Best in Energy – 21 September 2022

European energy trading hit by falling liquidity

Small modular reactors – deployment challenges

U.K. government caps energy prices for businesses

Coal miners seek ways to stay in future energy mix

Germany nationalises gas importer Uniper

Hertz orders 175,000 more electric vehicles ($WSJ)

CHINA’s railway hauled a record volume of freight in the first seven months of the year. Freight tonne-kilometres were up +9% compared with the same period in 2021 and +22% compared with before the pandemic in 2019. Coal is by far the largest item on the network. The system is moving record quantities of coal from the northern mining areas in Shanxi, Shaanxi and Inner Mongolia to the major consuming centres in the eastern, central and southern provinces:

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Best in Energy – 13 September 2022

EU frames energy windfall tax as “solidarity contribution”

EU explores electricity demand reduction at peak hours

Diesel additives are in short supply in Germany ($BBG)

Europe needs more diesel fuel exports from China

Renewable energy jobs set to increase rapidly

U.S. railroads prepare for imminent strike ($WSJ)

China reports cyberattack by United States (trans.)

U.S. Northeast distillate inventories very low

NORTHWEST EUROPE’s benchmark gas futures contract for deliveries in January 2023, the heart of next winter, has fallen to less than €200 per megawatt-hour from a peak of €345 in late August. Higher inventories in seasonal storage have reduced the probability about stocks running out. Plans for significant voluntary and mandatory reductions in gas and electricity consumption and the increasing probability of a region-wide recession will also lessen the pressure on stocks in the event gas supplies from Russia are disrupted:

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Best in Energy – 31 May 2022

EU/Russia oil embargo agreed in principle

(see also press statement from the EU)

EU/Russia oil ban on seaborne imports ($FT)

(see also background on negotiations ($FT))

Global refiners cannot keep up with demand

India boosts discounted oil imports from Russia

Greece advises tankers to avoid Iran waters ($FT)

Russia/Ukraine war focuses on rail system ($WSJ)

China plans big increase in wind and solar (trans.)

BRENT spot prices and calendar spreads have surged as traders anticipate EU sanctions on Russia’s exports will increase the shortage of oil.  Both have returned to levels last seen in March in the immediate aftermath of Russia’s invasion of Ukraine. The six-month calendar spread is at a near-record backwardation of $16 per barrel, signalling inventories are expected to fall further in the rest of the year, leaving the market critically tight:

BRENT’s inter-month spreads for the rest of 2022 and 2023 have moved into an increasingly large backwardation over the last two months as the prospect of EU sanctions is expected to tighten the market and leave it short of both crude and fuels:

CHINA’s manufacturers reported a continued contraction in business activity in May but the downturn was less widespread than in April. The official purchasing managers’ index increased to 49.6 (10th percentile) up from 47.4 (1st percentile) the previous month:

CHINA’shydro-electric generation increased to a record 313 TWh in the first four months of the year, surpassing the previous peak of 299 TWh in 2019, and sharply reducing coal consumption:

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