Best in Energy – 20 September 2022

Germany’s auto sector emissions remain high

China boosts imports of coal from Russia

EU/Africa tensions over gas investment ($FT)

La Niña to boost winter heating in Japan ($BBG)

U.S. shale producers hit drilling limits ($WSJ)

U.S. central bank refocuses on inflation ($WSJ)

Stranded asset story and the energy crisis ($FT)

Renewables and domestic energy security ($FT)

California relies on nuclear for 10% of electricity

United States is shifting policy on Taiwan ($BBG)

Coal boom leads to expansion of marginal mines

U.S. TREASURY securities with ten year maturity are yielding 3.53%, the highest since 2010, as traders anticipate the central bank will have to keep interest rates higher for longer to bring down inflation. Yields are rising at the fastest year-over-year rate since 1999. The increase is testing the downward trend in place since the mid-1980s. If the increase is sustained it will force a widespread re-pricing of most other assets:

HEDGE FUNDS and other money managers made few changes to their positions in the six most important petroleum futures and options contracts in the week to September 13. There were total net purchases of +4 million barrels with buying in NYMEX and ICE WTI (+10 million) and Brent (+3 million) but sales of U.S. gasoline (-5 million), U.S. diesel (-3 million) and European gas oil (-1 million):

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Best in Energy – 14 September 2022

EU plans significant energy market overhaul

China set for turnover in economic officials

Poland to freeze household electricity prices

Equinor completes rapid sale of Russia assets

U.S. households’ real incomes are flat ($WSJ)

U.S. power generators’ carbon intensity falls

Expert interpretation of the Soviet Union

U.S. INTEREST RATE traders expect the central bank to boost its target federal funds rate to 4.25-4.50% by April 2023 up from 2.25-2.50% at present as officials try to bring inflation back towards their long term target. Inflation has proved faster and more persistent than anticipated implying higher interest rates and a greater probability of a hard-landing for the economy:

U.S. SERVICES prices increased at an annualised rate of +7.7% in the three months to August. Services inflation is a proxy for underlying price pressures in the economy because services account for more than 60% of consumer spending and are labour-intensive rather than energy or commodity-intensive. Service sector inflation has decelerated from a peak of +9.9% in the three months to June but remains more than three times faster than the central bank’s long-term target of a little over 2% per year:

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Best in Energy – 8 September 2022

Global energy employment report from IEA

Germany to subsidise basic electricity quota

China boosts coal imports amid hot dry spell

China buys cheap LNG from Russia ($BBG)

U.S. power use forecast to hit record in 2022

White House plan to cut industrial emissions

Semiconductor makers face downturn ($BBG)

Europe set for big gas shortfall in 2023 ($BBG)

Europe energy suppliers face Lehman moment

Goldman’s case for a U.S. soft landing ($WSJ)

Pakistan’s floods risk triggering unrest ($FT)

U.S. COOLING DEMAND since the start of the year has been around +11% higher than the long-term seasonal average (1981-2010) and +2% higher than the prior seven-year average (2015-2021). Higher-than-usual temperatures have contributed to pressure on electricity networks and put gas consumption by power generators on course for a record high this year:

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Best in Energy – 1 June 2022

The United Kingdom has a two-day public holiday on Thursday and Friday to celebrate the sovereign’s platinum jubilee, so Best in Energy will resume on Monday.

OPEC ⁺ explores suspending Russia allocation ($WSJ)

Russia prepares to re-route oil from Europe to Asia

India’s private refiners benefit from cheap Russian oil

India’s record renewables output eases coal shortage

Africa pushes back against emissions hypocrisy ($FT)

U.S. retailers attempt to resist price increases ($WSJ)

Global diesel and gasoline shortage raises prices ($FT)

U.S. residential use of air-conditioning reaches 88%

OPEC’s spare capacity and market stabilisation

EUROZONE manufacturers reported a further slowdown in growth last month as rapid inflation and the war between Russia and Ukraine took their toll. The manufacturing purchasing managers’ index slipped to 54.6 in May (65th percentile) from 55.5 in April (74th percentile) and 63.1 in the same month last year (100th percentile):

EUROPE’s gas futures summer-winter calendar spread from July 2022 to January 2023 is moving deeper into contango as inventories rise at the fastest rate on record alleviating some concerns about filling storage sites:

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Best in Energy – 18 May 2022

EU cannot be a green island in a dirty world ($FT)

Oil consumption and moderate recessions ($BBG)

U.S./EU examine Russia oil embargo + tariff plan

U.K. inflation accelerates to 9% fastest since 1982

China’s LNG imports set to rise from August ($BBG)

U.K. explores extensions for coal and nuclear ($BBG)

Texas electricity supply hit by congestion on grid

German refinery at risk from Russian oil ban ($BBG)

Austria tries to encourage industry to store gas

U.K. orders competition probe into fuel retailing

U.S. MANUFACTURING output in the three months Feb-Apr was almost 6% higher than in the same period a year earlier, showing momentum in the business cycle but also why supply chains are struggling to cope and prices are escalating rapidly. Rapid growth in manufacturing explains why diesel is short supply and prices are escalating:

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