Asia demand for U.S., Atlantic Basin oil set to jump as buyers prep for winter

Asian demand for crude oil from the Atlantic Basin and the Americas is set to rise as low prices drive Japanese and South Korean buyers to snap up cargoes to arrive ahead of peak winter consumption.

Robust appetite from the region could help soak up excess supplies in Europe and the United States, offering some support to benchmark global prices that plumbed 10-month lows last week.

The loading of oil shipments from Europe and the Americas to Asia tapered off in June after surging between March and May, but the recent price slump is pushing Asian buyers and traders to once again turn to the North Sea Forties grade of oil and to U.S. crude.

Some traders hope the value of cargoes will increase during the time spent en route to Asia, with a possible upcoming climb in prices indicated by October ICE Brent futures this month rising as much as 70 cents per barrel above the prompt month August contract.

"We know people are taking WAF (West African) and North Sea," said a trader with a North Asian refiner, declining to be identified as he was not authorized to speak with media.

A widening of Brent's premium to West Texas Intermediate (WTI) crude to almost $3 a barrel earlier this month has particularly buoyed the appeal of moving U.S. oil to Asia.

Japanese refiners JXTG and Cosmo Energy have bought U.S. cargoes that will arrive in September, trade sources said, ahead of the winter season when power demand jumps as people crank up electric heating.

JXTG has purchased 1 million barrels of U.S. Mars crude, while Cosmo has bought a mixture of WTI Midland and Domestic Sweet (DSW) blend, those sources said.

Both companies declined to comment on the matter.

Meanwhile, traders expect 2 million to 4 million barrels of North Sea Forties to load in July and arrive in South Korea from the end of August to early September. [O/LOAD]

More Libyan crude could also make its way to Asia as output there rises. Thailand's PTT PLC recently bought Libya's Amna crude from Chinese trader Unipec for delivery in August and September.

Elsewhere, the release of a second batch of Chinese crude import quotas has also spurred sellers to bring more oil to Asia, said an analyst at a trading company.

And shipping data shows that ExxonMobil, which operates a refinery in Thailand, chartered the Aframax Astro Saturn to take U.S. crude from Corpus Christi, Texas to Sri Racha, Thailand for end-July arrival.

"U.S. crude has high potential. We want to diversify our supply sources (and are interested)," an official from a Southeast Asian refiner said, adding that it was keen on both light-sweet and medium-sour crude but not the DSW blend because of quality issues.

Source: Reuters

Brazil authorities seek arrest of 95 Rio de Janeiro police officers

Brazilian authorities issued arrest warrants on Thursday for 95 police officers in Rio de Janeiro state who they say have sold arms and tipped off drug gangs to future operations, in the largest such effort yet to root out corrupt officers.

Another 90 arrest warrants were issued for suspected drug traffickers, police and state prosecutors said in an emailed statement.

By midday, about 50 people had been arrested, roughly half of them police, authorities said.

Investigators said they were targeting police who maintain ties to the powerful drug gangs that control vast swaths of metropolitan Rio de Janeiro.

Police were accused of selling powerful rifles to gang leaders and tipping them off to police actions that would be carried out in the slums the gangs control in return for bribes.

Source: Reuters

Despite hacking charges, U.S. tech industry fought to keep ties to Russia spy service

As U.S. officials investigated in January the FSB's alleged role in election cyber attacks, U.S. technology firms were quietly lobbying the government to soften a ban on dealing with the Russian spy agency, people with direct knowledge of the effort told Reuters.

New U.S. sanctions put in place by former President Barack Obama last December - part of a broad suite of actions taken in response to Russia's alleged meddling in the 2016 presidential election - had made it a crime for American companies to have any business relationship with the FSB, or Federal Security Service.

U.S. authorities had accused the FSB, along with the GRU, Russia's military intelligence agency, of orchestrating cyber attacks on the campaign of Democratic presidential candidate Hillary Clinton, a charge Moscow denies.

But the sanctions also threatened to imperil the Russian sales operations of Western tech companies. Under a little-understood arrangement, the FSB doubles as a regulator charged with approving the import to Russia of almost all technology that contains encryption, which is used in both sophisticated hardware as well as products like cellphones and laptops.

Worried about the sales impact, business industry groups, including the U.S.-Russia Business Council and the American Chamber of Commerce in Russia, contacted U.S. officials at the American embassy in Moscow and the Treasury, State and Commerce departments, according to five people with direct knowledge of the lobbying effort.

The campaign, which began in January and proved successful in a matter of weeks, has not been previously reported.

In recent years, Western technology companies have acceded to increasing demands by Moscow for access to closely guarded product security secrets, including source code, Reuters reported last week.[nL1N1JK1ZF] Russia's information technology market is expected to reach $18.4 billion this year, according to market researcher International Data Corporation.

The sanctions would have meant the Russian market was "dead for U.S. electronics” said Alexis Rodzianko, president of the American Chamber of Commerce in Russia, who argued against the new restrictions. “Every second Russian has an iPhone, iPad, so they would all switch to Samsungs," he said.

A spokesman for the U.S. Commerce Department Bureau of Industry and Security declined to comment. A State Department official said Washington considered a range of factors before amending the FSB sanction and regularly works with U.S. companies to assess the impact of such policies.

The lobbyists argued the sanction could have stopped the sale of cars, medical devices and heavy equipment, all of which also often contain encrypted software, according to a person involved in the lobbying effort. The goal of the sanctions was to sever U.S. business dealings with the FSB - not end American technology exports to Russia entirely, the industry groups argued.

“The sanction was against a government agency that has many functions, only one of them being hacking the U.S. elections,” said Rodzianko.

The lobbyists assembled representatives from the tech, automotive and manufacturing sectors to make the case to the U.S. Treasury Department, said the person involved in the lobbying effort.

The industry groups did not argue against the intent of the sanction but asked for a narrow exception that would allow them to continue to seek regulatory approvals from the FSB while still keeping in place the broader ban on doing business with the spy agency.

"PUNISHMENT FOR VERY BAD ACTS"  

The industry groups represent a number of technology firms with a large presence in Russia, including Cisco and Microsoft.

Reuters was unable to determine which companies were directly involved in the lobbying. Microsoft said it did not ask for changes to the sanctions. In a statement, Cisco said it also did not seek any changes to the sanction but had asked the Treasury Department for clarification on how it applied.

In order to get encrypted technology into Russia, companies need to obtain the blessing of the FSB, a process that can sometimes take months or even years of negotiation. Before granting that approval, the agency can demand sensitive security data about the product, including source code - instructions that control the basic operations of computer equipment.

The United States has accused Russia of a growing number of cyber attacks against the West. U.S. officials say they are concerned that Moscow’s reviews of product secrets could be used to find vulnerabilities to hack into the products.

Some U.S. government officials rejected the industry groups' arguments. They openly embraced the prospect of any ripple effect that cut further trade with Russia.

Kevin Wolf was assistant secretary at the Commerce Department and oversaw export control policy when the FSB sanction was put in place. Wolf said within days of the sanction taking effect, Commerce received numerous calls from industry groups and companies warning of the unintended consequences.

But for Wolf, who was "furious" with Moscow over the alleged cyber attacks, any additional curbs on trade with Russia was a bonus rather than an unintended downside.

"I said, 'Great, terrific, fuck 'em ... The whole point is to interfere with trade'," recounted Wolf. “The sanction was meant to impose pain (on Russia) and send a signal as punishment for very bad acts."

Wolf left the Commerce Department when President Donald Trump took office on Jan. 20.

Other officials felt that the impact on legitimate trade was too great. “The intention of the sanction was not to cut off tech trade with Russia,” said a U.S. official with direct knowledge of the process.

The lobbyists had also argued that since the sanctions only applied to U.S. technology makers, it would put them at a disadvantage to European and Asian companies who would still be able to interact with the FSB and sell products in Russia.

"We were asking for a narrow technical fix that would give a fair deal for American companies," Dan Russell, CEO of the U.S.-Russia Business Council, said in an interview.

The advocacy worked. State and Treasury officials began working to tweak the sanction in January before Obama left office, according to people involved in the process.

On Feb. 2, the Treasury Department created an exception to the sanction, about two weeks after Trump took office, to allow tech companies to continue to obtain approvals from the FSB.

Source: Reuters

Despite weak oil prices, OPEC still pockets more dollars

REUTERS/Essam Al-Sudani/File Photo

With world oil inventories swelling despite a global pact on cutting output and crude prices falling by a fifth in the past month, OPEC appears to be losing its battle to balance the market.

But there is one crucial fight the oil-exporting group has been winning so far: its members have earned more money this year than last and the prospect of higher revenues is likely to motivate OPEC to stick with output cuts or even deepen them.

OPEC's first output cut in eight years has earned the group $1.64 billion a day so far this year, up more than 10 percent from the second half of 2016, according to Reuters calculations based on OPEC figures for average production and its crude basket price up until June 20.

Compared with the first half of 2016, when oil prices sank to a 12-year low near $27 a barrel, the increase in income is a dramatic 43 percent, even though production by the Organization of the Petroleum Exporting Countries was little changed.

