Geopolitics & War
Russian refinery on fire after Kamikaze drone strike
A Ukrainian kamikaze drone plowed into a major oil refinery inside Russian territory, sparking a huge fireball explosion.
GS & Nomura have raised their probability estimates of a US recession
Goldman Sachs and Nomura have raised their probability estimates of a US recession. Nomura is expecting the US to get into recession in Q4.
Read more at: Traders Market Weekly: When Logic Hits You in The Face
Supply & Demand
Massive refining capacity idle in China as gasoline prices soar
As gasoline prices soar and the US considers invoking Cold War-era laws to boost production, there’s a massive pool of oil refining capacity on the other side of the Pacific Ocean that’s sitting idle.
Around a third of Chinese fuel-processing capacity is currently out of action as Asia’s largest economy struggles to put the coronavirus behind it.
Even if this capacity is tapped, the chances of China exporting gasoline is unlikely as these assets are meant to serve the domestic market.
EU scrambles for mitigations against Russian supply cuts
European natural gas prices creep up as Russia tightened its squeeze on gas exports to Europe, despite a lower demand and high fuel costs curbing industrial demand.
The IEA warned that Russia could cut off gas supply to EU completely and that the EU countries need to be prepared for such an eventuality and plan contingencies accordingly.
Gazprom PJSC’s shipments through the Nord Stream pipeline remain at about 40% of capacity.
Russian gas giant Gazprom has announced that it will stop gas delivery via both strings of the Turkish Stream pipeline due to “planned maintenance”.
Italy, one of the biggest buyers of Russian gas, is temporarily increasing coal-fired generation, joining nations such as Germany, Austria, and the Netherlands in reviving mothballed power stations or removing limits on the dirtier-burning fuel.
The Netherlands is choosing to utilize nuclear power.
Countries like Norway are increasing their natural gas production.
A French nuclear power crisis is worsening the situation. A recent flurry of unexpected issues at the Électricité de France (EDF), the state nuclear power operator representing the largest nuclear fleet in Europe, has caused French nuclear energy output to tumble to its lowest levels in 30 years. Around half of the EDF’s massive nuclear fleet has been taken offline, delivering a massive blow to the EU’s energy independence and security in the midst of a worldwide energy crisis.
Governments are also making attempts to inform consumers to curb consumption.
‘The situation is serious’: Germany plans to fire up coal plants as Russia throttles gas supplies. @CNBC#Energy #EnergyCrisis #Renewables #Solar #Nuclear #LNG #USLNG #OOTT #ONGT #Gas #Fuel #Coal #EnergyRealism https://t.co/4Ax6t6n6BX— Global LNG News (@GlobalLNGnews) June 20, 2022
French #Nuclear Power Crisis— Prof. Peter Strachan (@ProfStrachan) June 19, 2022
"Around half of France’s atomic fleet, the largest in #Europe, has been taken offline as a storm of unexpected problems swirls around the nation’s state-backed #NuclearPower operator, Électricité de #France, or #EDF"
Russian oil now accounts for over 10% of India's imports
India's Russian oil imports jump 50 times. 40% of these imports are done by #Reliance and Nayara (Rosneft). This takes Russian oil to over 10% of India's imports.
Along similar lines, Russia has overtaken Saudi Arabia to be China's largest crude oil supplier.
Russia beats Saudi Arabia and becomes China’s largest Importer of Crude Oil— News Talk City (@newstalkcity) June 22, 2022
Read More: https://t.co/Cha3sgMTFp#Asiancountries #Brazil #China #Covid19 #CrudeOil #Europe #Iran #NewsTalkCity #Russia #RussiabeatsSaudiArabia #RussiawaronUkraine #Russianoil #Saudicrudeoil
Iraq seeks to raise oil production to 8 mn bpd by 2027
Iraq seeks to raise oil production to 8 mn bpd by 2027
Read more at: Iraq seeks to raise oil production to 8 mn bpd by 2027
Discoveries & Launches
Tanzania launches mega gas and LNG project
The Government of Tanzania & its partners Equinor, Shell & ExxonMobil have announced the signing of the historic Host Government Agreement, which will greenlight a gas and LNG mega project.
The US$30 billion project aims to produce 10 million tons per annum of LNG for export with transformational potential for industrialization by bringing investment, technology, skills, and infrastructure to the country, which will benefit Tanzanian businesses and its citizens.
The Government of Tanzania & its partners including @Equinor, @Shell & @exxonmobil have announced the signing of the historic Host Government Agreement, which will green light a gas and LNG mega project.— Energy Connects (@energyconnects_) June 21, 2022
More here: https://t.co/hm3KYJsQo0#EnergyConnects #EnergyNews #OOTT
Asian Refiners focus on jet fuel as air travel surges
As Covid restrictions recede, air travel has seen a surge.
