Economy

Traders were encouraged by signs of an improving demand outlook, with crude oil futures closing at their highest point in more than a week on Friday, posting their biggest weekly gain since April.

energy commodity prices

• West Texas Intermediate (WTI) crude futures for July delivery rose $1.16, or 1.6%, to $71.78 a barrel, with front-month WTI futures ending the week up 2.3%.
• delivered in augustBrent Crude (Brent) futures rose 94 cents, or 1.2%, to $76.61 a barrel, ending the week up 2.4%.

Brent and WTI Crude OilFutures both settled at their highest since June 7 and notched their biggest weekly gain since the week ended April 6.

• Gasoline futures for July delivery rose 1.5% to settle at $2.68 a gallon, and ended the week up 3.4%.
• Delivered in JulyHot Fuel FuturesPrices rose 2.9 percent to $2.55 a gallon, for an 8.1 percent gain for the week.
• Natural gas futures for July delivery rose 3.9% to settle at $2.63 per million Btu, closing the week up nearly 17%.

market drivers

Crude oil finally ended the week higher following gaining on Friday following two consecutive weekly losses. Crude oil prices found support on Thursday following the Wall Street Journal reported that Chinese authorities were preparing to implement aggressive economic stimulus measures.

China is the world’s second largest oil consumer. Disappointment over China’s economic rebound has been weighing on crude oil prices through 2023, but that’s not the only factor driving lower prices this year.

“There are a number of key factors behind the decline in oil prices so far this year: a weaker-than-expected rebound in Chinese demand, stronger-than-expected supply from Russia, rising U.S. crude inventories and heightened demand concerns – especially in the Western Hemisphere,” said Matt Smith, chief oil analyst for the Americas at Kpler.

“In view of this, OPEC+ (especially Saudi Arabia) is worried regarding the market conditions for the rest of the year, so it announced a production cut in early April, and then in June, Saudi Arabia unexpectedly announced an additional production cut of 1 million barrels per day starting in July. to prevent oil prices from falling below $70 a barrel,” he said.

Data from Baker Hughes on Friday suggested that U.S. production may be falling. According to the data, the number of active oil rigs in the United States fell by 4 this week to 552.

Meanwhile, media sources this week have speculated that the United States and Iran are close to reaching an interim nuclear deal.
Analysts said that the full resumption of Iranian oil production would have a major impact on global markets, but many still expected that the United States would not reach an agreement with Iran to ease Iran’s oil sanctions.

In natural gas, front-month futures rose to their highest level since March 7 on Friday. Natural gas also closed sharply higher on Thursday, as the EIA announced that US natural gas inventories increased by 84 billion cubic feet last week (6/9), which was lower than expected.

Victoria Dircksen, a commodity analyst at Schneider Electric, reported that the weather forecast released by the National Oceanic and Atmospheric Administration (NOAA) for the next 8 to 14 days shows that the temperature in most of the Midwestern and southern parts of the United States will be above average, which means The cooling demand for power generation in the second half of June may increase.

Xinhua News Agency, Frankfurt, June 15th(International Observation) The European Central Bank may continue to raise interest rates as inflation continues to run high

Xinhua News Agency reporter Shao Li

The European Central Bank held a monetary policy meeting on the 15th and decided to raise the three key interest rates in the euro zone by 25 basis points. Since the start of the rate hike process in July last year, the ECB has raised interest rates eight times in a row, totaling 400 basis points. Analysts pointed out that despite the sluggish economic growth in the euro zone, the expectation that the inflation rate will remain too high for a long time will make it difficult for the European Central Bank to suspend interest rate hikes. The European Central Bank may further raise interest rates in July in order to prompt inflation to fall.

According to the announcement issued on the same day, starting from the 21st of this month, the European Central Bank will raise the main refinancing rate, marginal lending rate and deposit mechanism interest rate to 4%, 4.25% and 3.5% respectively. The ECB will ensure that key interest rates in the euro zone reach a sufficiently high and restrictive level and remain there if necessary to achieve its medium-term target of inflation falling back to 2 percent in a timely manner.

At present, the inflation rate in the euro area has shown a downward trend, but the ECB expects that the inflation rate will remain at an excessively high level for a long time. According to Eurostat data, the overall inflation rate in the euro zone was 6.1% in May this year. The European Central Bank believes that although some inflation indicators have slowed down, inflationary pressures are still high, especially the core inflation rate that excludes energy, food, tobacco and alcohol prices is higher than previously expected.

On the day of announcing the interest rate decision, the European Central Bank raised its inflation forecast for the euro area to 5.4% in 2023, and lowered its inflation forecast to 3% in 2024 and 2.2% in 2025.

In contrast to the continued interest rate hikes in the euro zone, the U.S. Federal Reserve Board announced on the 14th that it will maintain the target range of the federal funds rate of 5% to 5.25%. interest.

Carsten Brzeski, director of macro research at ING, believes that the core inflation rate in the euro zone will only approach the 2% target level in two years, and there are more reasons to continue raising interest rates. At the same time, the European Central Bank expects economic growth in the euro area to return to potential levels by the end of the year, which also leaves the door open for further interest rate hikes.

According to the revised data released by Eurostat on the 8th, the Eurozone economy fell into a technical recession at the beginning of this year, and the gross domestic product (GDP) fell by 0.1% month-on-month for two consecutive quarters. The “Financial Times” once wrote that the current economic data in the euro zone may weaken people’s confidence in the resilience of the euro zone economy, making the European Central Bank hesitant to continue to increase borrowing costs.

Friedrich Heinemann, an economist at the Center for European Economic Research, said the fact that the ECB has continued to raise interest rates despite the poor economic outlook shows that restoring price stability is its top priority.

Regarding whether the European Central Bank will continue to raise interest rates in July, there were different voices within the European Central Bank. Those who support the suspension of interest rate hikes emphasize that there is an obvious lag effect in monetary policy, so the wait-and-see effect is more important. Opponents point to persistently high core inflation in the euro zone and the European Central Bank’s work to raise borrowing costs.

European Central Bank President Christine Lagarde said at the press conference that day that the current inflation rate is still too high and that rising wages are increasingly driving inflation. The ECB has not done its job of fighting inflation. She said there were “no plans to pause (rate hikes) under consideration at this time” and further rate hikes in July were “very likely” unless there was a material change in economic data.

BNP Paribas economist Spiros Andreopoulos expects the ECB to raise rates one last time in July and keep rates there for several quarters.

Dirk Schumacher, an economist at Natixis, said the European Central Bank’s move to raise inflation forecasts for the euro zone in 2023 has increased the likelihood it will continue raising interest rates in September. To avoid that, euro zone core inflation needs to fall significantly by September.

[Responsible editor: Yan Yujie]

The president and CEO of Alstom for the Americas persists and signs: the debate surrounding the usefulness for a country of having a high-speed train (TGV) is one of the 1970s.

• Read also: Obstacles for a Quebec-Toronto TGV

• Read also: Voices militate for the TGV in Quebec

• Read also: Quebec must board the train… at high speed

Asked Thursday at an event of the Council on International Relations of Montreal (CORIM), Michael Keroullé admitted to being surprised to see Canadians still hesitating between the option of the TGV and that of the TGF (high frequency train) .

“This is a debate that no longer takes place elsewhere. Canada is the only G7 country not to have a TGV on its territory. There are 10,000 kilometers of high-speed rail in Europe. And I’m not talking regarding Asia; where we are talking regarding hundreds of thousands of kilometers in China alone…”

The big boss of Alstom, of which the Caisse de depot et placement du Québec (CDPQ) is today the largest shareholder – with a 17.5% stake -, recalls that the Quebec-Toronto rail corridor, targeted by a such a train, already brings together 18 million people, or half of the Canadian population.

The context might not be more conducive, in his opinion, to the adoption of the TGV option by the Canadian government. “We do not feel alone, on the contrary. […] We are very, very optimistic and quite convinced that high speed is what will make the most economic sense.

“It’s speed that brings success [que le train soit préféré par les automobilistes]. Not the frequency, but the speed. And then, he continues, we can very well afford both speed and frequency. That’s something we don’t say enough.”

The REM: still “a few weeks”

Despite the successive postponements of its commissioning, the CEO of Alstom assures that the systems of the Metropolitan Express Network (REM) in the Montreal region do not experience any specific problem.

“Everything works very well. We’re just extremely careful, responded to the Journal Mr. Kéroullé, on the sidelines of his conference. We want this launch to be a launch without any event. We want it to be a success from day one. It is very important for us, it is very important for the Caisse.”

A few days ago, The Press revealed that four weeks following announcing a new postponement of commissioning, CDPQ Infra, a subsidiary of the Caisse de depot, had still not started the final stage of “white run”. The latter consists of cross-checking – over several weeks – all the systems before the official commissioning.

“A few weeks late is not pleasant. But that’s better than a failed launch,” replied Mr. Keroullé. In addition to system testing, Alstom is currently working on the qualification of employees who will be responsible for operating and maintaining the REM.

“It’s a very complicated system, a whole new infrastructure. There are a lot of needs around that that you have to master. […] We need to mature. […] Trying to go faster than you really can would be more risky. And we are not ready to take those risks.”

And so, “in agreement with the CDPQ, we decided to take the time necessary to reach the right level of maturity for both the system and the operators”, he said, hoping that the first 18 km section, between Brossard and downtown Montreal, can be put into service in time for September.

“We’re talking regarding a few weeks,” he said. […] As they say, it’s coming.”

No worries for La Pocatière

The workers at the Alstom assembly plant in La Pocatière would have no reason to worry regarding their level of participation in the manufacture of the streetcars ordered by Quebec.

In an interview, the CEO of Alstom repeated Thursday that the 400 full-time workers currently hired by the manufacturer in Bas-Saint-Laurent are guaranteed work at least “until 2028”, and this, regardless of their level of involvement in the delivery of this tramway project.

One of the three concepts of the Quebec tramway as presented by Alstom (Harfang).

Taieb Moalla

Recall that Alstom, which bought Bombardier Transportation in 2021, was the only bidder following the call for tenders launched by the City of Quebec.

The $1.34 billion contract, signed in April, provides for the construction of 34 four-car trainsets (for a total of 136 cars) and their maintenance for a period of 30 years.

A little over a month ago, union members affiliated with the CSN had expressed their concern that the realization of this project would slip away from them in favor of Mexico.

It will not be, retorts the management of Alstom, assuring that the final assembly will be done in Quebec and that the requirements of the winning call for tenders forced them to a minimum local content of 25%.

Alstom might exceed this level, says its spokesman, Olivier Marcil.

But while the company is still designing the supply chain, it’s still too early to commit to it.

The manufacture of the cars of the Quebec tram must begin in 2025.