Income could rise in the rest of the year if, as OPEC hopes, a supply glut is banished. OPEC plus Russia and other non-OPEC producers agreed on May 25 to extend supply cuts to March, after an initial deal to keep them in place for the first half of 2017.

"I expect the gains for OPEC to be higher during the second semester 2017 due to a tight market in the third and fourth quarter, despite an oversupply from non-OPEC not tied to the OPEC agreement and higher-than-expected production from Libya and Nigeria," said Chakib Khelil, Algeria's former oil minister.

He estimated OPEC revenues rose about 8 percent in the first half of 2017, following its move at the end of 2016 to cut overall output by about 4 percent.

"The overall gain in revenues for OPEC would be in the 9 to 10 percent range for the whole of 2017 compared to 2016," the former minister said.

OPEC's decision in late 2016 to return to a policy of limiting supply, in cooperation with Russia and other non-members, marked the end of a two-year period in which the group pumped at will in a Saudi-led shift to curb rival output and boost market share, which accelerated a drop in prices.

"I think the extent to which Saudi Arabia bled revenue during 2014-2016 forced them back to the OPEC table before the job of really turning the screw on U.S. shale and other non-OPEC supply was completed," said David Fyfe, chief economist at trading firm Gunvor.

"However, the production deal has at least staunched the cash hemorrhage for now," he said.

The Reuters calculation is based on data from the International Energy Agency and figures published by OPEC about its production according to estimates by six secondary sources.

For the price, Reuters used the OPEC basket, an index of the crudes sold by the member countries.

It is intended to illustrate the general trend for oil revenues and does not aim to give exact estimates of countries' oil export earnings.

STICK WITH IT

OPEC and non-OPEC allies led by Russia initially agreed to cut about 1.8 million barrels per day (bpd) in the first half of 2017. But with the supply glut proving slow to shift, they agreed on May 25 to prolong the deal to the first quarter of 2018.

A drop in prices since then has prompted some OPEC delegates to question whether the deal is enough, but the group is in no rush to deepen its output cut.

Rising U.S. production has undermined some of the impact of the OPEC-led cuts. In addition, Libya and Nigeria, two OPEC members exempted from the curbs, have increased output although not by enough to alter the overall picture of lower OPEC output in the six-month period.

While OPEC states will welcome the extra revenue, it has not yet plugged budget deficits that have opened up. To balance its books, Saudi Arabia needs oil closer to $75 a barrel, asset management firm AB Bernstein estimates.

However, Fyfe of Gunvor said the higher earnings during the first half of this year will probably give producers sufficient motivation to keep going and even consider further measures.

Taking Dubai oil as a benchmark, prices so far in 2017 are 25 percent above last year's $41 average, while OPEC production in the same time is 2 percent, or 700,000 bpd, below 2016's average, he said.

"That arithmetic ought to persuade OPEC and Russia of the value of sticking with it, maybe cutting sufficient extra barrels to offset Libya and Nigeria increases and reaping the reward of higher overall 2017 revenues," said Fyfe.

"But the politics of apportioning further cuts will get messy," he added.

Khelil also said he thought OPEC needed to keep on with supply restraint beyond the expiry of the current deal to protect the increase in income earned this year.

"It would be in the best interest of OPEC to plan on continuing curtailing production after the end of March 2018 so as to maintain the 9 to 10 percent gain in revenues achieved in 2017," he said.

Source: Reuters

New computer virus spreads from Ukraine to disrupt world business

REUTERS/Valentyn Ogirenko

A new cyber virus spread from Ukraine to wreak havoc around the globe on Wednesday, crippling thousands of computers, disrupting ports from Mumbai to Los Angeles and halting production at a chocolate factory in Australia.

The virus is believed to have first taken hold on Tuesday in Ukraine where it silently infected computers after users downloaded a popular tax accounting package or visited a local news site, national police and international cyber experts said.

More than a day after it first struck, companies around the world were still wrestling with the fallout while cyber security experts scrambled to find a way to stem the spread.

Danish shipping giant A.P. Moller-Maersk (MAERSKb.CO) said it was struggling to process orders and shift cargoes, congesting some of the 76 ports around the world run by its APM Terminals subsidiary.

U.S. delivery firm FedEx Corp (FDX.N) said its TNT Express division had been significantly affected by the virus, which also wormed its way into South America, affecting ports in Argentina operated by China's Cofco.

The malicious code locked machines and demanded victims post a ransom worth $300 in bitcoins or lose their data entirely, similar to the extortion tactic used in the global WannaCry ransomware attack in May.

More than 30 victims paid up but security experts are questioning whether extortion was the goal, given the relatively small sum demanded, or whether the hackers were driven by destructive motives rather than financial gain.

Hackers asked victims to notify them by email when ransoms had been paid but German email provider Posteo quickly shut down the address, a German government cyber security official said.

Ukraine, the epicenter of the cyber strike, has repeatedly accused Russia of orchestrating attacks on its computer systems and critical power infrastructure since its powerful neighbor annexed the Black Sea peninsula of Crimea in 2014.

The Kremlin, which has consistently rejected the accusations, said on Wednesday it had no information about the origin of the global cyber attack, which also struck Russian companies such as oil giant Rosneft (ROSN.MM) and a steelmaker.

"No one can effectively combat cyber threats on their own, and, unfortunately, unfounded blanket accusations will not solve this problem," said Kremlin spokesman Dmitry Peskov.

ESET, a Slovakian company that sells products to shield computers from viruses, said 80 percent of the infections detected among its global customer base were in Ukraine, with Italy second hardest hit with about 10 percent.

ETERNAL BLUE

The aim of the latest attack appeared to be disruption rather than ransom, said Brian Lord, former deputy director of intelligence and cyber operations at Britain's GCHQ and now managing director at private security firm PGI Cyber.

"My sense is this starts to look like a state operating through a proxy ... as a kind of experiment to see what happens," Lord told Reuters on Wednesday.

While the malware seemed to be a variant of past campaigns, derived from code known as Eternal Blue believed to have been developed by the U.S. National Security Agency (NSA), experts said it was not as virulent as May's WannaCry attack.

Security researchers said Tuesday's virus could leap from computer to computer once unleashed within an organization but, unlike WannaCry, it could not randomly trawl the internet for its next victims, limiting its scope to infect.

Bushiness that installed Microsoft's (MSFT.O) latest security patches from earlier this year and turned off Windows file-sharing features appeared to be largely unaffected.

There was speculation, however, among some experts that once the new virus had infected one computer it could spread to other machines on the same network, even if those devices had received a security update.

After WannaCry, governments, security firms and industrial groups advised businesses and consumers to make sure all their computers were updated with Microsoft (MSFT.O) security patches.

Austria's government-backed Computer Emergency Response Team (CERT) said "a small number" of international firms appeared to be affected, with tens of thousands of computers taken down.

Security firms including Microsoft, Cisco's (CSCO.O) Talos and Symantec (SYMC.O) said they had confirmed some of the initial infections occurred when malware was transmitted to users of a Ukrainian tax software program called MEDoc.

The supplier of the software, M.E.Doc denied in a post on Facebook that its software was to blame, though Microsoft reiterated its suspicions afterwards.

"Microsoft now has evidence that a few active infections of the ransomware initially started from the legitimate MEDoc updater process," it said in a technical blog post.

CORPORATE CHAOS

A number of the international firms hit have operations in Ukraine, and the virus is believed to have spread within global corporate networks after gaining traction within the country.

Shipping giant A.P. Moller-Maersk (MAERSKb.CO), which handles one in seven containers shipped worldwide, has a logistics unit in Ukraine.

Other large firms affected, such as French construction materials company Saint Gobain (SGOB.PA) and Mondelez International Inc (MDLZ.O), which owns chocolate brand Cadbury, also have operations in the country.

Maersk was one of the first global firms to be taken down by the cyber attack and its operations at major ports such as Mumbai in India, Rotterdam in the Netherlands and Los Angeles on the U.S. west coast were disrupted.

Other companies to succumb included BNP Paribas Real Estate (BNPP.PA), a part of the French bank that provides property and investment management services.

"The international cyber attack hit our non-bank subsidiary, Real Estate. The necessary measures have been taken to rapidly contain the attack," the bank said on Wednesday.

Production at the Cadbury factory on the Australian island state of Tasmania ground to a halt late on Tuesday after computer systems went down.

Russia's Rosneft, one of the world's biggest crude producers by volume, said on Tuesday its systems had suffered "serious consequences" but oil production had not been affected because it switched to backup systems.

Source: Reuters

Brazil economy to grow less than expected in 2017: finance minister

REUTERS/Ricardo Moraes/File Photo
The Brazilian economy is likely to expand at a slower pace than expected this year, Finance Minister Henrique Meirelles said on Wednesday, adding that the government may need to increase taxes.

Speaking to journalists, Meirelles said gross domestic product (GDP) is likely to increase 2 percent in the fourth quarter from the year before, down from a previously expected 2.7 percent. As a result, full-year growth should average "a bit less" than the official 2 percent estimate, he added.