Jet Fuel crack spreads have hit record highs.
This has pushed Asian refiners to adjust Q3 product slate in favor of jet fuel.
Henry Hub and Dutch TTF Natural Gas Prices are diverging as of now
For a while, the Henry Hub prices were converging with the Dutch TTF Prices because of the US LNG export potential and the Europe gas crisis.
As of now, the two price indexes are diverging, due to limited LNG export and import capacity and the Freeport fire.
Conoco sees volatility in the natural gas market to last for a few years and is making LNG investments in Qatar with this in mind.
While #LNG prices have diverged significantly from European #gas prices in Q2, weakening the correlation between #TTF & LNG cargo prices, the connection between LNG cargo prices has remained strong.— S&P Global Commodity Insights LNG (@SPGCILNG) June 20, 2022
➡ Find out more: https://t.co/K2kjnN442C#ONGT #Freeport #Russia #Ukraine pic.twitter.com/mTWDsp2hEb
Global #LNG cargo prices have moved together in a narrow band while major #gas hubs – Henry Hub and the Dutch Title Transfer Facility – are at historically divergent price levels from each other.— S&P Global Commodity Insights LNG (@SPGCILNG) June 21, 2022
➡ Find out more here: https://t.co/il8Glf0eLq#ONGT #Freeport #Russia #Ukraine pic.twitter.com/8aP1xipGDO
#Conoco Sees #Natgas Volatility Lasting Years as it Invests in #Qatar #LNG expansion project. But high prices are leading to more #coal and “broke customers” which is “causing a lot of economic slowdown around the world.” #ONGT #OOTT #USLNG https://t.co/reDyUqqEia— Susan Sakmar (@SusanSakmar) June 20, 2022
European coal prices have surged to $424/tonne
European coal prices have surged to $424/tonne.
The main reason for this is the restart of coal-fired power plants by several EU countries.
To put things in perspective, just a year ago, they traded at $100/tonne.
Spot physical European coal prices (ARA CIF) surge to an **all-time high** of ~$424 per tonne, according to Argus, surpassing the peak set immediately after the Russian invasion of Ukraine. A year ago, European coal traded just a little over $100 per tonne. #CoalTwitter #COP27— Javier Blas (@JavierBlas) June 24, 2022
Brent price can move up another $40, says Goldman Sachs economist
Goldman Sachs economist Jeff Currie, who rose to prominence during the 2000s by forecasting the commodity super-cycle and oil spiking above $100 a barrel, predicts that we are 18 months into a 10-year-long oil supercycle regime and that Brent prices can move up another $40 in the coming months.
The reasons given include lack of investments in oil (due to ESG concerns) and shortage of refining capacity.
#BRENT price can 📈 another $40s ; lack spare capacity, inventories drawing, SPR not helped, refining capacity short USA— Heid 🛢️🔥📈 (@Heid_oil) June 24, 2022
A structural story with underinvestment re ESG concerns #OOTT
Jeff Curry @GoldmanSachs only 18 months in to 10 year super spike period where #OIL will 📈
US Inflation has just hit a 40-year high
In the US, inflation just hit a 40-year high:
Gas +69.8% +
Fuel Oil +108.7%
Meat, Poultry, & Fish +15.1%
Used Cars +18.1%
Airline Fares +39.8%
It is a similar story across the world.
The German PPI jumped by 33.6% in May YoY (the highest increase since 1949, when this index was set up):
Electricity prices +90.4%
In Other News
Eni, Conoco Win Prized North Field East Stakes in Qatar
Eni, Conoco Win Prized North Field East Stakes in Qatar.
The latest @energyintel International Oil Daily news:— Oliver Klaus (@Oliver_Klaus1) June 21, 2022
- #Eni, #Conoco Win Prized #NorthField East Stakes in #Qatar
- #China’s Russian Imports Outpace Saudi Arabia
- #Iraq Deputy PM Maps ‘Realistic’ Production Path
- #Opec-Plus Poised to Enter New Phase#OOTT
Glencore pleads guilty to seven counts of bribery
Glencore pleaded guilty to seven counts of bribery in connection with oil operations in five countries.
Glencore Energy pleaded guilty to seven counts of bribery in connection with oil operations in five countries. UAE is planning to build a new Red Sea port in Sudan, and more. Here's a roundup of five business stories making headlines in Africa pic.twitter.com/FLdvePq6Af— Reuters (@Reuters) June 24, 2022