Commodities Update — Gold prices edging up; Soybeans recover; Cargill plans to close rapeseed facility 

RIYADH: Oil prices made gains on Wednesday, rebounding from losses earlier in the session amid concerns over fuel demand and the broader economy ahead of an expected big hike in interest rates by the US Federal Reserve.

In volatile trading, Brent crude futures for August were up 15 cents, or 0.1 percent, at $121.32 a barrel as of 0422 GMT after falling to as low as $120.65 earlier in the session on the back of a 0.9 percent decline on Tuesday.

US West Texas Intermediate crude for July rose 15 cents, or 0.1 percent, to $119.08 a barrel, after hitting a low of $118.22 earlier in the day, having dropped 1.7 percent a day earlier. 

Energy executives at transition conference still lean on fossil fuels

Energy company executives at a conference on the global transition insisted on Tuesday that fossil fuels, especially natural gas, are still needed at a time when global markets grapple with tight energy supplies and skyrocketing prices.

TotalEnergies’ CEO Patrick Pouyanne, speaking at the Reuters Events’ Global Energy Transition 2022 conference, said tight global fuel supplies are partly due to oil and gas companies listening to political leaders calling for less investment in fossil fuels.

In recent years, governments worldwide have encouraged investment in renewable fuels to achieve pledged reductions in carbon emissions. 

Oil and gas companies reined in exploration and production as investors pressed them to devote more capital to share buybacks and dividends.

Pouyanne said companies have listened to policymakers’ carbon emission reduction goals, which has left a lack of investment in fossil fuel production at a time when the world is calling for more energy supplies.

“We have to do all of it. Indexing on just one aspect of energy or another isn’t really a sustainable long-term solution,” said Bruce Niemeyer, Chevron Corp’s vice president of strategy and sustainability, to Reuters on the sidelines of the conference.

Lorenzo Simonelli, CEO of Baker Hughes, said the market must focus more on reducing carbon emissions and less on fuel sources used to do that.

“We must decrease emissions at the same time as increasing supply,” Simonelli said. “Energy is good, emissions are bad.”

US allies need to limit Russian oil revenue: Deputy Treasury Chief

Russia’s oil profits have likely risen despite lower crude exports and the US and its allies must find ways to reduce Moscow’s oil revenue, possibly by capping prices, US Deputy Treasury Secretary Wally Adeyemo said on Tuesday.

Adeyemo told a US Senate Appropriations subcommittee hearing that higher oil prices have offset lower production and export volumes since Russia invaded Ukraine in late February.

The US is discussing with European and Asian allies a way to impose a cap on prices paid for Russian crude to limit its benefit from higher crude prices, Adeyemo said.

But he declined to provide details on the status of those talks, saying that such information would be reserved for a classified briefing for senators.

“So the goal is to make sure that you reduce the price that they are able to gain from selling their crude going forward,” Adeyemo said, adding that otherwise, Russia is benefiting directly from the higher prices caused by its own aggression in Ukraine.

The US has already banned Russian energy imports but the EU, heavily dependent on Russia, is working to phase in a boycott starting at the end of 2022.

Asked why Washington has not imposed a full trade embargo on Russia, Adeyemo said such a move would only have “a marginal impact on Russia’s economy at best,” given the limited amount of trade between the two countries.

Adeyemo gave no indication of a broader move toward secondary sanctions on countries and companies that are continuing to do business with Russia. He said there were some actions being taken against individual firms, including those servicing yachts for Russian oligarchs under sanctions.