Source: Reuters

Poll shows Lula and Silva tied in 2018 Brazil presidential vote

Former Brazilian President Luiz Inácio Lula da Silva would tie with Marina Silva in the runoff stage of the 2018 presidential elections, a poll published on Monday by the Folha de S.Paulo newspaper showed, though high rejection rates suggested strong voter disdain against politicians amid recent scandals.

The Datafolha poll asked voters about eight combinations of 12 potential candidates in a first-round vote. Lula, a member of the leftist Workers' Party, takes all scenarios where he runs, with around 30 percent of support, despite facing several corruption trials.

Lula, who was Brazil's president from 2003 to 2010, and Silva, a former senator who came in third in the past two presidential elections, each polled at 40 percent in a runoff scenario. Lula was in a statistical tie with anti-corruption federal judge Sergio Moro, who has vowed never to enter politics.

If Lula is found guilty of corruption by Moro, who is expected to issue a decision as soon as this month, and the ruling is upheld by an appeals court, he will be barred from running for public office. Silva easily wins all first-round vote scenarios in which Lula does not run.

The poll showed 46 percent of voters would not vote for the former president, the highest rejection rate among all candidates considered in the survey.

Many analysts see voter anger over corruption opening the door for a candidate from outside Brazil's political establishment, along with the fact nearly all expected candidates are ensnared in a corruption investigation involving kickbacks from some of Brazil's biggest companies.

That has reflected in increasing support for right wing, law-and-order congressman Jair Bolsonaro, who polled as high as 18 percent in some of the scenarios in the Datafolha poll. Still, he fails to win any potential runoffs.

The most recent poll interviewed 2,771 people across Brazil from June 21-23. The margin of error was 2 percent.

Source: Reuters

China's COFCO likely to sit out global grains race as it digests acquisitions

As the world trade in farm commodities faces a shake-up, one of the groups widely expected to play a leading role - China's COFCO - will probably have to sit out the industry consolidation after all.

Sources with knowledge of COFCO's expansion strategy say the state-run conglomerate is struggling to integrate businesses it bought three years ago, deals which made it a significant global agricultural trader but are now hindering its ability to swoop on rivals.

Illustrating the problems, the sources said that at times different arms of the agribusiness had tried to compete against each other in commodity deals. On top of this, several senior staff had recently left its trading operations while a heavy group debt burden presented another impediment to further mergers and acquisitions.

"For now, the focus is on reorganization and digesting the acquisitions," said a COFCO official, who declined to be identified. "Thoughts of further aggressive M&A or building assets are on the backburner for at least a couple of years," the official told Reuters.

Spokespeople for COFCO Group and its newly-formed COFCO International trading arm did not respond to requests for comment.

One of about 100 conglomerates controlled by China's central government, COFCO Group has interests that include hotels, real estate and some of China's leading food and drink brands including GreatWall wine.

It trades more than 78 million tonnes of grain a year, according to state media, and in 2014 agreed to buy Dutch grain trader Nidera and the agribusiness of Singapore-listed Noble Group for more than $3 billion.

The deals gave COFCO assets in some of the top grain, vegetable oil, sugar and coffee producing regions. They also allowed it to start challenging the "ABCD" quartet of agricultural commodity traders - Archer Daniels Midland (ADM), Bunge, Cargill [CARG.UL] and Louis Dreyfus Company [AKIRAU.UL] - which have long dominated the global business.

These firms were once highly profitable but in recent years record stocks of commodities such as corn, soybeans and wheat have sliced margins and dampened trading opportunities.

A first sign of sweeping change for the industry emerged last month when Swiss mining and commodities group Glencore Plc made an informal approach to Bunge to discuss "a possible consensual business combination".

While Bunge said it was not engaging in such talks, some kind of industry consolidation seems unavoidable and some people had said Glencore's move might spur COFCO into M&A action.

"For the past year I've expected that it would be COFCO that would go after Bunge. This may motivate them further," Jay O'Neil, an agricultural economist at Kansas State University, said last month.

Sources familiar with COFCO's thinking, however, also played down this possibility. "The company has suffered a lot because of the lengthy process of going toward one group," one of the sources said. "It will take some time to repair the damage of the last couple of years."

As COFCO Group is a state-owned enterprise, any acquisition would also need Chinese government approval, which could be a lengthy process.

COFCO INTERNATIONAL

COFCO unveiled its new division, COFCO International, on April 24, bringing together Nidera and its Swiss-based grain arm COFCO Agri under new chief executive Johnny Chi.

According to its website, the company aims to expand its business globally and "strengthen worldwide origination, logistics and trading capabilities" supported by COFCO's unique position in China.

The company has increased staff numbers in Geneva, home to COFCO International's headquarters and the center of its grains and oilseeds business. Its Rotterdam office separately plays a core role in trading activities.

Since the start of the year, COFCO has tried to replace two top officials at COFCO Agri, who sources said left due to disagreements over the direction of the group.

Company memos seen by Reuters showed that there has also been a string of departures in recent weeks, including head trader Wolfgang Stiehler, who had joined Nidera only in January this year to provide strategy also. Stiehler did not immediately respond to a Reuters request for comment.

Other officials who have left included traders, back office staff and local country managers, the memos showed.

A second source said Nidera and COFCO Agri had recently tried to compete for the same grain deal. While the duplication was eventually prevented, there were other similar instances and it was unclear whether those were stopped. "How is this supposed to happen if it's one company?" the source added.

"The transition into a merger is looking more difficult than people thought. The merger is complex and will not be quick," a third source said.

Two of the sources said separately that COFCO Agri was still buying grains from bigger rivals such as ADM, even though COFCO International was operational. This was due to the need to hedge deals, or to ensure they are completed promptly, one of the sources said.

DEBT AND CASH

Another obstacle to more acquisitions is COFCO's debt and cash position. Data from its results showed the group's total debt had risen to 51.88 billion yuan ($7.6 billion) in 2016 from 50.63 billion yuan the previous year.

Separately, the parent group's cash and cash equivalent position dropped to 1.28 billion yuan in 2016 from 4.13 billion yuan in the previous year. COFCO group's operating profit fell to 0.85 billion yuan in 2016 from 1.96 billion in 2015.

COFCO International's shareholders also include Singapore state investor Temasek, China-based private equity firm HOPU Investments, Standard Chartered and the World Bank's private sector investment arm IFC, according to regulatory statements.

Temasek, HOPU and Standard Chartered all declined to comment, while COFCO's investor relations department declined to provide details about the size of shareholdings in COFCO International. An IFC spokesman confirmed it had invested in the company but gave no details of the stake.

SOUTH AMERICAN GROWTH

Since first investing in Nidera, COFCO has reported several major problems, including a $150 million financial hole in its Latin American operations and $200 million in unauthorized trading losses on its biofuels desk in the region.

However, it has also made progress there. Data seen by Reuters showed COFCO, through Nidera's and Noble Agri's existing operations, has become the second biggest grain exporter from Argentina, behind Cargill.

In Brazil, data showed that COFCO had moved up to the no. 4 grain exporter slot in 2016, ahead of Louis Dreyfus.

"It's a new company with a lot of people coming from other firms," said Joseph Reiner, COFCO International's Brazil-based global head of coffee. "Growth has to be sustainable, considering resources and results," he told Reuters.

COFCO is already gaining prominence in the sugar market. Last month it sold the bulk of sugar - primarily sourced from Brazil - against the May ICE futures raw sugar contract. This was the second-largest delivery against the contract.

COFCO is estimated to rank as Brazil's no. 6 sugar player. Marcelo de Andrade, Sao Paulo-based president of global sugar at COFCO International, said the firm had looked at possible purchases of sugar mills in Brazil "but decided to abort any deals".

"At the moment we are not looking (at buying) any more and we are keen to fill as much as possible our current crushing capacity," he told Reuters.

Source: Reuters

Corruption charges against Brazil's Temer expected to come in waves: source

Brazil's top federal prosecutor will level corruption charges against President Michel Temer one at a time instead of making all the accusations at once, a strategy aimed at weakening his defense, a source with direct knowledge of the process told Reuters on Friday.

Under Brazilian law, any criminal charges against a sitting president must be approved by two-thirds of the lower house of Congress in order for the Supreme Court to put a leader on trial.

Top prosecutor Rodrigo Janot is expected to charge Temer with receiving bribes early next week. The president is also facing accusations of racketeering and obstruction of justice.

Temer's office and his attorney, Antonio Mariz, did not immediately respond to requests for comment. Temer has repeatedly said he is innocent of all accusations.

The investigation is hampering the president's ability to push his economic reforms through Congress.

Key lawmakers in Temer's alliance told Reuters this week, on condition of anonymity so they could speak freely, that they will set aside work on those proposed labor law reforms if forced to vote on criminal charges against Temer.

They also said they will not even consider advancing work on pension reforms until changes to the labor law are passed.

Temer is being investigated in connection with a political graft scheme involving JBS SA, the world's largest meatpacker. Company executives said in plea-bargain testimony that the president took nearly $5 million in bribes in return for help resolving tax matters, for freeing up loans from state-run banks and other matters.

