Freeport LNG explosion to shut facility for at least 3 weeks
OPEC spare capacity set to fall to lowest for over a decade
Battery shortages hinder wind and solar grid integration
Asia’s jet fuel refining margins hit record high
U.S. PETROLEUM inventories increased by +4 million bbl to 1,685 million bbl last week. The one-week increase was the largest so far this year. But stocks are still at the lowest seasonal level since 2008:
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 $16 per barrel, signalling inventories are expected to fall further in the rest of the year, leaving the market critically tight:
BRENT’s inter-month spreads for the rest of 2022 and 2023 have moved into an increasingly large backwardation over the last two months as the prospect of EU sanctions is expected to tighten the market and leave it short of both crude and fuels:
CHINA’s manufacturers reported a continued contraction in business activity in May but the downturn was less widespread than in April. The official purchasing managers’ index increased to 49.6 (10th percentile) up from 47.4 (1st percentile) the previous month:
CHINA’shydro-electric generation increased to a record 313 TWh in the first four months of the year, surpassing the previous peak of 299 TWh in 2019, and sharply reducing coal consumption:
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EU cannot be a green island in a dirty world ($FT)
Oil consumption and moderate recessions ($BBG)
U.S./EU examine Russia oil embargo + tariff plan
U.K. inflation accelerates to 9% fastest since 1982
China’s LNG imports set to rise from August ($BBG)
U.K. explores extensions for coal and nuclear ($BBG)
Texas electricity supply hit by congestion on grid
German refinery at risk from Russian oil ban ($BBG)
Austria tries to encourage industry to store gas
U.K. orders competition probe into fuel retailing
U.S. MANUFACTURING output in the three months Feb-Apr was almost 6% higher than in the same period a year earlier, showing momentum in the business cycle but also why supply chains are struggling to cope and prices are escalating rapidly. Rapid growth in manufacturing explains why diesel is short supply and prices are escalating:
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China prioritises energy and food security (trans.)
California forecasts power shortages to 2025
U.S. grids warn of electricity shortfalls ($WSJ)
IEA sidelined by White House on oil release
India’s prolonged electricity blackouts
India’s fuel distributors trim volumes
Japan to phase out Russian oil imports
U.S. fuel prices rise faster than crude
Global refining margins widen ($BBG)
U.S. refiners run out of capacity ($FT)
CO2 removal becomes focus for policy
Pandemic results in 15 million deaths
U.S./Ukraine intelligence sharing ($WSJ)
INDIA’s temperatures have fallen over the last week and are closer to the seasonal average, reducing electricity consumption slightly and easing stress on the power grid. The grid’s frequency has moved closer to the 50 Hz target and periods of under-frequency have become shorter and less severe, showing a closer balance between generation and demand:
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