China accelerates purchases of Russian crude*
China increases crude inventories*
China boosts energy imports from Russia ($BBG) *
U.S./China talks on Russia strategic oil purchases*
U.S./China top diplomats hold telephone talks*
United States open to Russia oil secondary sanctions*
China cuts mortgage rates sharply to boost economy
Italy boosts Russian oil imports ($FT)
Germany prepares for rationing industrial gas supply
China completes Daqing coal rail maintenance (trans.)
U.K. postal service to raise prices again as costs surge
U.K. consumer confidence lowest since at least 1974
Finland prepares for end of Russian gas flows ($BBG)
U.K. grid practises black start with renewables ($BBG)
* An interesting cluster of stories has emerged over the last 24 hours about China increasing crude oil purchases from Russia, but using the extra volumes to replenish strategic reserves, which the White House says would not violate any sanctions. The first six items should all be read in this context.
China does not report commercial or strategic reserves and there is less distinction between them than for IEA countries, so there is no way of ascertaining whether extra crude is really going into strategic inventories or being added to commercial stocks to be refined or depleted later. The concept of “replenishment” of strategic stocks is also curious because China did not join the U.S.-led emergency oil releases in late 2021 and early 2022.
An outside observer might conclude China is boosting its purchases of deeply discounted Russian crude, but the White House has decided to ignore it, at least for the time being, because it does not want to risk triggering a further rise in prices, especially before congressional elections in November, where inflation is emerging as the dominant political issue.
U.S. FINANCIAL CONDITIONS were tightening rapidly even before this week’s tumble in equity prices, as access to credit and risk capital becomes more restricted and expensive:
EUROPE’s GAS FUTURES summer-winter calendar spread from July 2022 to January 2023 has moved into a small contango of €2/MWh, down from a record backwardation of more than €70 in early March, as storage fills at record rates and inventories become more comfortable:
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