Joesley Batista, one of the brothers who control JBS, also made a recording of a conversation he had with Temer earlier this year. In it the president appears to condone paying off a potential witness. Batista also accused Temer and aides of negotiating millions of dollars in illegal campaign donations for his Brazilian Social Democracy Party.

Lawyers defending Temer were trying to dismiss the use of the recording in the investigation, saying it was manipulated. But police said on Friday after finishing an analysis of the audio files and the equipment used by Joesley Batista to record the president that they were valid.

Lawmakers in Temer's alliance say they have the one-third of lower-house votes required to block any charges against Temer. Out of 513 deputies, leaders in the alliance said this week they have between 250 and 300 votes.

But they also told Reuters they widely expected Janot to use the strategy of dragging out the charges against Temer in an effort to wear down lawmakers with multiple votes.

Those ballots will be deeply unpopular with Brazilian voters who overwhelmingly believe Temer is corrupt, according to opinion polls.

It also gives more time for possible new corruption revelations to surface against Temer, said another key lawmaker speaking on condition of anonymity, potentially eroding his support in the house.

Source: Reuters

China, India, Japan hamper Asia oil demand growth, efforts to balance market

As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance.

A fuel glut in China, a hangover from demonetization in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world's top four oil buyers.

The three countries make up a fifth of 97 million barrels per day (bpd) in global oil consumption, and any hiccups among them will mean lower-than-expected oil demand growth in Asia, helping to undercut the OPEC-led effort to support prices.

"We are indeed seeing lower demand from more than a few clients - air, marine, road, industrial ... They are actually consuming less fuel than anticipated," said Michael Corley, managing director of Mercatus Energy Advisors.

In China, vying with the United States as the world's biggest oil importer, imports in May were still at a near record of 9 million bpd, but a looming cut in refinery operations is set to hit demand for crude oil in the third quarter.

In India, which overtook Japan as the world's third-biggest oil importer last year, crude imports fell by more than 4 percent between April and May to around 4.2 million bpd C-INIMP, as after-effects of the country's recent demonetization program hit consumption.

For the first five months of the year, India's imports are about flat to the same period last year, following an annual rise of 7.4 percent last year.

In Japan, Asia's most advanced economy, oil demand has been in structural decline for years due to a declining, ageing population, and the rise of cars with better mileage or that use alternative fuels.

Japan in April imported around 3.5 million bpd C-JPIMPTOT, down from a peak of 5.9 million bpd hit in 2005.

Coupled with plentiful supplies, the stuttering demand in Asia has contributed to a 20 percent price fall for Brent crude oil LCOc1 to around $45 per barrel, in what is the biggest slump in a first half of a year since 1997.

FLOATING STORAGE

In the latest indicator of a supply overhang, traders said that five very large crude carriers (VLCCs) have been chartered in recent days to store unsold oil.

Each VLCC can hold around 2 million barrels of oil, and the five chartered for storage add to around 25 supertankers already sitting in southern Malaysian waters.

In a market condition known as contango, where spot crude oil prices are cheaper than those for future delivery, it is profitable to store oil for a later sales.

Currently, spot Brent is almost $1.50 a barrel cheaper than that for delivery in early 2018. <0#LCO:>

"If oil prices head lower, floating storage will get more traction," said Ashok Sharma, managing director of ship broker BRS Baxi in Singapore.

The cheap spot price comes despite the effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by 1.8 bpd that has been in place since January.

Doubts over OPEC's compliance with its own targets and soaring U.S. output have led to scepticism that markets will re-balance soon.

"The slide in oil prices continues ... as markets remain skeptical of OPEC's ability to balance supplies," ANZ bank said on Friday.

Source: Reuters

U.S. bans fresh Brazil beef imports over safety concerns

The United States halted imports of fresh Brazilian beef on Thursday, the U.S. Department of Agriculture (USDA) said, after a high percentage of shipments failed to pass safety checks.

The USDA had "recurring concerns about the safety of the products intended for the American market," after increasing tests on Brazilian beef in March, according to a statement.

The agency raised scrutiny on Brazilian beef and ready-to-eat products as a precaution following an investigation into corruption involving Brazil's health inspectors that targeted meat companies JBS SA (JBSS3.SA) and BRF SA (BRFS3.SA).

JBS, the world's largest meat packer, declined to comment on the U.S. ban.

The USDA's action threatens the reputation of meat from Brazil, the world's top exporter of beef and poultry, even though the United States is not a top customer. It also could boost domestic sales in the United States.

"Product was already on the water and that's not going to be allowed in," Altin Kalo, a U.S. livestock analyst at Steiner Consulting Group, said about shipments headed to the United States from Brazil via boat.

Since March, the USDA has rejected 11 percent of Brazilian fresh beef products, compared to the rejection rate of 1 percent for shipments from the rest of the world, the agency said. The shipments, totaling about 1.9 million pounds, raised concerns about public health, animal health and sanitation, according to the USDA.

The agency said none of the rejected lots made it into the U.S. market.

The move to block Brazilian meat is a turnaround for Agriculture Secretary Sonny Perdue, who warned in March that Brazil might retaliate if the United States halted beef imports.

On Thursday, he said in a statement that "although international trade is an important part of what we do at USDA, and Brazil has long been one of our partners, my first priority is to protect American consumers."

The U.S. suspension will remain in place until Brazil's Agriculture Ministry "takes corrective action which the USDA finds satisfactory," according to the agency.

A slew of global buyers, including China, Egypt and Chile, curtailed imports of Brazilian meat after Brazilian federal police unveiled an investigation into alleged corruption in the sector on March 17.

Brazilian authorities said at the time that meat companies made payments to government health officials to forego inspections and cover up health violations.

China is not expected to follow the U.S. move as it only permits imports of frozen Brazilian beef, which has different requirements to fresh meat, said analysts.

Brazil is also China's top beef supplier, and would be difficult to replace in the short-term, said Pan Chenjun, senior animal protein analyst at Rabobank.

The United States began allowing shipments of fresh beef from Brazil last year after banning them due to concerns about foot and mouth disease in cattle.

Source: Reuters

Under pressure, Western tech firms bow to Russian demands to share cyber secrets

Western technology companies, including Cisco, IBM and SAP, are acceding to demands by Moscow for access to closely guarded product security secrets, at a time when Russia has been accused of a growing number of cyber attacks on the West, a Reuters investigation has found.

Russian authorities are asking Western tech companies to allow them to review source code for security products such as firewalls, anti-virus applications and software containing encryption before permitting the products to be imported and sold in the country. The requests, which have increased since 2014, are ostensibly done to ensure foreign spy agencies have not hidden any "backdoors" that would allow them to burrow into Russian systems.

But those inspections also provide the Russians an opportunity to find vulnerabilities in the products' source code - instructions that control the basic operations of computer equipment - current and former U.S. officials and security experts said.

While a number of U.S. firms say they are playing ball to preserve their entree to Russia's huge tech market, at least one U.S. firm, Symantec, told Reuters it has stopped cooperating with the source code reviews over security concerns. That halt has not been previously reported.

Symantec said one of the labs inspecting its products was not independent enough from the Russian government.

U.S. officials say they have warned firms about the risks of allowing the Russians to review their products' source code, because of fears it could be used in cyber attacks. But they say they have no legal authority to stop the practice unless the technology has restricted military applications or violates U.S. sanctions.

From their side, companies say they are under pressure to acquiesce to the demands from Russian regulators or risk being shut out of a lucrative market. The companies say they only allow Russia to review their source code in secure facilities that prevent code from being copied or altered. (Graphic on source code review process: tmsnrt.rs/2sZudWT)

The demands are being made by Russia’s Federal Security Service (FSB), which the U.S. government says took part in the cyber attacks on Hillary Clinton’s 2016 presidential campaign and the 2014 hack of 500 million Yahoo email accounts. The FSB, which has denied involvement in both the election and Yahoo hacks, doubles as a regulator charged with approving the sale of sophisticated technology products in Russia.

The reviews are also conducted by the Federal Service for Technical and Export Control (FSTEC), a Russian defense agency tasked with countering cyber espionage and protecting state secrets. Records published by FSTEC and reviewed by Reuters show that from 1996 to 2013, it conducted source code reviews as part of approvals for 13 technology products from Western companies. In the past three years alone it carried out 28 reviews.

A Kremlin spokesman referred all questions to the FSB. The FSB did not respond to requests for comment. FSTEC said in a statement that its reviews were in line with international practice. The U.S. State Department declined to comment.

Moscow's source code requests have mushroomed in scope since U.S.-Russia relations went into a tailspin following the Russian annexation of Crimea in 2014, according to eight current and former U.S. officials, four company executives, three U.S. trade attorneys and Russian regulatory documents.

In addition to IBM, Cisco and Germany's SAP, Hewlett Packard Enterprise Co and McAfee have also allowed Russia to conduct source code reviews of their products, according to people familiar with the companies' interactions with Moscow and Russian regulatory records.

