Tag: Federal Reserve

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 – 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 – 13 April 2023

China/Europe economic rebound set to boost emissions

China plans to accelerate coal production and generation

Russia redirects gasoline exports from Europe to Africa

U.S. gas consumption fell during mild start to 2023

U.K. households confused by hydrogen and heat pumps ($FT)

U.S. INTEREST RATE traders have cut expectations for the path of rates following the regional banking crisis and amid signs both business activity and price rises are slowing. Projected interest rates have reverted to their level at the start of February, before anxiety about inflation increased:

U.S. SERVICE SECTOR inflation has decelerated significantly though it is still running faster than the central bank target. Services prices rose at an annualised rate of +5.8% over the three months ending in March, while prices excluding rent of shelter rose at an annualised rate of +2.7%:

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 – 10 March 2023

U.S. Treasury reassures traders on sanctions ($FT)

Russia’s missiles target Ukraine’s energy networks

India to boost LNG imports for generators ($BBG)

U.S. central bank discovers r* is unreliable indicator

U.S. yield curve inversion and equity values ($WSJ)

U.S. economy and supply-driven inflation ($WSJ)

U.S. inflation fuelled by margin expansion ($BBG)

U.S./EU downplay race on energy subsidies ($FT)

EU eases state aid rules to match U.S. subsidies

(see also European Commission press release)

U.S. railroad safety and trackside sensors ($WSJ)

Yemen’s decaying oil storage tanker to be unloaded

U.S. TREAURY YIELD curve between two-year and ten-year maturities has inverted to around 100 basis points, the most extreme since August 1981, when the economy was entering the second part of the double-dip recession of the early 1980s. The inversion is signalling a sharp fall in interest rates, resulting from a rapid deceleration of inflation, a downturn  in the business cycle, or a combination of both:

U.S. GAS INVENTORIES are moving into an increasing surplus, keeping downward pressure on prices. Stocks were +240 billion cubic feet (+13% or +0.58 standard deviations) above the prior ten-year seasonal average on March 3, up from a deficit of -263 billion cubic feet (-8% or -0.98 standard deviations) on January 1, 2023, and a deficit of -427 billion cubic feet (-13% or -1.52 standard deviations) on September 9, 2022:

Best in Energy – 8 March 2023

Russia/India switch trade settlement out of dollars

India’s heightened risk of evening power shortages

Nord Stream sabotage linked to Ukraine ($NYT)

Ukraine denies involvement in pipeline sabotage

U.S. shale chiefs recognise end of revolution ($FT)

Tesla shifts focus to cutting manufacturing costs

Nuclear generation deployment is shifting to Asia  

China’s military researchers study Ukraine conflict

Europe boosts diesel from Middle East and Asia

Tech sanctions to spur industrial espionage ($FT)

U.S./China struggle to stabilise relationship ($WSJ)

U.S. CENTRAL BANK chief Jerome Powell toughened his rhetoric on core inflation during congressional testimony, sending forecasts for interest rates surging higher on March 7. Rate traders expected interest rates to end 2023 at around 5.55% up from a forecast of 5.38% on March 6:

SINGAPORE distillate inventories remain at their lowest level for the time of year since 2008. Stocks are -4 million barrels (-36% or -1.91 standard deviations) below the prior ten-year seasonal average. The deficit has only narrowed slightly from six months ago when it was -4 million barrels (-34% or -2.21 standard deviations):

Best in Energy – 3 March 2023

China’s abandonment of coronavirus suppression

China predicts rise in gas consumption

Debt relief in return for climate policies

U.S. interstate gas pipeline construction

U.K. auto sector’s future in doubt ($FT)

Bangladesh tenders for more LNG

Interest rate traders probe Fed reactions

NORTH INDIA has experienced above-normal seasonal temperatures since early February, driving an increase in air-conditioning and refrigeration demand and boosting electricity consumption to a record level. Temperatures in New Delhi’s Palam suburb have been above the long-term seasonal average for 18 out of 22 days since February 9:

U.S. GAS INVENTORIES are depleting much more slowly than normal for the time of year. As a result, inventories were +209 billion cubic feet (+11% or +0.55 standard deviations) above the prior ten-year seasonal average on February 24 up from a deficit of -427 billion cubic feet (-13% or -1.52 standard deviations) on September 9, 2022:

Best in Energy – 24 February 2023

U.S. central bank grapples with long and variable lag

BASF to cut chemicals production in Germany ($FT)

Cheniere outlines plan for U.S. LNG expansion ($FT)

U.S. shale firms squeezed by rapid cost rises ($FT)

G7/EU claim success on Russia oil sanctions ($WSJ)

Hafnium prices surge on increased aerospace demand

U.S. PETROLEUM INVENTORIES including the strategic reserve rose by +3 million barrels over the seven days ending on February 17. Increased inventories of commercial crude (+8 million), distillate fuel oil (+3 million) and jet fuel (+1 million) were partly offset by reductions in gasoline (-2 million), propane (-3 million) and other oils (-3 million).

Petroleum inventories have risen for seven consecutive weeks by a total of +55 million barrels, the largest increase over any similar period since June 2020, when the market was absorbing the impact of the first wave of the pandemic and lockdowns.

Total inventories are still at the lowest seasonal level since 2005 and -235 million barrels (-13% or -2.22 standard deviations) below the prior ten-year average, but the deficit has narrowed from -291 million barrels (-16% or -3.06 standard deviations) on December 30:

Best in Energy – 10 February 2023

Russia plans to cut oil production by 0.5 million b/d in March

Indonesia’s coal-fired generation and “just energy transition”

U.S. gas production growth set to slow as futures prices slump

Germany’s storage firms to “refine” gas purchasing strategy

U.K. energy inefficient homes and heritage preservation ($FT)

U.S. heating oil prices ease from record high in early November

CFTC/ICE commitment of traders suspended for second week

NORTHWEST EUROPE is now roughly two-thirds of the way through the winter heating season. In an average year, two-thirds of all heating degree days at Frankfurt in Germany occur on or before February 10. Cumulative heating demand has been the lowest since the winter of 2015/16 and before that 2006/07. With the 2022/23 heating season now winding down, traders’ attention has already turned to the summer refill season and winter 2023/24:

U.S. INTEREST RATE traders anticipate a major reduction in inflationary pressure – with or without a significant slowdown in the business cycle – which has been reflected in a sharp reduction in forward interest rate forecasts. Market forecasts for interest rates at the end of 2024 fell by more than a full percentage point between the start of November and the start of February: