat Goel, senior economist at S&P Global Market Intelligence, told CNN. This year’s projected bump is twice the 7% jump recorded in 2008, during the financial crisis. That was the next highest increase tracked by the firm.

The price increases coincide with difficult economic periods, and Goel noted that “the high inflation era of 1970s/1980s could easily have seen larger price increases.” But he added that the firm doesn’t have candy price data that tracks back to that period.

The higher prices should come as no surprise. Inflation has remained stubbornly high, with an unadjusted annual rate of 8.2% reported by the Bureau of Labor Statistics in September. Food prices have jumped even higher. In the year through September, food got 11.2% more expensive, with grocery prices spiking 13%.

Halloween candy is frigtheningly expensive this year.

Drew Angerer/Getty Images

Food manufacturers have been steadily raising their prices, and candy makers are no exception. In its 2022 financial forecast shared early this year, Hershey said that it was planning to raise “list price increases across all segments.”

Even so, people seem to be willing to shell out for candy this spooky season. Household spending on Halloween candy in the US is expected to hit $3.2 billion this year, according to S&P Global, a 1% increase over last year.

The National Retail Federation, which partners with Prosper Insights & Analytics on an annual Halloween Consumer survey, found that 67% of respondents planned to hand out candy this year, up from 66% in 2021.

Overall, the NRF expects US consumers to spend a record $10.6 billion on Halloween celebrations in 2022, up from $10.1 billion last year.

Daniel Acker/Bloomberg/Getty Images

Hershey says it won't be able to meet Halloween demand this year

Candy shoppers might not find exactly what they’re looking for, however.

In July, Hershey (HSY) said that high interest in its regular candy offerings meant it wouldn’t be able to meet demand for Halloween items.

The chocolate maker uses the same manufacturing lines for its regular and seasonal products, and as a result was unable to amp up production of its regular sweets and Halloween or holiday items simultaneously.

“We had a strategy of prioritizing everyday on-shelf availability,” CEO Michele Buck said during an analyst call over the summer. “That was a choice that we needed to make,” she said. “It was a tough decision.”

For Hershey, that likely means ceding ground to competitors such as Mars Wrigley, maker of M&Ms and Snickers, and Sour Patch Kids seller Mondelez (MDLZ) during the Halloween season.

-— CNN’s Matt Egan contributed to this report.

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U.S. home-price growth slows most on record as market hits brakes - The Seattle Times

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1. U.S. home-price growth slows most on record as market hits brakes  The Seattle Times
2. Home Prices Fell in August in Biggest Monthly Decrease Since 2011  The Wall Street Journal
3. Home price growth slows further in August  HousingWire
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Gas Price Crisis Overshadows A Crisis In Oil Prices - OilPrice.com

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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By Irina Slav - Oct 25, 2022, 6:00 PM CDT

• Despite the 30-percent drop in oil price benchmarks, many buying nations are facing a steep bill for their oil imports.
• The strong dollar isn't just causing trouble for oil buyers such as India and China, but also for European importers.
• Importing nations might get a boost for their plans to move away from the U.S. dollar and start using their local currencies more.

There has been so much media space dedicated to the gas supply troubles of the European Union and the associated spillover effect for developing economies that another fossil fuel problem has remained relatively unnoticed: oil prices. Oil prices have been on a general decline over the past couple of months, shedding about 30 percent from the peaks reached earlier this year, pressured by expectations of a global economic slowdown.

The slowdown itself has a close causal link with energy prices, more specifically, oil and gas prices. And speaking of oil prices, despite the 30-percent drop in benchmarks, many buying nations are facing a steep bill for their oil imports, which would aggravate the challenge for their economies.

Take India, for instance—one of the world’s biggest oil importers. A recent analysis in the Indian Express detailed that because of the oil price rally from earlier this year, India’s trade deficit for the first half of the year had reached $150 billion and could double to $300 billion for the full year.

This would, in turn, cause a problem with the country’s balance of payments as various parts of the economy slow down due to higher oil prices, not just in India but in the West as well. And speaking of the West, its European part has similar oil price problems to those that India has.

Related: Texas Natural Gas Prices Sink Close To Zero

In a recent article on the troubles of oil-importing nations, Bloomberg noted that Europe was more than just a major importer of natural gas. The continent, and the EU specifically, also imports most of the oil it consumes, meaning it is highly vulnerable to price swings.