Until now, little has been known about that regulatory review process outside of the industry. The FSTEC documents and interviews with those involved in the reviews provide a rare window into the tense push-and-pull between technology companies and governments in an era of mounting alarm about hacking.

Roszel Thomsen, an attorney who helps U.S. tech companies navigate Russia import laws, said the firms must balance the dangers of revealing source code to Russian security services against possible lost sales.

"Some companies do refuse," he said. "Others look at the potential market and take the risk."

"WE HAVE A REAL CONCERN"

If tech firms do decline the FSB's source code requests, then approval for their products can be indefinitely delayed or denied outright, U.S. trade attorneys and U.S. officials said. The Russian information technology market is expected to be worth $18.4 billion this year, according to market researcher International Data Corporation (IDC).

Six current and former U.S. officials who have dealt with companies on the issue said they are suspicious about Russia's motives for the expanded reviews.

"It’s something we have a real concern about," said a former senior Commerce Department official who had direct knowledge of the interaction between U.S. companies and Russian officials until he left office this year. "You have to ask yourself what it is they are trying to do, and clearly they are trying to look for information they can use to their advantage to exploit, and that’s obviously a real problem."

However, none of the officials who spoke to Reuters could point to specific examples of hacks or cyber espionage that were made possible by the review process.

Source code requests are not unique to Russia. In the United States, tech companies allow the government to audit source code in limited instances as part of defense contracts and other sensitive government work. China sometimes also requires source code reviews as a condition to import commercial software, U.S. trade attorneys say.

"CLEAN ROOMS"

The reviews often takes place in secure facilities known as "clean rooms." Several of the Russian companies that conduct the testing for Western tech companies on behalf of Russian regulators have current or previous links to the Russian military, according to their websites.

Echelon, a Moscow-based technology testing company, is one of several independent FSB-accredited testing centers that Western companies can hire to help obtain FSB approval for their products.

Echelon CEO Alexey Markov told Reuters his engineers review source code in special laboratories, controlled by the companies, where no software data can be altered or transferred.

Markov said Echelon is a private and independent company but does have a business relationship with Russia’s military and law enforcement authorities.

Echelon’s website touts medals it was awarded in 2013 by Russia’s Ministry of Defense for "protection of state secrets." The company’s website also sometimes refers to Markov as the "Head of Attestation Center of the Ministry of Defense."

In an email, Markov said that title is only intended to convey Echelon’s role as a certified outside tester of military technology testing. The medals were generic and insignificant, he said.

But for Symantec, the lab "didn't meet our bar" for independence, said spokeswoman Kristen Batch.

“In the case of Russia, we decided the protection of our customer base through the deployment of uncompromised security products was more important than pursuing an increase in market share in Russia,” said Batch, who added that the company did not believe Russia had tried to hack into its products.

In 2016, the company decided it would no longer use third parties, including Echelon, that have ties to a foreign state or get most of their revenue from government-mandated security testing.

"It poses a risk to the integrity of our products that we are not willing to accept," she said.

Without the source code approval, Symantec can no longer get approval to sell some of its business-oriented security products in Russia. "As a result, we do minimal business there," she said.

Markov declined to comment on Symantec’s decision, citing a non-disclosure agreement with the company.

TRUSTED LABS

Over the past year, HP has used Echelon to allow FSTEC to review source code, according to the agency's records. A company spokesman declined to comment.    

An IBM spokesman confirmed the company allows Russia to review its source code in secure, company-controlled facilities "where strict procedures are followed."

FSTEC certification records showed the Information Security Center, an independent testing company based outside Moscow, has reviewed IBM’s source code on behalf of the agency. The company was founded more than 20 years ago under the auspices of an institute within Russia’s Ministry of Defense, according to its website. The company did not respond to requests for comment.

In a statement, McAfee said the Russia code reviews were conducted  at "certified testing labs" at company-owned premises in the United States.

SAP allows Russia to review and test source code in a secure SAP facility in Germany, according to a person familiar with the process. In a company statement, SAP said the review process assures Russian customers “their SAP software investments are safe and secure.”

Cisco has recently allowed Russia to review source code, according to a person familiar with the matter.

A Cisco spokeswoman declined to comment on the company's interactions with Russian authorities but said the firm does sometimes allow regulators to inspect small parts of its code in "trusted" independent labs and that the reviews do not compromise the security of its products.

Before allowing the reviews, Cisco scrutinizes the code to ensure they are not exposing vulnerabilities that could be used to hack the products, she said.

Source: Reuters

Oil market fundamentals heading in right direction - Saudi's Falih

BSaudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction but still needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday.

"In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect," he told the newspaper, referring to a global deal to curb oil production.

"Current expectations indicate the market will rebalance in the fourth quarter of this year, taking into account an increase in shale oil production," he said.

Asked about the recent drop in oil prices, Falih said: "Markets determine prices but are themselves driven by unpredictable variables beyond the control of producing nations."

"Short-term volatility is mostly a reaction to short-term factors ... as well as the role of speculators in stock markets that increase market volatility."

Oil prices dipped on Monday, weighed down by a continuing expansion in U.S. drilling that has helped to maintain high global supplies despite an OPEC-led initiative to tighten the market by cutting production.

The price of oil is down around 14 percent since late May, when producers led by the Organization of the Petroleum Exporting Countries extended their pledge to cut output by 1.8 million barrels per day (bpd) by an extra nine months.

Falih said there was a relatively big draw of around 50 million barrels from floating storage and a drop in industrialised nations' onshore storage of 65 million barrels compared to July last year.

"The market often tends to ignore these criteria and focus on the drop in U.S. inventories that came below expectations," he said.

Compliance in April and May with the OPEC-led output deal was above 100 percent, he said.

Falih also said he expects Libya's production to return to normal levels.

OPEC members Libya and Nigeria were exempted from the supply cuts because unrest had curbed their output.

"It is inappropriate to pressure Libya to slow the recovery in its production," he was quoted as saying.

He said production levels in Libya and Nigeria were within the range determined when OPEC, meeting in September last year in Algeria, decided to cut output for the first time since 2008.

"They shouldn't be considered a threat to the initiative."

OPEC's output rose by 336,000 bpd in May to 32.14 million bpd, led by a rebound in Nigeria and Libya, the 14-country organisation said last week in its monthly report.

Source: Reuters

Brazil's Temer to sue billionaire foe over graft accusations

Brazilian President Michel Temer denied allegations made by a billionaire businessman in a magazine interview published on Saturday that he led a corruption scheme in which politicians squeezed high-profile executives for bribes, and vowed to sue the businessman.

In a statement, Temer's office said he will take "all appropriate actions" against billionaire Joesley Batista, who told Época magazine that the 77-year-old politician has run a bribe-for-favors scheme at the government since 2010.

In his first interview since striking a leniency agreement with Brazilian prosecutors, Batista told Época that Temer asked for money several times in recent years as he led a group of senior politicians regularly demanding kickbacks in exchange for political favors.

"Temer is the leader of a lower house criminal organization," Época quoted Batista as saying. "Those who are not under arrest are in the government. They're very dangerous."

Temer's lawyers said in the statement released by his office that they will file civil and criminal lawsuits against Batista as early as Monday. Press representatives for Batista and his family's investment holding company, J&F Investimentos SA, were not immediately available for comment.

The coming week already promises to be a tense one for Temer and Batista, one of Brazil's richest businessmen. The Supreme Court is to discuss the validity of Batista's plea deal, and Prosecutor-General Rodrigo Janot could file charges against the president for corruption accusations that Batista made in May.

Temer, in his statement on Saturday, rebuffed Batista's allegations in the Época interview that, saying that the billionaire repeatedly sought Temer's help for his personal benefit but was denied.

Temer also attacked terms of the leniency deal that allowed Batista to escape prosecution, saying in the statement that the terms made the billionaire "Brazil's most successful criminal ever." The statement said Batista's testimonies "puts the blame of his crimes on others, while protecting his real partners." The statement did not identify anyone.

THREAT OF OUSTER

Last week, Temer escaped the threat of ouster as president after Brazil's top electoral court dismissed a case over alleged illegal campaign funding for the 2014 election - in which he ran on the same ticket of former President Dilma Rousseff.

Rousseff was impeached last year on accusation she oversaw the doctoring of budget accounts.

J&F agreed to pay a record-setting 10.3 billion-real ($3.1 billion) leniency fine, after Joesley Batista and his brother Wesley admitted to bribing almost 1,900 politicians in recent years. J&F-controlled JBS SA, the world's No. 1 meatpacker, is being investigated for alleged insider trading ahead of the announcement of the Batista family's leniency deal.

Batista denied having ordered insider trades at JBS, according to the Época interview, adding that he believed they were all made in line with the law.

He said J&F will sell "as many assets as necessary" to quash concerns about the group's solvency. J&F diversified from meatpacking in recent years, expanding into fashion, home cleaning, banking and pulpmaking with the help of state loans, prosecutors said.

Source: Reuters

Van rams Muslim worshippers in London, PM May condemns 'sickening' attack

A van plowed into worshippers near a London mosque in the early hours of Monday, injuring 10 people, two of them seriously, in what Prime Minister Theresa May said was a sickening, terrorist attack on Muslims.

