Best in Energy – 15 July 2022

White House downplays hopes for more oil

Middle East imports more Russian fuel oil

Japan plans reactor restarts before the winter

United Kingdom heads for winter crisis ($BBG)

Germany is moving into a recession ($BBG)

ERCOT confident will avoid blackout ($BBG)

U.S. household finances and inflation ($WSJ)

Russia/NATO conflict is test of resolve ($BBG)

Central banks turn hawkish on inflation

U.S. CENTRAL BANK is expected to raise short-term interest rates to 3.50-3.75% by February 2023 up from 1.50-1.75% at present to curb inflation. From the second quarter of 2023, however, policymakers are expected to start reducing interest rates as the economy slows and inflation decelerates:

U.S INTEREST RATE traders anticipate a recession has become virtually certain following the continued acceleration of inflation. The yield curve spread between 2-year and 10-year maturities is now in the 98th percentile for all months since 1990:

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Best in Energy – 13 July 2022

Baltic grids prepare to synchronise to EU rapidly

OPEC predicts oil consumption to rise in 2023

Russia’s fuel exports to Middle East surge ($BBG)

China hydropower generation hits record high

U.S. homes with electric-only energy systems

China hesitates to mandate vaccination ($BBG)

Rapid inflation and its many discontents ($FT)

BRENT’s calendar spread from December 2022 to December 2023 has softened to a backwardation of $8 per barrel from $16 in early June as traders anticipate a cyclical economic slowdown will relieve some of the shortage in oil supply next year:

TEXAS electricity consumption increased at a compound annual rate of +1.5% over the last 20 years, reaching 427 billion kWh in 2021, up from 318 billion kWh in 2001:

U.K. REAL GDP rose by +0.51% in May from April, the fastest increase for four months, with particularly large increases in manufacturing (+0.87%) and construction (+1.54%):

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Best in Energy – 29 April 2022

EU regulators defend electricity market design

India explores purchase of Russian oil assets

EU LNG imports running at full capacity ($BBG)

China admits epidemic supply disruption (trans.)

EU struggles with payment for Russian gas

Austria’s payment for Russian gas ($BBG)

EU options for sanctioning Russian oil ($WSJ)

South Asia’s fuel-oil power generation ($BBG)

U.S. REAL FINAL SALES to private domestic purchasers (FSPDP) increased at an annualised rate of 3.7% in the first quarter, accelerating from 2.6% in the fourth quarter, according to advance estimates published on April 28.

Real FSPDP excludes the effect of foreign trade as well as the temporary impact of changes in government spending and inventory accumulation and depletion, so is the most useful measure of underlying spending by households and businesses. The economy exhibited strong momentum in the first three months of the year.

But headline real gross domestic product shrank at an annualised rate of 1.4% in the first quarter as a result of negative effects from foreign trade (-3.2 percentage points), inventory accumulation (-0.8 percentage points) and slower government spending (-0.5 percentage points):

U.S. S&P 500 equity index has risen just 2.5% over the last twelve months; the slow increase is consistent with an end-of-cycle recession or mid-cycle slowdown:

U.S. CONSUMERS were the most negative about the government’s economic policy in March for seven years – with levels of disapproval consistent with recessions and mid-cycle slowdowns in the past:

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Best in Energy – 25 March 2022

Brent futures margin requirements raised further

Europe’s diesel shortage threatens output growth

U.S. refiners source more fuel oil from Middle East

EU diesel supply vulnerable to Russia ban ($BBG)

EU faces high costs for filling gas storage ($BBG)

China economy disrupted by new epidemic ($BBG)

Russia/Ukraine war cuts fertiliser supply ($WSJ)

Mexico follows Fed in raising interest rates

UAE/Saudi seek to reset U.S. relationship ($FT)

EUROPEAN gas oil and Brent twelve-month calendar spreads are both trading in the 99.9th percentile for all trading days since 2000 as traders anticipate possible severe shortages of both crude and products stemming from Russia’s invasion of Ukraine and U.S./EU sanctions imposed in response:

EUROZONE manufacturers reported a less widespread expansion this month as war in Ukraine and inflation pushes the region’s economy towards a cyclical slowdown. Preliminary readings put the purchasing managers’ index at 57.0, down from 58.2 in February, and the lowest since January 2021, when economy was still gripped by pandemic:

GERMANY’s IFO business expectations index fell to 85.1 in March from 98.4 in February, a level only normally seen during a recession, as employers prepare for the impact of the war and sanctions to be felt on the domestic economy:

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