Tag: central banks

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 – 2 May 2023

Australia interest rate rise surprise (Reuters)

U.S. ethanol blend waiver reissued (Reuters)

China coal consumption set to rise (Reuters)

U.S. fuel use slips amid freight recession (FT)

India predicts heatwaves in May (Bloomberg)

Iran executed high-placed British spy (NYT)

U.S./Iran seized each other’s oil tankers (FT)

U.S. South’s low winter gas depletion (EIA)

Wind farm construction costs (Energy Monitor)

Nickel market moves into big surplus (Reuters)

New York to limit gas connections (Utility Dive)

CHINA’s manufacturers unexpectedly reported a fall in business activity in April after rapid growth in March and February. The purchasing managers’ index slumped to 49.2 (6th percentile for all months since 2011) down from 51.9 (92nd percentile) in March and 52.6 (96th percentile) in February. The surge in activity after the end of coronavirus controls and the passing of the exit wave appeared to have run out of momentum, at least temporarily:

U.S. GAS inventories rose by +79 billion cubic feet over the seven days to April 21. Inventories have tracked much higher than usual so far in 2023 and were at the highest level for the time of year since 2020 and before that 2017. Stocks were +280 billion cubic feet (+16% or +0.61 standard deviations) above the prior ten-year seasonal average up from a deficit of -261 billion cubic feet (-8% or -0.98 standard deviations) at the start of 2023:

Best in Energy – 18 April 2023

Global economic fragmentation and prices (ECB)

Tin prices surge after Myanmar warning (Reuters)

Asia’s oil refining margins are shrinking (Reuters)

California gas connections ban overruled (Reuters)

Russia’s plan for more oil storage (Reuters)

Russia fuel increasingly traded in Gulf (WSJ)

Russia oil sanctions evasion warning (OFAC)

European airlines report strong demand (FT)

U.S. directed-energy weapons systems (GAO)

Gas market quarterly outlook (Oxford Institute)

SINGAPORE’s middle distillate inventories have accumulated since hitting a cyclical low in late November and early December. Stocks are still -2.2 million barrels (-20% or -1.28 standard deviations) below the prior ten-year seasonal average but the deficit has narrowed from -3.1 million barrels (-31% or -1.35 standard deviations) on December 18:

Best in Energy – 17 April 2023

Saudi Aramco shares used as collateral ($FT)

U.S. LNG projects struggle with finance ($FT)

White House staff in Saudi Arabia discussions

Global diesel prices signal slowdown ($BBG)

Bangladesh/Russia to settle payment in yuan

U.K. critical minerals – prospectivity analysis

China’s long-distance hydrogen pipelines

U.S. interest rate rises and soft landings

(see also underlying research paper)

China/Myanmar ocean outpost? ($WSJ)

U.S. OIL RIG count fell by -2 over the seven days ending on April 14 and is down by a total of -39 (-6%) from its peak in early December as exploration and production firms have trimmed activity in response to lower prices. The number of active rigs has fallen to the lowest level for ten months since June 2022:

Best in Energy – 30 March 2023

U.S. oil and gas expansion stalled in first quarter

China independent refiner in marketing deal

China starts up new refinery for heavy crudes

Ford invests in China/Indonesia nickel project

Asia’s thermal coal imports accelerate in March

California to regulate gasoline refining margins

U.S. LNG delayed by tighter financial conditions

Central banks warn over price-price spiral ($FT)

Europe’s gas storage outlook for 2023/24 ($BBG)

U.S. gas production increased by 4% in 2022

U.S. INTEREST RATE traders expect the central bank to lower its target for the federal funds rate to 4.25-4.50% by December 2023, down from 4.75-5.00% at present. Tighter credit conditions and increased caution among households and businesses following regional bank failures are expected to enforce a slowdown on borrowing and economic growth, bearing down on inflation:

U.S. PETROLEUM INVENTORIES including the strategic reserve fell -11 million bbl in the seven days to March 24, after declining -10 million in the week to March 17:

Best in Energy – 28 March 2023

China’s coal imports rebound as economy restarts

France hit by fuel shortage due to industrial unrest

Kurdish regional oil output falls after pipeline halt

Sustainable aviation fuel adoption in United States

U.S. renewable generation surpasses coal or nuclear

Freight forecasts downgraded on stock glut ($WSJ)

U.S. retailers negotiate cuts in freight rates ($WSJ)

U.S. shale producers avoid forward oil selling ($FT)

Aramco’s downstream integration into China ($FT)

Aramco downstream integration into China ($BBG)

Central banks constrained by inflation targets ($FT)

U.S. CONTAINER PORTS handled loaded boxes amounting to 2.24 million twenty-foot equivalent units (TEUs) in February 2023, down from 2.77 million TEUs in February 2022, and the lowest for the time of year since 2015. Businesses are still trying to reduce excess inventories as a result of the pivot from spending on merchandise to services following the lifting of epidemic controls, as well as the general slowdown in the business cycle:

Best in Energy – 24 March 2023

Russia oil exports and rising shadow fleet risks

India grows both coal and renewable generation

U.S. energy chief says SPR refill could take years

EU plans to indigenise solar supply chain ($FT)

U.S. central bank’s sharp policy dilemma ($WSJ)

EUROZONE manufacturers have reported a widespread decline in business activity so far in March, the ninth consecutive monthly decline since July 2022. The preliminary purchasing managers’ index fell to 47.1 (17th percentile for all months since 2006) in March from 48.5 (25th percentile) in February:

EARTH’s northern hemisphere from 45°N poleward was hit by severe geomagnetic storm peaking around 0300Z to 0600Z on March 24, according to warnings issued by the Space Weather Prediction Center. The storm registered G4 / K9-minus, the second most severe rating, something expected to happen on only 60 days in every 11-year solar cycle. Solar activity, as measured by sunspots, is intensifying towards the next cyclical peak expected around 2025/26:

Best in Energy – 23 March 2023

U.K. power trading under scrutiny ($BBG)

China’s resurgent oil use and price impact

Asia’s distillate fuel oil stocks are swelling

U.S. central bank and tighter credit ($FT)

U.S. households and gas use in 2020

SINGAPORE distillate inventories have started to rise from multi-decade lows set in the final months of 2022:

U.S. PETROLEUM INVENTORIES depleted by -10 million barrels over the week ending on March 17, the largest drawdown since the end of 2022. Draws in gasoline (-6 million barrels), distillate fuel oil (-3 million) and propane/propylene (-2 million) more than offset a small build in crude (+1 million):

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:

Best in Energy – 17 March 2023

U.S. energy-related emissions projection

Bank rout as easy money era ends ($BBG)

OPEC⁺ calm despite oil price drop ($BBG)

OPEC⁺ sees oil price fall financially driven

Russia/India oil price above $60 on freight

China is diversifying away from U.S. trade

U.S. retailers press for price cuts ($WSJ)

Russia oil exports and rising storage ($BBG)

Shippers balk at costly green freight ($WSJ)

U.S. INTEREST RATE markets steadied on March 16 as the Federal Reserve organised major national banks to help boost confidence in their smaller regional counterparts by placing large-scale deposits with First Republic bank. Rate forecasts firmed slightly. But the rate trajectory implied by futures prices still shows rates declining from August onwards as the central bank responds to tightening credit conditions and a slowing economy:

NORTHWEST EUROPE is roughly 85% of the way through the heating season. Temperatures at Frankfurt in Germany have been close to the long-term seasonal average since the start of March. But very warm temperatures in October and from mid-December to mid-January have left a significant deficit in heating demand that has not been erased. The total number of degree days so far this winter (1540) is -16% below the long-term average (1842):