The vehicle swerved into a group of mainly North and West African people shortly after midnight as they left prayers at the Muslim Welfare House and the nearby Finsbury Park Mosque in north London, one of the biggest in Britain.

The driver, a 48-year-old white man, was grabbed at the scene by locals and pinned down until police arrived. He was arrested on suspicion of attempted murder.

After being seized, the man said he had wanted to kill "many Muslim people," one witness told journalists.

A man, who had earlier suffered a heart attack, died at the scene but it was not clear if his death was connected to the van attack.

"This morning, our country woke to news of another terrorist attack on the streets of our capital city: the second this month and every bit as sickening as those which have come before," May told reporters outside her Downing Street office.

"This was an attack on Muslims near their place of worship," said May who later visited the mosque.

The attack was the fourth since March in Britain and the third to involve a vehicle deliberately driven at pedestrians.

It came at a tumultuous time for the government with Britain starting complex divorce talks with the European Union and May negotiating with a small Northern Irish party to stay in power after losing her parliamentary majority in a snap election that backfired.

DRIVER DETAINED

The mosques' worshippers, mainly from North and West Africa, had just left special prayers during the Muslim holy month of Ramadan.

Usain Ali, 28, said he heard a bang and ran for his life.

"When I looked back, I thought it was a car accident, but people were shouting, screaming and I realized this was a man choosing to terrorize people who are praying," he told Reuters. "He chose exactly the time that people pray, and the mosque is too small and full, so some pray outside."

Another witness Yann Bouhllissa, 38, said he had been tending an old man who had suffered a heart attack when the van was driven at them. The driver was then seized by locals.

"One guy caught the guy and brought him down," Bouhllissa told Reuters. "When he was on the floor, the guy asked 'why do you do that?'. He said 'Because I want to kill many Muslim people'."

Mohammed Mahmoud, the imam from the Muslim Welfare House, stepped in to ensure the van driver was not hurt until he was bundled into a police van.

"We found that a group of people quickly started to collect around him ... and some tried to hit him either with kicks or punches. By God's grace we managed to surround him and to protect him from any harm," Mahmoud told reporters.

"We stopped all forms of attack and abuse towards him that were coming from every angle."

Neil Basu, senior national co-ordinator for counter-terrorism policing, said restraint shown by locals was "commendable".

In addition to the man who died, 10 people were injured, with eight taken to hospital, two in a very serious condition, police said.

The driver, who Security Minister Ben Wallace said was "not known to the authorities in the space of extremism or far-right extremism", was arrested on suspicion of attempted murder. Police said they believed he had acted alone.

ATTACKS IN LONDON, MANCHESTER

The latest incident took place just over two weeks after three Islamist militants drove into pedestrians on London Bridge and stabbed people at nearby restaurants and bars, killing eight..

A suicide bombing at a pop concert in Manchester, northern England, in May also killed 22 people, while in March, a man drove a rented car into pedestrians on Westminster Bridge in London and stabbed a policeman to death before being shot dead. Five people were killed in that attack.

Five other terrorism plots have been foiled since March, police say.

May, weakened after losing her parliamentary majority in a June 8 election she had called to strengthen her hand in Brexit talks, has faced criticism for her record on security after the previous series of attacks blamed on Islamist militants.

London Mayor Sadiq Khan has called on her to reverse planned police spending cuts while she has also been criticized for her response to a fire in a London tower block last Wednesday which killed at least 79 people.

"Today’s attack falls at a difficult time in the life of this city, following on from the attack on London Bridge two weeks ago – and of course the unimaginable tragedy of Grenfell Tower last week," May said.

She promised action to stamp out all forms of hatred, saying there had been far too much tolerance of extremism in Britain over many years.

Police have said hate crimes rose after the London Bridge attack and more officers would be deployed to provide reassurance to mosques.

The Muslim Council of Britain said Monday's attack on mosque worshippers was the most violent manifestation of Islamophobia in Britain in recent months and called for extra security at places of worship.

Finsbury Park Mosque said it was a "callous terrorist attack" and noted it had occurred almost exactly a year after a man obsessed with Nazis and extreme right-wing ideology murdered lawmaker Jo Cox, a former humanitarian aid worker.

The mosque itself gained notoriety more than a decade ago for sermons by radical cleric Abu Hamza al-Masri, who was sentenced to life in a U.S. prison in January 2015 after being convicted of terrorism-related charges.

However, a new board of trustees and management took over in February 2005, a year after Abu Hamza was arrested by British police, since when attendance has greatly increased among worshippers from various communities, according to the mosque's website.

Source: Reuters

Oil slips as data points to fast-growing supply

Oil fell on Wednesday after reports showed global supply was rising and U.S. crude inventories were still increasing, raising concerns the market could stay oversupplied for longer than expected.

Brent crude oil LCOc1 fell by 28 cents to $48.44 a barrel by 1330 GMT, while U.S. crude futures CLc1 were down 29 cents on the day at $46.17.

Crude prices have fallen more than 10 percent since late May, pulled down by heavy global oversupply that has persisted despite a move led by the Organization of the Petroleum Exporting Countries to curb production.

OPEC and other exporters such as Russia have agreed to keep production almost 1.8 million barrels per day (bpd) below the levels pumped at the end of last year and not to increase output until the end of the first quarter of 2018.

But adherence to the cuts is under scrutiny and the producer group said this week its output rose by 336,000 bpd in May to 32.14 million bpd.

Oil stocks are near record highs in some parts of the world, and producers outside the OPEC deal are increasing output.

Some analysts are not ruling out that a rapid drawdown in inventories could take place.

"Balancing .. is taking longer. But at some point, investors may be surprised to see that supply and demand is in balance and as soon as global inventories start to normalize and come down to the five-year average, then (they) might start to worry that we might even have a shortage in the market," ABN Amro chief energy economist Hans van Cleef said.

The International Energy Agency said on Wednesday it expected growth in non-OPEC supply to be higher next year than growth in overall global demand. [IEA/M]

"For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply," the IEA said in its monthly oil market report.

"The outlook for oil hinges on the effectiveness of the OPEC cuts relative to the supply increases from U.S. shale," said William O'Loughlin, analyst at Australia's Rivkin Securities.

Data from the American Petroleum Institute showed on Tuesday that U.S. crude stocks rose by 2.8 million barrels in the week to June 9 to 511.4 million, compared with expectations for a decrease of 2.7 million barrels. [API/S]

The oil market needs strong demand to help offset the rapid increase in supply.

Global energy demand grew by 1 percent in 2016, roughly in line with the previous two years, but well below the 10-year average of 1.8 percent, BP (BP.L) said in its benchmark Statistical Review of World Energy on Tuesday.

Source: Reuters

Gunman wounds several at congressional baseball practice in Virginia

A gunman opened fire on Republican members of Congress during a baseball practice near Washington early on Wednesday, wounding several people including House of Representatives Majority Whip Steve Scalise before being taken into custody, police and witnesses said.

Five people were transported medically from the scene in Alexandria, the city's police chief, Michael Brown told reporters. Two of the wounded were Capitol Hill police who were at the scene, witnesses said.

In a dramatic blow-by-blow account, Representative Mo Brooks of Alabama told CNN the gunman was armed with a rifle and appeared to be a white male.

Brooks said he saw the man only for a second, and that he was shooting from a chain link fence behind the third base position on the field where the congressional group was holding an early morning morning practice ahead of a game against Democrats this week.

"There must have been 50 to 100 shots fired," he told CNN. "I hear Steve Scalise over near second base scream. He was shot," said Brooks, adding he helped apply a tourniquet with his belt to a congressional staffer who was shot in the leg.

"One of our security detail was shooting back, but it was our pistol versus the shooter's rifle," Brooks said. "The only weapon I had was a baseball bat."

Republican Senator Jeff Flake told local ABC-TV Scalise was shot in the left hip. Flake said the gunman was shot.

U.S. President Donald Trump said in a Twitter message that Scalise, "a true friend and patriot, was badly injured but will fully recover. Our thoughts and prayers are with him."

Scalise's position as whip in the Republican-controlled House makes him one of the most senior figures in Congress. He is a representative from Louisiana.

The group were practicing for the annual Democrats versus Republicans congressional baseball game that was scheduled to be played on Thursday.

'GOING AFTER ELECTED OFFICIALS'

"It's pretty well known in the neighborhood who those folks are on the baseball field," Brooks said. "It's not a secret we are practicing ... He was going after elected officials."

Democrats were also practicing at another field at a different location, CNN reported.

Reba Winstead lives across the street from the parking lot of the park where the shooting occurred.

"I was on my front porch and that is when I heard the first round of shots. There was about a dozen shots. There was a pause. Then there was more shooting. I called 911."

Trump, a Republican, said in a statement that he and Vice President Mike Pence were monitoring developments closely.

"We are deeply saddened by this tragedy. Our thoughts and prayers are with the members of Congress, their staffs, Capitol Police, first responders, and all others affected," he said.

Steve Scalise is the third-highest ranked member of the Republican leadership in the House, and has the difficult job of trying to keep order in the fractious party ranks and rounding up votes for bills.

Source: Reuters

Brazil crisis should not prevent lowering of inflation goal: official

Brazilian President Michel Temer should move ahead with plans to reduce the 2019 inflation goal despite the political crisis that has roiled his government, a member of the administration's economic team told Reuters on Tuesday.

Corruption allegations against Temer, who could be formally charged by prosecutors in coming weeks, threaten to derail his government's market-friendly drive, which includes a pension reform and legislation to flexibilize the labor market.

A reduction of the 4.5 percent inflation target for 2019, which was expected before the crisis erupted, could help the government gain market support, said the official who asked for anonymity to speak freely.

"The cost of cutting the target is very low while its gains are high in the eyes of the market," said the official, adding that he supports a new target of 4 percent.

A two-year recession has dragged down Brazil's annual inflation rate to its lowest in 10 years in May. Consumer prices as measured by the benchmark IPCA index rose 3.60 percent in the 12 months through May, down from an increase of 4.08 percent in the previous month.

Inflation is expected to end 2017 at 3.71 percent, according to a central bank weekly survey of economists.

The sharp drop has raised calls for a target reduction despite worries that political turmoil could undermine the pension reform needed to cap government spending and keep future inflation at bay.

Another senior economic team member told Reuters last week that the falling inflation rate will be a key factor when the National Monetary Council, the country's top economic policy body, meets later in June to decide on the 2019 target. The council, which is made up of the finance and planning ministers and central bank chief, is scheduled to meet on June 29.

Eighteen of 29 economists surveyed by Reuters in late May expected the 2019 goal to be reduced, with analysts split over a symbolic cut to 4.25 percent or a more aggressive move to 4.0 or 3.5 percent.

Source: Reuters

Qatar crisis to speed the rise of Asia's spot LNG trade

Qatar's isolation by other Arab nations has dealt a strong hand to Japanese utilities in talks reviewing long-term gas contracts with the top LNG exporter, likely accelerating a shift to a more openly traded global market for the fuel.

If Japan gets its way in the periodic contract review, the world's biggest buyer of LNG would have to import more short-notice supplies from producers such as the United States, another step away from rigid deals that run for decades towards a more active spot market.

At stake for Qatar are 7.2 million tonnes of annual liquefied natural gas (LNG) sold in contracts that expire in 2021. The $2.8 billion a year in gas mostly goes to Japan's JERA, a joint venture between Tokyo Electric and Chubu Electric that is the world's single biggest LNG buyer.

"Since the crisis emerged, the Japanese are sure not to renew all contracts and they will push very hard to get more flexible terms," said an advisor on LNG contracts, speaking on condition of anonymity due to the sensitivity of ongoing negotiations.

Qatar and Japan as seller and buyer will each account for nearly a third of 300 million tonnes to be shipped this year in 500 tankers. Any change in how volumes trade between them is sure to jolt an industry where practices in place since the 1970s are already being challenged.

In some ways the situation is similar to what happened in Europe between 2008 and 2014, when amid an economic crisis and tensions between Europe and Russia, European utilities renegotiated gas purchase terms, freeing up more supplies for spot markets.

Three deals between Japan and Qatar are under a periodic review, three sources with knowledge of the matter said, potentially allowing for some adjustments, and the buyers may also only partially renew the contracts when they expire.

An official with a Japanese buyer would not comment on individual contracts, but said purchase agreements were typically reviewed every five years.

That fits with the deals under discussion, which will expire in 2021 and were signed in 1997/1998 and in 2012.

Qatar Petroleum was not available for comment.

TABLES TURN

LNG volumes grew to 260 million tonnes last year from 250 million tonnes in 2015, produced by around a dozen countries, with more than half coming from Qatar, Australia and Malaysia.

Thirty-nine countries imported LNG in 2016, up by four from the previous year, with 70 percent of world consumption in Asia.

Facing competition from new producers, Qatar talked tough with Japan ahead of the contract reviews, warning buyers not to demand too many changes, or Japanese companies could be squeezed out of their stakes in Qatar's LNG projects.

But the tables have turned since Arab nations including Saudi Arabia, Egypt, and the United Arab Emirates (UAE) cut ties with Doha, boycotting its trade and weakening Qatar's negotiating position.

Cheniere, the only U.S. company to export LNG so far, is offering its supplies as an alternative.

"This dispute is a timely reminder of the value of the diversity and flexibility of supply that destination–free U.S. exports bring to individual buyers," said Cheniere spokesman Eben Burnham-Snyder.

Unlike other exporters, Cheniere allows its buyers to re-sell cargoes.

The Qatar crisis "will further encourage international LNG buyers to include more American LNG ... for reliability reasons," said Kent Bayazitoglu, director of market analytics at Gelber & Associates in Houston.

Source: Reuters

Brazil top court lambastes alleged Temer espionage attempt

Brazil's Supreme Federal Court urged a thorough investigation into reports that the country's secret security service spied on Justice Edson Fachin, in the latest clash involving President Michel Temer's embattled administration.

Court president Carmen Lúcia said in a statement on Saturday that, if proved accurate, such reports show an inadmissible meddling into the court and an attack against democratic liberties in Latin America's biggest country.

Magazine Veja reported late on Friday that the agency known as Abin might have been used to spy on Fachin - the top court justice in charge of a massive corruption probe that has ensnared Temer.

Temer's office denied the Veja report, saying the Abin "acts in accordance with the purpose for which it has been created".

If the report proves accurate, Lúcia said in the statement, punishment of the alleged espionage should take into account the grave "legal, political and institutional consequences of such an act."

"Common in dictatorships, these practices ... are serious and, when carried out against a judge, are completely unacceptable in a democracy," Lúcia said in the statement. "It has to be probed and repudiated, and any responsible parties properly punished."

Her remarks add to tension between the executive and judiciary branches of power, which gained intensity in the wake of Fachin's decision to validate a plea deal involving Temer in a corruption probe. Prosecutors allege that Temer worked to obstruct justice and condoned efforts to pay for the silence of a potential witness.

Source: Reuters

U.S. breaks with G7 on climate, development banks

The United States refused to sign up to the Group of Seven major industrialized economies' statement on climate change and plans to fund sustainable development, a statement from the group's environment ministers said on Monday.

The U.S. said it did not sign up to statements by its G7 colleagues from Italy, Canada, Japan, France, Britain and Germany on climate change and multilateral development banks "reflecting our recent announcement to withdraw and immediately cease implementation of the Paris Agreement and associated financial commitments," the statement said.

"The United States will continue to engage with key international partners in a manner that is consistent with our domestic priorities, preserving both a strong economy and a healthy environment," it said.

Earlier this month, U.S. President Donald Trump announced he would withdraw from the Paris climate change accord, saying that participating would undermine the economy, wipe out jobs, weaken U.S. national sovereignty, and put the country at a permanent disadvantage to others.

Source: Reuters

Brazil electoral court case against Temer loses force

After its chief judge urged his peers to consider Brazil's political stability, the country's top electoral court on Thursday excluded testimony of engineering company executives in an illegal campaign funding case against President Michel Temer

The decision by the Supreme Electoral Court suggested it may throw out the case that has threatened to unseat the scandal-hit president. That would clearly be a temporary win for Temer, but analysts say it would still leave him weakened and by no means bring an end to the political crisis roiling Brazil.

A guilty ruling would annul the 2014 election victory of former President Dilma Rousseff and her then running mate Temer and unseat Temer, though he could appeal and likely remain in office until a final decision, which would take months. That would deepen uncertainty over his austerity agenda aimed at plugging a gaping budget deficit and pulling Brazil out of its worst ever recession.

So far, only one judge has ruled in the trial. Herman Benjamin voted to annul the 2014 Rousseff-Temer ticket for accepting bribes and illegal donations.

But four of the seven justices are expected to vote the other way on Friday morning, including the head of the court, Gilmar Mendes, who said any ruling had to consider the stability of the country and Temer should not be compelled to step down for a minor reason.

Exclusion of the plea-bargain testimony from Odebrecht SA [ODBES.UL] executives strengthened Temer's line of argument that his campaign received no illegal funds.

The executives told prosecutors they funneled millions of dollars into the 2014 Rousseff-Temer campaign in return for government contracts and other kickbacks.

The Temer and Rousseff defense teams requested the Odebrecht testimony be scrapped, holding that it went beyond the scope of the original complaint filed to the court by the Brazilian Social Democracy Party (PSDB) after it lost the 2014 election.

"Temer has the votes to stay in office," said Welber Barral, a Brasilia insider and political consultant who is following the case closely, as is much of the country and its investors.

Barral said the court, known as the TSE, would most probably vote 4-3 to throw out the case. Any of the judges, however, could ask for more time to study the case, which could delay a final ruling for weeks.

Brazil's currency BRBY strengthened as investors sensed the court would likely favor Temer, raising the survival chances of his measures to close the budget deficit. Interest rate futures, a gauge of concern over Brazil's future, fell off morning highs on the decision to exclude Odebrecht testimony.