All the big European economies, including Germany, Italy, Spain, and France, the report said, depended on imported oil for as much as 90 percent of their consumption. And this means that, like India and China, the EU has a problem with the U.S. dollar.

A rally in the greenback resulting from tighter monetary policies at the Fed contributed significantly to the affordability problem that most oil importers have been struggling with this year. Since most of the oil traded around the world is priced in U.S. dollars, the more expensive the dollar, even if oil prices themselves haven’t changed much, the higher the import bill for this oil would be.

“A stronger dollar is a headwind for oil consumer nations whose currencies are not linked to the greenback,” Giovanni Staunovo, commodity analyst at UBS, told Bloomberg. “Over the last 12 months, oil prices have increased much more in local currency terms.”

This state of affairs might have major implications for the oil markets of tomorrow. They might be markets with a bigger role for local currencies.

China—the world’s largest importer of oil—has been trying to expand the use of its national currency in international trade for years. By a happy coincidence, its BRICS partner and major oil supplier, Russia, is very much on board with the idea of local currencies, especially so after the EU began shooting sanction packages at it following the invasion of Ukraine.

Other developing nations, including India, are also entertaining the idea of replacing the global trade currency with their local currencies in bilateral trade deals. India has even developed a mechanism for international deal settlement in rupees, although it is still paying for Russian oil in U.S. dollars.

This might be an emerging trend worth watching, but how it could play out in the European Union is an entirely different matter. The EU has time and again declared its close alliance with the U.S., especially in energy. 

So, moving away from the greenback for oil trades would probably be as bad of an idea as President Macron’s accusations that the U.S. is employing double standards in having lower gas prices at home than the price of the LNG that U.S. companies sell to Europe.

Yet, with the U.S. dollar’s important role in the affordability of oil amid what is increasingly looking like a global economic slowdown, other importing nations might get a boost for their plans to move away from it and start using their local currencies more.

By Irina Slav for Oilprice.com

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Tesla Cuts Prices in China in Sign of Slowing Demand - The New York Times

Shares of the company slumped as investors worried about increasing competition.

Tesla on Monday cut prices for its cars in China, a sign of intensifying competition in the world’s largest car market that provoked a slump in the company’s shares.

Tesla’s Chinese website was offering the Model 3 sedan on Monday for a starting price of 265,900 renminbi, or $36,600, including government subsidies, a 5 percent reduction. The Model Y sport utility vehicle was advertised at 288,900 renminbi, a 9 percent cut.

Tesla shares fell more than 6 percent before recovering a little as the price cuts reinforced fears among investors that the company’s profitability and dominance of the electric vehicle market was threatened by slowing economic growth and increased competition. Until recently, strong demand for Tesla cars had allowed the company to frequently raise prices.

In China, Tesla faces competition from domestic companies like BYD, SAIC Motor and Nio, which are also pushing into the European market with more affordable electric vehicles. The Chinese government has promoted its electric vehicle and battery makers, seeing the shift in technology as a chance to break into the global market and challenge established Japanese, German, Korean and U.S. carmakers.

Although China has the world’s largest car market, Chinese automakers are small players in the rest of the world. Investors closely monitor Tesla’s performance in China because the country is seen as having far more growth potential than Europe or the United States.

Tesla shares have fallen 12 percent since Wednesday, when the company reported third quarter profit figures that disappointed Wall Street. Although its earnings in the third quarter doubled from a year earlier, to $3.3 billion, investors had expected more.

Investors have been concerned about problems that Tesla has encountered increasing production at new factories near Austin, Texas, and Berlin. “Factory ramps take time,” Tesla told investors last week.

Tesla stock is also under pressure because traders widely expect that the company’s chief executive, Elon Musk, will have to sell more shares to come up with the money he needs to close his purchase of Twitter by Friday.

For car buyers, the Tesla price cuts in China could be good news. Popular electric models like the Ford Mach-E, Hyundai Ionic 5 or Volkswagen ID.4 have been difficult to find, and there are reports of dealers demanding thousands of dollars more than the retail prices suggested by manufacturers.

The market may be shifting as automakers produce more cars because they have fewer supply chain problems, and rising interest rates reduce demand by raising monthly car payments sharply.

Wait times for Teslas have already been shrinking, in part because the company was able to increase production at its factory in Shanghai, which had been hit by slowdowns related to pandemic lockdowns.

Tesla’s Chinese website tells potential buyers they could receive a Model Y in as little as a week. The United States website tells buyers they could receive a Model 3 as early as this month. Previously, Tesla buyers had to wait several months.

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