EUROPE’s gas futures summer-winter calendar spread for July 2023 to January 2024 has slumped into an increasingly wide contango as traders anticipate a record carryover over inventories from winter 2022/23 which will leave the storage system short on space. Lower gas prices in summer 2023 will encourage more consumption by power generators and major industrial users. Higher prices may still be needed to restrain consumption during the peak of next winter:
U.S. OIL DRILLING has started to slow in response to the fall in prices since the middle of 2022. The number of rigs drilling for oil was just 609 on January 27 down from a cyclical high of 627 on December 2:
U.S. GAS inventories fell faster than the seasonal average in the second half of November. Working gas stocks in underground storage were -178 billion cubic feet (-4.9%) below the pre-pandemic five-year seasonal average on November 25 compared with a deficit of -97 bcf (-2.5%) on November 11:
UN climate targets start to stretch to +1.7°C ($WSJ)
U.K. energy crisis hits poorer households hard ($FT)
Europe’s electricity networks brace for winter ($FT)
CHINA was historically a collection of macro-regional economies, with strong transport and commercial links within each region, but much weaker links between regions. The country’s rapid industrialisation and urbanisation since reform and opening in 1978-1980 has led to much more integration at national level, but regionalism remains persistent.