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EU Leaders Set to Clash Over Energy Prices at Prague Gathering — Commodities Roundup

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–Brent crude oil rose 0.9% to $95.27 a barrel.

–European benchmark gas fell 7.3% to EUR162.87 a megawatt-hour.

–Gold futures edged down 0.2% to $1,717.10 a troy ounce.

–Three-month copper fell 0.3% to $7,539.50 a metric ton.

–Wheat futures rose 1.5% to $8.92 a bushel.

TOP STORY:

EU Leaders Set to Clash Over Energy Prices at Prague Gathering

European leaders who have been compromising on their response to Russia’s war in Ukraine all year now face a growing rift over how to offset the rising damage of high energy prices to their domestic economies.

Italy and several other countries will square off against Germany at a summit in Prague on Friday, in a spat that mirrors clashes from past crises. Heavily indebted countries fear that their wealthier neighbors will gain an unfair edge by supporting their businesses and consumers.

At the center of the battle is frustration from governments who say their calls for a European Union-wide limit on gas prices have until recently been sidelined, even as wealthier countries like Germany and France have announced big spending plans at home to cushion businesses and consumers from soaring energy prices. Russia’s squeeze on gas supplies has sent prices soaring across the EU, causing factories to shut down and fueling expectations that the bloc is heading into a recession.

OTHER STORIES:

U.S. Plots Response To OPEC After Cut In Output

OPEC’s decision to slash oil production has the U.S. considering responses that could include measures aimed at breaking the cartel’s hold on markets or limiting U.S. oil exports should shortages emerge.

The cutback by the Organization of the Petroleum Exporting Countries and its Russia-led allies is the latest dilemma for President Biden, who has sought to transition the U.S. away from fossil fuels while at the same time keeping consumer prices in check.

A long fall in gasoline prices has started to reverse, and this week’s OPEC decision to cut oil production by 2 million barrels a day threatens to push prices higher again just weeks before the Nov. 8 midterm elections.

Mr. Biden and lawmakers have decried the decision, raising the prospect of retaliatory action against OPEC and Saudi Arabia, its largest producer. Congressional leaders are threatening legislation that would charge OPEC members in front of the World Trade Organization or subject them to U.S. antitrust law.

London Metal Exchange Floats Russian Metal Ban

The London Metal Exchange floated the idea of a ban on Russian metal, a move that could deal a blow to the country’s huge aluminum industry.

Western governments have mostly held off on hitting the huge Russian metals industry with sanctions, and metal-consuming companies have continued buying its aluminum, nickel and copper. But in negotiations for 2023 supply contracts, many companies such as automakers are opting to switch from Russian material.

Food Prices Decline for Sixth Consecutive Month, UN’s FAO Says

Global food prices fell for the sixth consecutive month, according to a new report from the Food and Agriculture Organization of the United Nations, although worries around grain trade and output remain.

The FAO’s food-price index, a closely watched barometer of global food prices, averaged 136.3 points in September, down 1.1% from the previous month but still 5.5% above the level last year.

Tanzania Sells 158.7 Metric Tons of Coffee Beans at Auction

Tanzania sold 158.7 metric tons of coffee beans at an auction on Thursday, the Tanzania Coffee Board said Friday.

The highest price the coffee beans fetched at the auction was $234 per 50-kilogram bag, up from $230, while the lowest was $75 a bag, up from $74 a bag at the prior auction on Sept. 29, the TCB said in a market report.

BASF CFO Faces Wild Swings in Energy Prices as Company Looks to Budget for 2023

Germany’s BASF SE saw its energy costs jump EUR800 million, equivalent to about $785 million, to EUR1.1 billion in the second quarter compared with the same time last year, an indicator of the chemicals producer’s struggles to forecast and budget for its energy consumption.

The Ludwigshafen-based company is one of the world’s largest chemicals makers by sales and uses natural gas to produce electricity and steam for its factories.

Chevron Negotiates More Investments in Republic of Congo

A delegation from U.S. energy giant Chevron met with top government officials from the Republic of Congo on Thursday to discuss extending investments in the country’s oil-and-gas industry.

MARKET TALKS:

Palm Oil Prices Rise Amid High Soybean Prices

1010 GMT – Malaysian palm oil prices rose amid gains in soybean oil. Crude palm oil prices are expected to remain high in 4Q, as demand is picking up and the vegetable oil is still trading at a steep discounts compared with soybean oil, which is used in similar products, Citi analyst Lester Siew says in a research note. The benchmark Bursa Malaysia Derivatives contract for December delivery ended MYR141 higher at MYR3,841 a metric ton. (yiwei.wong@wsj.com)

Russia Seaborne Oil Exports Return to Prepandemic Levels Despite Sanctions

1000 GMT – Russia’s seaborne oil exports are back at prepandemic levels despite tightening sanctions on Moscow due to the war in Ukraine. Maritime data provider Banchero Costa said in a report that Russia is exporting around 11% of all oil shipments, the second biggest oil mover behind Saudi Arabia. In the first eight months of this year Russia shipped out 148.4 million metric tons of crude oil, up 16% on year, with India and China being the biggest buyers. (costas.paris@wsj.com)

EU Bans Russia’s Shipping Registry, Cuts Country’s Access to Ports

0956 GMT – The European Union has toughened its sanctions on Russia and banned the country’s Maritime Register of Shipping, which provides ships with certificates of sail sailing as the block prepares to ban ships from moving Russian products altogether starting in December. Ships certified by the Russian register won’t be able to dock at EU ports and or conduct ship to ship transfers in the open sea starting this month. (costas.paris@wsj.com)

Oil Is Set for Biggest Weekly Gain Since Ukraine War

0759 GMT – Oil is on course to end the week up 11% after OPEC+’s large cut to production quotas. Brent crude is up 0.3% at $94.64 a barrel. The oil benchmark is set to end the week with its biggest weekly gain since February. Oil climbed early in the week on the first reports that the cartel was considering a cut but has shown only a small price response after the group agreed to a 2 million barrel a day cut. With OPEC+ having largely exhausted its spare capacity, the cut had to happen at some point, JPMorgan says. “The outcome of the October 5th OPEC+ meeting was already largely embedded into our baseline supply forecast,” the bank says in a note. (william.horner@wsj.com)

Metals Mixed Ahead of Jobs Report

0741 GMT – Metals prices are wavering ahead of Friday’s nonfarm payroll data. Three-month copper prices are up 0.2% to $7,570 a metric ton while gold is 0.1% lower at $1,718.50 a troy ounce. Metals prices have been swayed significantly by macroeconomic sentiment and so Friday’s reading is likely to impact how investors react to risk assets. Economists at Deutsche Bank Research are forecasting payrolls grew by 275,000, above the 250,000 consensus print. “If realized, that would still be the slowest pace of monthly job growth since April 2021,” Jim Reid, analyst at the bank, said in a note. A strong jobs report is likely to cement a 75 basis-point hike at the next FOMC meeting, Reid said. (yusuf.khan@wsj.com)

Write to Will Horner at william.horner@wsj.com

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