Best in Energy – 17 November 2022

U.S. hydrogen – funding and technology deployment

Aramco plans downstream investment in South Korea

U.S. diesel inventories at 70-year seasonal low ($FT)

Texas tries to prepare better for extreme winter cold

U.K. inflation accelerates to 11.1% in October

France’s nuclear generation starts to recover

China/Taiwan bilateral communications cease

U.S. PETROLEUM INVENTORIES depleted by -11 million barrels in the week to November 11. Large drawdowns in commercial crude (-5 million bbl), crude in the strategic petroleum reserve (-4 million) and other oils (-3 million) were partially offset by increased stocks of gasoline (+2 million), distillate fuel oil (+1 million) and jet fuel (+0.3 million). Total inventories have depleted by -509 million barrels since early July 2020, the largest drawdown on record and a symptom of persistent under-supply:

Best in Energy – 23 March 2022

Fed’s narrow path to a soft-landing*

Russia sanctions risk diesel shortage

U.S. imports of petroleum from Russia

Russia’s oil exports and global economy

China’s plan for hydrogen development

White House options to cut fuel prices

Russia cuts pipeline oil flows after storm

U.K. inflation rate accelerates to 6.2%

* The Fed’s aggressive rate rises in 1994 helped create a government debt funding crisis in Mexico forcing a devaluation of the peso at the end of the year (the “tequila crisis”). The U.S. central bank was caught unaware (see Fed minutes from an emergency conference call held on Dec. 30, 1994). Rapid interest rate rises in the United States tend to induce extreme stress in the more peripheral and obscure parts of the international system. In 1994, it was the Mexican government’s increasingly heavy reliance on funding its operations with short-duration dollar-linked bills known as “tesobonos” that had to be constantly rolled forward. The causes of the peso crisis was my first semi-serious piece of research when I had to write a 15,000-word thesis on it for my university finals in 1996.

BRENT spot prices and calendar spreads are ratcheting higher again as traders anticipate a prolonged conflict in Ukraine and therefore a prolonged disruption of Russia’s petroleum exports, coupled with the lack of spare capacity in the global oil supply system, leaving it increasingly vulnerable to any more shocks:

U.S. GASOLINE prices have started to converge with Brent after the supply chain was shocked by Russia’s invasion of Ukraine. But retail prices are still rising at one of the fastest rates for 30 years, increasing by around 20% over the last four weeks, which is in the 99th percentile for all four-week periods since 1993:

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