IF TEMER SURVIVES TSE, UNLIKELY TO FALL

Temer opponents had been counting on a TSE ruling to force him from office. The country is stuck in a political crisis triggered by Brazil's biggest ever graft scandal and last year's impeachment of Rousseff, whose supporters called it a soft coup arranged by Temer and allies to thwart the scandal probe.

Temer himself is under investigation for allegedly receiving millions in bribes and obstruction of justice, and Brazil's top federal prosecutor is widely expected to formally charge him soon.

Temer, whose government's approval ratings are in the single digits, canceled meetings to follow the court session on television in his presidential office, an aide said. "The president is confident his defense with prevail," spokesman Marcio de Freitas told Reuters.

If Temer is forced from office, lower house Speaker Rodrigo Maia would take over, and Congress would have 30 days to pick a caretaker to lead the country until elections in late 2018.

Temer has refused to resign despite separate bribery allegations made in plea-bargain testimony by executives of the world's largest meatpacker JBS SA (JBSS3.SA).

Even if Temer survives the electoral court case and is charged by prosecutors for corruption, he is unlikely to fall.

For the top court to put him on trial, the charges would have to be authorized by two thirds of the lower chamber of Congress, where his allies are still a majority.

The PSDB party, Temer's main coalition ally, delayed until Monday a meeting on whether to pull its three ministers from his cabinet, which would erode his support in Congress, but not to the point that charges against him would pass the chamber.

Source: Reuters

Iran raises oil exports to West, almost on par with Asia

Iran's oil exports to the West surged in May to their highest level since the lifting of sanctions in early 2016 and almost caught up with volumes exported to Asia, a source familiar with Iranian oil exports said.

Iran, which used to be OPEC's second biggest oil exporter, has been raising output since 2016 to recoup market share lost to regional rivals including Saudi Arabia and Iraq.

While many Asian nations continued to purchase oil from Iran during sanctions, Western nations halted imports, halving Iran's overall exports to as little as one million barrels per day (bpd).

Last month, Iran exported about 1.1 million bpd to Europe including Turkey, almost reaching pre-sanction levels and only slightly below the 1.2 million bpd supplied to Asia, the source told Reuters.

Iran's exports to Asia last month were the lowest since February 2016, Reuters' calculations showed.

Oil exports to Asia fell as South Korea and Japan stepped up oil condensate purchases and bought less oil, said the source, who asked not to be identified as the information is confidential.

"Iran's condensate parked in floating storage has almost been exhausted because of higher purchases by Japan and Korea," the source said.

Exports to Asia were also hit by India's decision to cut annual purchases from Iran by a fifth for the fiscal year to March 2018.

After the lifting of sanctions, Tehran added new clients such as Litasco and Lotos and won back customers such as Total (TOTF.PA), ENI (ENI.MI), Tupras (RDSa.L), Repsol (REP.MC), Cepsa CPF.GQ and Hellenic Petroleum (HEPr.AT).

OPEC member Iran was allowed a small production increase under a December deal to limit output.

Iran's overall May oil production totaled 3.9 million bpd, the source said.

Iran is currently producing about 200,000 bpd of West Karoun grade, which the nation blends with other Iranian heavy grades for export, he said.

Source: Reuters

Barnier: Brexit negotiations to start when UK is ready, position of Brussels

The European Union's chief negotiator for Brexit said on Friday that negotiations on the United Kingdom's withdrawal from the bloc would begin when the country was ready.

Commenting after the hung parliament result in the UK snap election, Michel Barnier said the timetable and position of Brussels were clear.

Source: EFE

Attackers bomb Iran parliament and mausoleum, at least 12 dead: Iranian media

Suicide bombers and gunmen attacked Iran's parliament and the Mausoleum of Ayatollah Khomeini in Tehran on Wednesday morning, killing at least 12 people in a twin assault at the heart of the Islamic Republic, Iranian officials and media said.

Islamic State claimed responsibility and released a video purporting to show gunmen inside the parliament building and one body, apparently dead, on the floor.

The rare attacks were the first claimed by the hardline Sunni Muslim militant group inside in the tightly controlled Shi'ite Muslim country. Islamic State has regularly threatened Iran, one of the powers leading the fight against the militants’ forces in neighboring Iraq and, beyond that, Syria.

The raids took place at a particularly charged time, after Iran's main regional rival Saudi Arabia and other Sunni powers cut ties with Qatar on Monday, accusing it of backing Tehran and militant groups.

Attackers dressed as women burst through parliament's main entrance in central Tehran, deputy interior minister Mohammad Hossein Zolfaghari said, according to the semi-official Tasnim news agency.

One of them detonated a suicide vest in the parliament, he said. About five hours after the first reports, Iranian news agencies said four people who had attacked parliament were dead and the incident was over.

At least 12 people were killed by the attackers, the head of Iran's emergency department, Pir-Hossein Kolivand, was quoted as saying by state broadcaster IRIB.

"I was inside the parliament when shooting happened. Everyone was shocked and scared. I saw two men shooting randomly," said one journalist at the scene, who asked not to be named.

Soon after the assault on parliament, another bomber detonated a suicide vest near the shrine of the Republic's revered founder, Ayatollah Khomeini, a few kilometers south of the city, Zolfaghari said, according to Tasnim.

A second attacker was shot dead, he said.

The Intelligence Ministry said security forces had arrested another "terrorist team" planning a third attack, without giving further details.

"I was shopping and suddenly heard shooting," said housewife Maryam Saghari, 36, who lives near parliament.

"People started to run away from the area. I was very scared. I don't want to live in fear," she told Reuters by telephone.

Source: Reuters

Brazil's labor reform bill advances in Senate

Brazilian President Michel Temer's proposal to modernize the labor market was approved by the Senate's economic affairs committee on Tuesday, clearing an important hurdle despite a political crisis that has jeopardized the government's reforms agenda.

The committee passed the bill 14-11. The proposal still needs the approval of two other Senate committees before it reaches the floor.

Temer is facing calls to resign due to allegations he took bribes from meatpacker JBS SA. The scandal is threatening to derail his reform agenda that includes an overhaul of the costly pension system.

The labor reform bill has already been approved by the lower house, but faces fierce opposition from labor unions that will lose power over workplaces. The bill allows more temporary work contracts and outsourcing, eliminating mandatory union dues.

The proposal to modernize Brazil's labor laws, some of which date back to the 1940s, is eagerly awaited by Brazilian businesses so they can lower labor costs that undercut their ability to compete in foreign markets.

The senator sponsoring the bill, Ricardo Ferraço, has said he expects the final vote in late June.

Source: Reuters

Brazil court opens case that could unseat President Temer

Brazil's top electoral court (TSE) reopened a case on Tuesday about illegal campaign funding by the Rousseff-Temer ticket that could annul their 2014 election victory and unseat President Michel Temer.

Temer's opponents see a court ruling as a way out of a political crisis set off by corruption allegations leveled against the center-right leader, but a decision could take weeks if not months and can be appealed by Temer.

The case was postponed in April to allow for new evidence arising from Brazil's biggest ever corruption scandal involving billions of dollars in kickbacks paid by companies to scores of politicians and government officials.

The court's decision is key to deciding the political future of Brazil, where the prospect of having a second president ousted in one year has generated political volatility. The uncertainty has weakened the Brazilian currency, stocks and bonds in recent days.

Temer was the running mate of leftist President Dilma Rousseff and replaced her when she was impeached last year.

If Temer is removed from office, lower house Speaker Rodrigo Maia would take over and Congress would have 30 days to pick a caretaker to lead the country until elections in late 2018.

Left-wing parties are calling for early general elections for Brazilians to pick a new president directly.

If Temer is found guilty, he is expected to appeal, which could delay the process for months. The government would likely destabilize and prompt members of his coalition to withdraw their support, increasing chances he could be forced to resign.

The main ally in Temer's governing coalition, the Brazilian Social Democracy Party (PSDB), is waiting for the court ruling to decide whether to abandon Temer's government, which would sink his fiscal reform agenda.

The electoral court had been expected to blame Rousseff and absolve Temer, but that is now unlikely due to recent plea-bargain testimony by executives of giant meatpacker JBS SA (JBSS3.SA) and engineering group Odebrecht who alleged they gave illegal funds to his campaign.

Temer has refused to resign since the Supreme Court late last month authorized an investigation against him for alleged corruption, racketeering and obstruction of justice.

The investigation is based in part on a secret recording of a conversation with a JBS executive in which Temer appeared to agree to the payment of hush money to silence a key witness in a massive graft scandal.

The political crisis engulfing Temer's government deepened on Saturday with the arrest of a close aide, former lawmaker Rocha Loures, who was seen in a police video receiving a bag filled with 500,000 reais ($152,000) in cash.

The Supreme Court has given Temer until Friday to answers questions by federal police on his conversation with the JBS executive and whether Loures was a middleman.

Temer's political standing took another blow on Tuesday with the arrest of his former minister of tourism, Henrique Eduardo Alves, for suspected graft in the building of a soccer stadium in northeastern Brazil for the 2014 World Cup.

Source: Reuters