Best in Energy – 2 March 2022

IEA to release 60 million bbl from emergency reserves

Oil traders shun crude and fuels from Russia

Global supply chains hit by political risks ($FT)

U.S. electricity price rising at fastest since 2008

Oil prices surge on loss of Russia exports ($BBG)

U.S. sanctions may herald “peak foreign reserves”

BRENT front-month futures prices have surged to $110 per barrel as traders concluded the 60 million barrels of emergency oil stocks to be released by the United States and other members of the International Energy Agency may not be enough to offset the loss of oil exports from Russia as a result of sanctions. After adjusting for inflation, Brent prices are now in the 84th percentile for all months since 1990 and the 69th percentile for all months since 2000:

EUROPE’s benchmark natural gas futures contract has spiked to a near-record €160 per megawatt-hour, reflecting the growing risk of a disruption to Russian gas exports as the economic warfare between Russia and the EU intensifies. Europe has enough gas in storage to last through the end of March but will need to attract large volumes of imports to refill depleted storage sites before next winter:

U.S. TREASURY yield curve continues to flatten as interest rate traders anticipate an increased probability of a mid-cycle slowdown or end-of-cycle recession within the next 12 months as a result of accelerating inflation, rising interest rates and now the disruption of commodity supply chains arising from the Russia/Ukraine conflict:

EU EMISSIONS allowance prices have tumbled almost 36% to €62 per tonne from a recent peak of €96 in early February:

U.S. MANUFACTURERS reported another widespread increase in business activity in February. The ISM composite purchasing managers’ index rose to 58.6 in February from 57.6 in January. But the expansion is decelerating from the very rapid rate last year as the business cycle matures:

Published by

John Kemp

Energy analyst, public policy specialist, amateur historian