Best in Energy – 12 May 2023

U.S. SPR could start refill after June (Reuters)

U.S. SPR refill becomes contentious (Prospect)

China issues new fuel export quotas (Reuters)

U.S. public support for nuclear power (Salon)

Giffen goods and the impact of inflation (FT)

Russia’s oil and the shadow fleet (Bloomberg)

El Niño to cut Thai rice exports (Bloomberg)

U.S. INITIAL CLAIMS for unemployment insurance benefits climbed to a seasonally adjusted 264,000 in the week ending on May 5, the highest since October 2021. Initial claims have been trending higher since October 2022 and more clearly since the end of January 2023 in a sign the labour market is starting to cool:

U.S. GAS inventories rose +78 billion cubic feet to 2,141 billion cubic feet over the seven days ending on May 5. Stocks are +257  billion cubic feet (+14% or +0.58 standard deviations) above the prior ten-year seasonal average. The surplus has remained broadly unchanged for the last 8-9 weeks since early March:

Best in Energy – 20 April 2023

Global refining capacity to surge in 2023/24 (Bloomberg)

EU gas consumption dropped 18% in August-March (FT)

El Niño likely to increase temperatures in 2023 (Reuters)

Germany’s plan to phase out oil and gas heating (Reuters)

Pakistan starts buying Russian crude (Reuters)

EUROPEAN UNION gas consumption was significantly below the prior ten-year seasonal average every month between October and March. In the big seven consumers (Germany, Italy, France, Netherlands, Spain, Belgium and Poland) consumption fell by -15% over the six-month period, mostly as a result of warmer-than-normal weather and industrial shutdowns:

U.S. JET FUEL inventories have normalised from a large deficit six months ago. Stocks were +0.2 million bbl (+0.4% or +0.06 standard deviations) above the prior ten-year average on April 14, erasing a deficit of -6.3  million bbl (-15% or -2.83 standard deviations) on October 2:

Best in Energy – 14 April 2023

El Niño starts to form in eastern Pacific area

Asia’s refiners switch from gas oil to gasoline

OPEC cites downside risks to oil consumption

China’s crude oil imports accelerated in March

U.S. GAS STOCKS increased by +25 billion cubic feet over the seven days ending on April 7, the first increase since early January, and the largest since early November, as the refill season started. Inventories were +219 billion cubic feet (+13% or +0.48 standard deviations) above the prior ten-year seasonal average but the surplus has narrowed slightly from +262 billion cubic feet (+15% or +0.61 standard deviations) on March 6:

Best in Energy – 22 September 2022

U.S/EU rivalry for high-energy industry ($WSJ)

South Korea reverts to coal generation ($BBG)

California relied on gas generation in heatwave

UAE oil firm explores Gunvor purchase ($BBG)

U.S./China banking and national security ($FT)

U.S. INTEREST RATE traders expect an imminent business cycle downturn is virtually certain and will be relatively severe. The U.S. Treasury yield curve between two-year and ten-year securities is more inverted than at any time since September 1981, when the economy was entering the second instalment of what proved to be double-dip recession. Like the early 1980s, the central bank finds itself forced to continue tightening monetary policy even as the economy weakens to bring inflation back under control:

LA NIÑA conditions are entering their third year, with sea surface temperatures in the central-eastern Pacific almost -1.0°C below the seasonal average last month:

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Best in Energy – 16 September 2022

Germany takes control of Russian-owned refinery

EU explores alternative benchmarks for gas prices

U.K. government set to lift moratorium on fracking

La Niña disrupts global economy ($BBG)

Europe’s gas prices have retreated ($FT)

EU28 GAS STOCKS stood at 953 TWh on September 14 and are on course to reach 1,019 TWh with a likely range of 981-1,080 TWh by the time the summer refill season ends in late October or early November. Inventories will begin the winter drawdown season at the third-highest level on record.

In the last ten years, inventories have drawn down by an average of 588 TWh with a range of 352-782 TWh between the peak in October-November and the trough in March-April.  But this has been with strong pipeline inflows from Russia and other countries as well as LNG deliveries.

If Russian pipeline flows are severely disrupted the winter draw is likely to be much higher. High prices and exceptional demand restraint will be needed to ensure stocks do not run out before the winter ends. Even so, they are likely to fall to very low levels by next March, implying another herculean effort to refill them next summer:

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