Best in Energy – 23 September 2022

U.S. central bank signals a hard landing ($WSJ)

U.S. trucking – possible decarbonisation pathway

China’s refiners anticipate higher exports ($BBG)

India plans more coal generation by 2030 ($BBG)

Asia LNG sales stall as prices hit resistance ($BBG)

ADNOC chief sees little room to manoeuvre in oil

Taiwan says blockade would be act of war

FedEx to cut costs and raise parcel prices ($WSJ)

U.S./China relations –Asia Society speech (trans)

EUROZONE manufacturers reported a further deterioration in business activity this month according to preliminary results from the purchasing managers’ survey. The composite activity index fell to 48.5 in September (24th percentile) down 49.6 in August (28th percentile) and 49.8 in July (29th percentile). The region’s economy is sliding into recession – even before expected energy shortages this winter:

U.S. INITIAL CLAIMS for unemployment benefits are still running at very low rates, with just 213,000 new claims filed last week on a seasonally adjusted basis. Core inflation is unlikely to fall to the Federal Reserve’s target of a little over 2% per year with the labour market this tight – which explains the central bank’s aggressiveness in raising interest rates:

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Best in Energy – 20 September 2022

Germany’s auto sector emissions remain high

China boosts imports of coal from Russia

EU/Africa tensions over gas investment ($FT)

La Niña to boost winter heating in Japan ($BBG)

U.S. shale producers hit drilling limits ($WSJ)

U.S. central bank refocuses on inflation ($WSJ)

Stranded asset story and the energy crisis ($FT)

Renewables and domestic energy security ($FT)

California relies on nuclear for 10% of electricity

United States is shifting policy on Taiwan ($BBG)

Coal boom leads to expansion of marginal mines

U.S. TREASURY securities with ten year maturity are yielding 3.53%, the highest since 2010, as traders anticipate the central bank will have to keep interest rates higher for longer to bring down inflation. Yields are rising at the fastest year-over-year rate since 1999. The increase is testing the downward trend in place since the mid-1980s. If the increase is sustained it will force a widespread re-pricing of most other assets:

HEDGE FUNDS and other money managers made few changes to their positions in the six most important petroleum futures and options contracts in the week to September 13. There were total net purchases of +4 million barrels with buying in NYMEX and ICE WTI (+10 million) and Brent (+3 million) but sales of U.S. gasoline (-5 million), U.S. diesel (-3 million) and European gas oil (-1 million):

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Best in Energy – 12 August 2022

Australia presses producers to reserve gas for local market

Crypto-mining and electricity demand response

U.S. solar generation installations delayed

U.S./China try to manage Taiwan tensions ($WSJ)

U.S./Iran attempt to finalise nuclear accord ($WSJ)

EUROPE’s GAS INVENTORIES are well above the seasonal average and accumulating at a record or near-record rate as the region attempts to maximise its seasonal storage ahead of the winter and a possible disruption to gas imports from Russia.

  • EU28 gas inventories have risen to 823 TWh up from a post-winter low of 291 TWh on March 19.
  • Stocks are +62 TWh above the prior ten-year seasonal average (+8% or +0.48 standard deviations).
  • The increase in inventories to date from the post-winter low (+532 TWh) is the largest for at least ten years.
  • Inventories accumulated at an average rate of 6 TWh per day over the seven days to August 10, among the fastest seasonal increases in the last decade.
  • Inventories are on course to reach 995 TWh by the end of the refill season (with a likely range of 915-1069 TWh).
  • Expected post-summer stocks are significantly higher than the 878 TWh anticipated at the start of the refill season on April 1 (710-1066 TWh).
  • Expected post-summer inventories have steadily risen as operators have filled storage irrespective of prices.

Expected post-summer stocks are +63 TWh (+7%) above the prior ten-year average (932 TWh).

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Best in Energy – 8 August 2022

Russia oil discounts narrow on China/India demand

Germany’s river freight restricted by low water level

Bangladesh explores rotating factory closure ($BBG)

Asia’s emissions market prices are still low ($BBG)

China’s navy and air force practices Taiwan blockade

China forecasts flooding in major coal areas (trans.)

U.S. shale producers focus on higher oil prices ($FT)

U.S./China navy competition and Northern Sea Route

EUROPEAN GAS OIL calendar spreads between December 2022 and December 2023 have fallen into a backwardation of less than $11 per barrel from almost $33 in mid-June, as traders anticipate the onset of a recession depressing consumption:

JAPAN LNG STOCKS at the end of May had risen to 2.36 million tonnes, the highest for the time of year for at least seven years, as the country’s utilities accumulate inventories to protect against possible supply disruptions in winter 2022/23:

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Best in Energy – 24 May 2022

U.S. president’s statements on Taiwan

Biden insists no change in Taiwan policy

U.S. Northeast distillate fuel oil shortage

U.S. Northeast home heating oil reserve

White House examines diesel release

Russia’s crude oil increasingly stuck at sea

LNG flows set to shift from Europe to Asia

Russia’s oil production declines ($BBG)

Amazon to sublet excess storage ($WSJ)

Sri Lanka raises fuel prices sharply

Iran/Venezuela increase oil cooperation

U.S. household finances strong at end 2021

U.S. EAST COAST distillate fuel oil inventories have fallen to just 22 million bbl compared with a pre-pandemic five-year seasonal average of 43 million bbl. Regional inventories have depleted to the lowest level since records began in 1990, leading to intense upward pressure on regional fuel prices:

U.S. DISTILLATE prices have been at a record premium to crude but the shortage is increasingly bleeding into gasoline inventories and prices as well as refiners try to boost output of diesel and jet fuel:

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Best in Energy – 23 May 2022

U.S. president ends strategic ambiguity on Taiwan

India cuts fuel taxes and boosts subsidies

Russia ends gas deliveries to Finland on pay dispute

Global refiners in dilemma whether to boost capacity

Electricity supplies are stretched worldwide ($BBG)

Saudi Arabia reiterates commitment to OPEC+ ($FT)

Fuel tax cuts are poor response to high prices ($BBG)

BRENT’s six-month calendar spread has increased to a backwardation of more than $13 per barrel, up from just $3 in early April, as traders anticipate planned EU sanctions on Russia’s petroleum exports will intensify the global shortage of crude oil and refined products:

U.S. RIG COUNT rose by +14 to 728 last week, with the addition of +13 rigs targeting oil-rich rock formations and +1 rig targeting predominantly gas-rich rock. The number of rigs drilling for oil has risen by +404 from its cyclical low in August 2020 but is still -107 below the pre-pandemic level:

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