Constellation Energy Agrees to Buy Calpine for $16.4 Billion -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is up 3.3% at $79.44 a barrel.

--European benchmark gas is up 1% at 45.45 euros a megawatt-hour.

--Gold futures are up 1.4% at $2,728.60 a troy ounce.

--LME three-month copper futures are down 0.3% at $9,082.50 a metric ton.

TOP STORY:

Constellation Energy Agrees to Buy Calpine for $16.4 Billion

Constellation Energy agreed to buy Calpine for $16.4 billion, combining two of the country's largest electricity generators at a time when their product is in high demand from tech companies.

Including the assumption of debt, Constellation on Friday valued the cash-and-stock deal for the privately held Calpine at $26.6 billion.

The value of power generators has soared in the past year due in large part to artificial intelligence. Tech companies are adding new data centers amid a boom in demand for AI computing, and those facilities require massive amounts of electricity.

OTHER STORIES:

Los Angeles Utility Didn't Implement Common Wildfire Safety Measures

One of the utilities delivering electricity to fire-ravaged areas of Los Angeles hasn't implemented an increasingly used safety protocol intended to prevent its equipment from igniting blazes, a measure that every other big California power provider has in place.

The Los Angeles Department of Water and Power hasn't developed a plan to proactively shut off parts of its system during windstorms to reduce the risk of sparks from its power lines, regulatory filings show. Other California utilities do so periodically when fire risk is high.

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Integra Resources Names George Salamis Chief Executive

Integra Resources has appointed George Salamis as president, chief executive and director.

The precious-medals producer also appointed Anna Ladd-Kruger as chair of its board of directors, effective immediately.

MARKET TALKS:

Oil Jumps on U.S. Sanctions Prospects -- Market Talk

1544 GMT - Oil prices jump nearly 4% in afternoon trade, with Brent crude breaking above $80 a barrel on prospects of fresh U.S. sanctions against Russia. The international oil benchmark is currently up 3.8% to $79.84 a barrel, while the U.S. oil gauge is up 4.1% to $76.93 a barrel. The U.S. is set to impose some of the harshest sanctions yet on Russia's oil industry, according to a Reuters report that cites a U.S. Treasury document circulating among traders. The move would cause significant disruptions to Russian exports to Chinese and Indian buyers. Oil prices are on track for weekly gains of roughly 4%, supported by concerns of supply disruptions and a tightening market, as well as expectations of stronger heating fuel demand due to colder weather in some parts of Europe and the U.S. ([e-mail])

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Gold Rises After Strong U.S. Jobs Data -- Market Talk

1509 GMT - Gold prices gain further in afternoon trade amid uncertainties over the impact of future U.S. policy on the economy and inflation, even after the latest jobs report supported the case for a slowdown in interest-rate cuts. Futures are currently up 1.1% to $2,720.10 a troy ounce and on track for weekly gains of roughly 3%. U.S. jobs growth beat expectations in December while the unemployment rate unexpectedly fell, reinforcing expectations of fewer rate cuts in coming months. The U.S. dollar index, which measures the currency against a basket of major U.S. trading partners, is up roughly 0.4 percent. Higher interest rates and a stronger dollar typically reduce gold's appeal, but the yellow metal also acts as an inflation hedge and a safe-haven investment. ([e-mail])

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Orange Juice Retail Prices Hit Record High -- Market Talk

1005 ET - Retail prices for orange juice rise to a new record, according to data from Nielsen. Through December 28, orange juice climbed to $10.03 a gallon--up from $9.88 a gallon in late November. Gallons of orange juice sold jumped, rising nearly 3 million gallons to 27.33 million gallons from Nielsen's previous assessment. That's the largest amount of orange juice sold on the retail market in two years. Orange juice futures trading on the ICE set new records in 2024, breaking the $5.00 a pound threshold after new hurricane damage to Florida's orange groves cut production to its lowest in nearly 100 years. Most-active futures are down 2.2% today, to $4.84 a pound. ([e-mail])

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U.S. Natural Gas Futures Extend Weather-Driven Gains -- Market Talk

0855 ET - U.S. natural gas futures are higher for a third straight session with January weather raising demand and locking in some production. "Production readings are suggesting a fourth straight day near 6 Bcf/d in freeze-offs," Eli Rubin of EBW Analytics says in a note. A brief warm-up at the weekend could ease the situation until a new cold shot next week and in the third week of January, but "traders may also be reluctant to hold short positions over the weekend with substantial weather risks in play," he adds. The Nymex front month is up 5.3% at $3.899/mmBtu. ([e-mail])

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Centrica Warns U.K. Winter Gas Reserves Are Concerningly Low -- Market Talk

1221 GMT - The U.K. has less than a week of gas demand in store due to colder-than-usual weather in the country and the end of Russian gas pipeline supplies through Ukraine on December 31, 2024, Chris O'Shea, chief executive of Centrica, says. As of Thursday, U.K. storage sites were 26% lower than at the same time last year, leaving them around half full, the group says. O'Shea says the U.K. needs to boost its energy storage capacity as it becomes increasingly reliant on renewable sources. The U.K. has some of the lowest levels of gas storage in Europe at 12 days average or 7.5 peak winter days, compared to Germany at 89 days, and France at 103 days, the company notes. Centrica shares are up 0.45% at 1.33 pounds. ([e-mail])

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Cocoa Highly Volatile After Reaching Record High -- Market Talk

1132 GMT - The cocoa market has been experiencing strong price volatility since reaching a record high in December. "Yesterday, the price rose by up to 10% at times, after falling by almost 7% the day before," Commerzbank Research's Carsten Fritsch says. Futures are currently down 0.4% to $10,885 a metric ton. Prices surged in the previous trading session following a Bloomberg report that chocolate maker Hershey Co. is seeking approval to buy a large amount of cocoa through the New York exchange amid tightening supplies in the physical market. "This shows that the cocoa market is currently extremely tight," Fritsch says. "Due to the high volatility, market participants are holding back on activities, which has led to a decline in liquidity and increased susceptibility to price fluctuations." ([e-mail])

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Oil Surges on Supply Risks Amid Prospects of Tighter Sanctions -- Market Talk

1111 GMT - Oil prices jump more than 2% in midday trade as traders focus on potential supply disruptions and expectations of stronger heating-fuel demand due to colder temperatures. Brent crude is up 2.6% to $78.94 a barrel, while WTI rises 2.7% to $75.92 a barrel. The benchmarks are on track for weekly gains of 2.7% and 3.2%, respectively, supported by prospects of stricter U.S. sanctions against Russia and Iran and declining Russian seaborne exports. "The U.S. is expected to announce more Russia sanctions in the coming days, which will intensify an ongoing slowdown in Russian crude exports," DNB Markets analysts say. Western sanctions against Russia's shadow fleet have already led to a decline in exports, according to market watchers, prompting Indian and Chinese buyers to seek alternatives. ([e-mail])

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Palm Oil Ends Higher as Inventories Decline for Third Straight Month -- Market Talk

1015 GMT - Palm oil prices closed higher as Malaysia's palm oil stocks declined for a third consecutive month in December. Malaysia's end-December palm oil inventories fell 6.9% on month to 1.71 million tons, according to the Malaysian Palm Oil Board. A rise in domestic palm oil consumption contributed to the decline in inventories, which cam in below market expectation, Tongguan Jinyuan Futures said in a research note. Investor sentiment is expected to remain volatile ahead of Indonesia's implementation of its biodiesel mandate, Tongguan Jinyuan Futures added. Meanwhile, a stronger greenback is expected to weigh on the broader commodities market, it noted. The Bursa Malaysia Derivatives contract for March delivery rose 97 ringgit to close at 4,393 ringgit a ton. ([e-mail])

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Gold Set for Weekly Gains on U.S. Policy Uncertainty -- Market Talk

0910 GMT - Gold is headed for a weekly gain of roughly 2% as uncertainty around future U.S. policy under President-elect Donald Trump boosts safe-haven demand. In early trade, futures are up 0.6% to $2,706.70 a troy ounce, with traders awaiting a key U.S. jobs report later on Friday for more cues on the path of interest rates. According to Swissquote, activity on Fed funds futures suggests the next cut would be in May. But "a set of stronger-than-expected [jobs] data could flip this expectation to the 'no cut until June' side very rapidly, enhance the selloff in the U.S. treasurys and support a further appreciation of the U.S. dollar," senior analyst Ipek Ozkardeskaya says in a note to clients. The yellow metal is seen as a hedge against inflation, but higher interest rates reduce the appeal of holding the non-yielding asset. ([e-mail])

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Oil Set for Weekly Gains Amid Colder Weather, Supply Worries -- Market Talk

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01-10-25 1108ET