shipping – JKempEnergy.com

Shipping lines cancel more ocean sailings as demand falls

Friendshoring starts to reshape minerals supply chains

OPEC⁺ tries to maintain unity despite U.S. pressure

Baltic grid operators ready for rapid re-synchronisation

Russia plans for nationalisation of Sakhalin-2 gas project

U.S. Supreme Court curbs authority of regulatory agencies

Japan faces power shortages throughout summer ($WSJ)

China starts west-east electricity transmission line (trans.)

Coal’s resurgence sends prices soaring ($FT)

U.S. DISTILLATE FUEL OIL supplied to the domestic market averaged 3.68 million b/d in the four weeks ending on June 24 down from 3.88 million b/d in the same period last year. The volume supplied is an estimate subject to considerable short-term errors and volatility so it should be interpreted with extreme caution. But the reduction of -0.2 million b/d is relatively large and would be consistent with the onset of an economic slowdown:

EUROZONE MANUFACTURERS reported a much narrower increase in business activity this month as inflation and sanctions push the region’s economy towards recession. The purchasing managers’ index slid to 52.1 in June (47th percentile for all months since 2006) down from 54.6 in May (65th percentile) and 63.4 in June 2021 (a record):

U.S. REAL PERSONAL INCOMES less transfer payments (PILT) were up by just +1.8% in May compared with the same month a year earlier. PILT is one of the indicators monitored by the National Bureau of Economic Research’s Business Cycle Dating Committee to determine peaks and troughs in the cycle. PILT growth has been slowing since the start of the year and is now in only the 30th percentile for all months since 1980, implying the economy is losing momentum as inflation outstrips earnings:

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U.S. gasoline and diesel prices hit record nominal highs

Germany/Qatar gas negotiations hit by disagreements

China’s gas consumption and imports decline ($WSJ)

Germany fears economic hit from gas disruption ($FT)

EU drops planned ban on shipping Russian crude ($FT)

China avoids surge in consumer price inflation ($WSJ)

U.S. INTEREST RATE traders have started to anticipate a slowdown in the business cycle that will bring inflation under control and then encourage the central bank to start trimming interest rates slightly to support growth later in 2023. Policy-controlled short-term rates are expected to peak at 3.00-3.25% by August 2023, up from 0.75-1.00% currently, before dipping slightly at the end of 2023 and into 2024.

The implied trajectory is consistent with inflation under better control by mid-2023 and a slowdown in the business cycle that will cause the central bank to shift its focus to supporting growth. A similar pattern occurred during previous interest rate tightening and “soft-landing” cycles in 1966/67 and 1994/95.

As a result, the U.S. Treasury yield curve between two-year and ten-year notes has started to steepen slightly, usually a sign of an impending business cycle slowdown that will eventually cause the central bank to reverse some of its expected interest rate rises: