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China so far non-committal to Washington’s oil release, OPEC+ unmoved

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November 24, 2021

By Yew Lun Tian, Ahmad Ghaddar and Olesya Astakhova

BEIJING/LONDON/MOSCOW/WASHINGTON (Reuters) -China, the world’s largest crude importer, was non-committal about its intentions to release oil from its reserves as requested by the United States, while OPEC producers were not considering changing tactics in light of the U.S. action, according to three sources in the group.

On Tuesday, U.S. President Joe Biden’s administration announced plans to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, Japan and India, to try to cool prices.

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The United States has made the largest commitment for a reserves release at 50 million barrels of pre-approved sales along with loans to the market, but without China, the action is considered less dramatic.

On Wednesday, China said it was working on its own reserves release. The announcement confirmed a Reuters report last week that China was working on its own timeline.

On Tuesday, Biden had told a briefing China “may do more.” Crude oil prices had been falling for several days on rumors of a coordinated action, but oil prices jumped 3% on Tuesday as Washington tapped its strategic reserve but the market lacked clarity on China’s intentions.

Washington’s move raised speculation that the Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, might consider pausing its current agreement to boost output by 400,000 barrels per day every month, but the group is not considering that, three sources told Reuters.

Fuel demand cratered early in the pandemic but has come roaring back this year, and oil prices have surged. Biden, facing low approval ratings ahead of next year’s congressional elections, has grown frustrated at OPEC+ shrugging off his repeated requests to pump more oil. Retail U.S. gasoline prices are up more than 60% in the last year, the fastest rate of increase since 2000.

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On Wednesday, Brent crude was down 18 cents, or 0.2%, at $82.13 a barrel by 12:36 p.m. EST (1736 GMT). Brent jumped by 3.3% on Tuesday. after falling 10% in the days prior to the news on rumors of a coordinated release.

“The market seems to believe in OPEC+ to keep oil balances tight more than it believes in the transitory nature of an SPR release,” said Rystad Senior Oil Markets Analyst Louise Dickson on Wednesday.

OPEC RESPONSE

OPEC+, which includes Saudi Arabia and other U.S. allies in the Gulf as well as Russia, has rebuffed requests so far to pump more. It meets again on Dec. 2 to discuss policy but has so far not indicated it will change tack.

The group is monitoring whether oil markets are balanced, Iraq’s oil minister Ihsan Abdul Jabbar said on Wednesday, saying the group still needs to study the latest data before making decisions about supply.

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The group has been struggling to meet existing targets under its agreement to gradually increase production and remains worried that a resurgence of coronavirus cases could again drive down demand.

Washington’s effort to team up with major Asian economies to lower energy prices was a warning to OPEC+ to control crude prices that are up more than 50% so far this year.

In the past, multi-country releases from reserves have been coordinated by the International Energy Agency (IEA), a Paris-based watchdog. The IEA does not intervene to influence prices, but the head of the agency said Wednesday some producers have been restricting supply too much.

“Some of the key strains in today’s markets may be considered artificial tightness … because in oil markets today we see close to 6 million barrels per day in spare production capacity lies with the key producers, OPEC+ countries,” said Fatih Birol, IEA head.

Under the plan, the United States will release 50 million barrels, the equivalent of about 2-1/2 days of domestic demand. However, some analysts called the structure of the U.S. release – a combination of 18 million barrels of pre-approved sales and a loan of 32 million barrels – too small and temporary.

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Goldman Sachs said the volume announced was “a drop in the ocean”. [O/R]

It was the first time the United States has coordinated such a move with some of the world’s largest Asian oil consumers, officials said. India plans to release 5 million barrels and Japan “a few hundred thousand kilolitres” of oil from its national reserve. South Korea has not provided any details of its plans.

(Reporting by Yew Lun Tian in Beijing, Ahmad Ghaddar and Noah Browning in London, Olesya Astakhova in Moscow; Additional reporting by Timothy Gardner and Alexandra Alper in Washington; Writing by David Gaffen; Editing by David Gregorio)

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Arnault-backed group launches second SPAC listing

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December 7, 2021

By Emma-Victoria Farr

LONDON (Reuters) – France’s richest man Bernard Arnault and former UniCredit head Jean Pierre Mustier will publicly list a second blank cheque vehicle in Amsterdam, raising 200 million euros ($226 million), the bookrunners on the deal said.

Earlier this year, the duo raised half a billion euros from their special purpose acquisition company (SPAC), Pegasus Acquisition Company Europe B.V., which is searching for takeover targets in the financial sector.

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On Tuesday, the same group of backers announced they would list a second vehicle with a similar focus, Pegasus Entrepreneurial Acquisition Company Europe, in Amsterdam.

SPACs are listed on a stock exchange by a group of entrepreneurs, who use the money raised to target a private company – allowing the target to get a stock market listing without the arduous process of launching a public listing.

Mustier is working with former Bank of America banker Diego De Giorgi and entrepreneur and investor Pierre Cuilleret in launching the 200 million euro listing.

Several SPACs have listed in Amsterdam, potentially boosting the Dutch financial capital’s credentials as a hub for fast-growing companies. London has only hosted one major SPAC in 2021, after updating its rules to make them easier.

Pegasus is backed by institutional sponsors Tikehau Capital and Financière Agache and by sponsors De Giorgi, Cuilleret and Mustier. Citi, Goldman Sachs and BNP Paribas are the bookrunners on the deal.

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($1 = 0.8860 euros)

(Reporting by Emma-Victoria Farr; editing by John O’Donnell and Louise Heavens)

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Bulls back in charge as Omicron worries wane

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December 7, 2021

By Marc Jones

LONDON (Reuters) – Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1% gains since February while Asia saw record bounces from some of China’s biggest firms such as Alibaba and Baidu. [.SS][.EU]

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The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6% overnight, as the confidence-sensitive Australian dollar also found buyers. [FRX/]

Safe-harbour government bonds went the other way with yields – which move inverse to bond prices – up 2.5% on Germany’s benchmark 10-year Bund after falling to a three-month low on Monday. [GVD/EUR]

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top U.S. infectious disease official, Anthony Fauci, told CNN “it does not look like there’s a great degree of severity” so far.

“Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms,” researchers at ING said in a note. “More broadly, it is still early days, even if markets are starting to display Omicron fatigue.”

The gains also came after China’s central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

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There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was “a positive sign on the strength of domestic demand”, RBC analyst Adam Cole said.

Elsewhere, Australia’s S&P/ASX200 rose 0.95%, while Japan’s Nikkei advanced 2.1% as risk-on sentiment pushed markets higher.

MSCI’s main Asia ex-Japan benchmark has lost about 5% so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7% after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

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“While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week’s brutal sell-off ought to have been milder,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

“After all, early assessments of Omicron cases have been declared mild, spurring half-full relief.”

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2% to $74.60 a barrel, adding to a near 5% rebound the day before as concerns about the impact of Omicron on global fuel demand eased. [O/R]

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations U.S. consumer price data due later this week will show inflation quickening.

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(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

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Exclusive: EU antitrust regulator seeks input on Microsoft’s $16 billion Nuance deal

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December 7, 2021

By Paresh Dave

(Reuters) – EU’s antitrust regulator is taking a deeper look into Microsoft Corp’s $16 billion deal for transcription technology company Nuance Communications Inc, asking customers and competitors to draw up a list of concerns, according to a questionnaire from last month seen by Reuters.

The previously unreported outreach is the most extensive by an antitrust authority since the companies announced the acquisition in April, according to a person familiar with the matter.

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Microsoft declined to comment, and Nuance did not respond to a request for comment.

After minimal review, the U.S. Department of Justice in June and the Australian Competition Commission in October said they would not contest the deal. The companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until Dec. 21 to clear the deal or open a bigger investigation.

The companies had expected to close the deal by the end of this year, but said last month the timeline could slip to early next year.

The questionnaire asks whether Microsoft and Nuance are competitors and whether a tie-up could affect clients and rivals, including whether Microsoft could favor Nuance over competing services.

Nuance primarily sells transcription technology that is popular among doctors and call centers that want to automate note-talking. Analysts view the deal as bolstering Microsoft’s presence in the healthcare market, and bringing it new voice and medical data to train artificial intelligence offerings in health, speech and biometric security.

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Like other big tech companies, Microsoft for years has grown its business through acquisitions, such as in advertising and video gaming. But in the last decade, Microsoft has avoided the target that recently has dogged its competitors Alphabet Inc’s Google, Facebook Inc, Apple Inc and Amazon.com Inc, all of which are facing antitrust lawsuits and investigations on numerous issues.

Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, said possible concerns about the pending deal could include Microsoft forcing its Office suite on Nuance customers by bundling them together.

Nuance has said it serves 77% of U.S. hospitals.

A key to its success has been has ensuring in deals with customers that it could use their data to advance its voice recognition systems, according to former chief executive Paul Ricci and another former employee.

For instance, a Nuance contract with Augusta University Medical Center, obtained by Reuters this year through a public records request, reads, “Customer shall provide Nuance access to voice and text data…and grants Nuance a perpetual, royalty-free license to copy, use and analyze such data for speech recognition research.”

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Big cloud vendors such as Amazon and Microsoft typically do not have unfettered access to customers’ data for research and development. But the opportunity to acquire those relationships and data explains Microsoft’s interest in Nuance, the former employees said.

Other providers of health transcription technologies include 3M Co and Philips.

(Reporting by Paresh Dave; Editing by Kenneth Li and David Gregorio)

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