Germany takes control of local Gazprom unit
Aramco raises crude prices to refiners in Asia
India faces coal crisis for a second year ($BBG)
U.S. intelligence sharing sets precedent ($WSJ)
China’s rail freight rose +2.8% yoy in Q1 (trans.)
U.S. TREASURY yield curve is now flat between two-year and ten-year maturities, which puts it in the 94th percentile for all months since 1990, and is a strong signal the business cycle is on course for a mid-cycle slowdown or end-of-cycle recession inside the next 12-18 months as the central bank is forced to lift interest rates to bring inflation back under control. Interest rate traders expect the Federal Reserve to boost its target overnight rate to 2.50% by the end of the year up from 0.25-0.50% currently:
BRENT’s calendar spread from Jun 2022 to Dec 2023 has narrowed sharply as the announced crude oil sales from the U.S. strategic petroleum reserve depress nearby prices while the more vague promise to buy back the barrels later helps boost prices in 2023:
U.S. PETROLEUM inventories including the strategic petroleum reserve have depleted by -411 million bbl since the start of July 2020 after increasing by +225 million bbl during the first wave of pandemic and lockdowns. Inventories have fallen in 68 of the last 91 weeks. The drawdown confirms the global market has been persistently under-supplied for almost two years. Historically, market analysis has treated U.S. government-controlled stocks as purely strategic and passive and has therefore focused on inventory changes excluding the SPR. But as the SPR comes to be used more actively to manage prices, the focus will switch to inventories including the SPR as providing the best indicator of the balance between production and consumption:
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