Best in Energy – 23 May 2023

Germany to subsidise industrial power (Reuters)

Boeing sceptical on sustainable aviation fuel (FT)

U.S. western states in Colorado river deal (WSJ)

Ford’s procurement deals for lithium (FT)

Ocean shipping container production falls (FT)

U.S. retailers near end of destocking cycle (WSJ)

EUROZONE manufacturers have reported another widespread decline in business activity so far in May. Preliminary results show the purchasing managers’ index slipping to 44.6 (6th percentile for all months since 2006) in May down from 45.8 (8th percentile) in April and 54.6 (67th percentile) a year ago. The index is firmly in recession territory at the lowest level since the first wave of the pandemic in March-May 2020 and before that July 2012 and October 2008-June 2009 following the financial crisis:

EUROPE’s gas storage is refilling more slowly than average as a result of a relatively cold start to spring and sharply lower prices encouraging more consumption by industry and power generators. Storage sites across the European Union and United Kingdom (EU28) topped up their fill by +10.3 percentage points between March 31 and May 21 compared with a prior ten-year average top up of +11.3 percentage points. But because storage started from a record high, fill remains exceptionally high. EU28 storage was 65.9% full on May 21, the second highest on record, and compared with a prior ten-year seasonal average fill of just 44.7%:

Best in Energy – 17 May 2023

[MUST READ] U.S./China diplomatic rivalry (Bloomberg)

Oil price decline driven by porous sanctions (Bloomberg)

Vehicle tyres, electric vehicles and air pollution (Reuters)

India to complain to WTO over EU carbon tariff (Reuters)

China to accelerate rural rollout of electric cars (Xinhua)

Russia/NATO economic warfare and asset seizures (FT)

India’s surging air-conditioning demand (Bloomberg)

Indonesia wants cheaper transition funds (Bloomberg)

Australia’s LNG exports and energy transition (Reuters)

U.S. office occupancy flat as return-to-office stalls (WSJ)

U.S. office sale prices slump (WSJ)

U.S. gas price forecast to rise (EIA)

U.S. rural electric subsidies (Reuters)

Nuclear fusion supply chain (Reuters)

U.S. oilfield services see sharp slowdown (FT)

U.S. MANUFACTURING production excluding volatile output of vehicles and parts was down -1.6% in April 2023 compared with April 2022. Production for the three months from February to April was down -1.5% compared with the same period a year earlier:

U.S. BUSINESS INVENTORIES remain elevated despite efforts to reduce them which implies the softness in industrial and freight activity is likely to be prolonged for several more months. Manufacturers, distributors and retailers held inventories equivalent to 1.39 months of sales in March 2023, unchanged from December 2022, and up from just 1.30 months in March 2022. Excess inventories are particularly high at distributors and retailers which will remain a drag on new orders:

Best in Energy – 3 May 2023

U.S. economy starting to show cracks (Reuters)

Retailers struggle with stock control (Reuters)

U.S. shale sector transactions decline (Reuters)

China to expand nuclear generation (Xinhua)

Pakistan plan to buy more Russian crude (FT)

U.S. oil refinery expansion on Gulf Coast (EIA)

U.S. UNEMPLOYMENT insurance claims are starting to rise in a sign the labour market is weakening in response to persistent inflation, rising interest rates and slowing business and consumer spending. The number of people filing for unemployment insurance benefits for the first time has climbed to an average of almost 230,000 per week in the last 13 weeks up from a recent low of 200,000 in the 13 weeks between mid-August and mid-November 2022:

U.S. INTEREST RATE traders had not changed their expectations much by the start of May compared with the start of April. The central bank is expected to raise its federal funds target one more time to 5.00-5.25% by the end of its meeting on June 13-14 up from 4.75-5.00% at present as it combats persistent inflation. Rates are expected to start falling from the fourth quarter onwards as inflation subsides and the business cycle weakens:

Best in Energy – 22 March 2023

Russia’s oil export prices become opaque ($FT)

Russia’s oil exports find new middlemen ($FT)

U.S. refiners to prioritise future distillate growth

U.S. commercial real estate problem loans ($WSJ)

Central banks’ bond purchases and bank failures

La Niña fades but timing of El Niño still uncertain

Lithium prices slump ($BBG)

U.S./China economic coercion

U.S. BUSINESS INVENTORIES remained elevated in January as manufacturers and distributors struggled to work down excess stocks despite an acceleration in retail sales. Reducing unplanned inventories is likely to take at least another six months, even if the economy avoids a recession, which will keep freight volumes under pressure until the third quarter of 2023: