Chinese Demand Destruction Counters the danger Of A Russian Oil Ban - While lockdowns in China are causing significant demand destruction and adding downward pressure to grease prices, the EU's threat to ban Russian oil imports has the potential to send prices significantly higher.
April 18, 2022
China’s descent into an almost nationwide COVID lockdown has triggered the primary large-scale demand roadblock of 2022, with some 45 cities accounting for 40% of the country’s economic output being under some style of mobility curtailment. On the opposite hand, the eu Union continues to mull banning Russian oil imports, pushing up the Brent complex even higher compared to other regional benchmarks. ICE Brent front-month futures have closed the week slightly above the $110 per barrel mark, but uncertainty regarding both supply and demand will ensure volatility within the coming days.
Putin Warns of Energy Flow Redirection. Russia’s President statesman said that Moscow will redirect its energy eastwards and build new infrastructure toward Asia, arguing that unfriendly regimes within the West are driving up prices for themselves despite their dependence on Russian flows.
Chinese Refiners Cut Rates on COVID Demand Slump. China’s refiners are cutting refinery runs at the most important scale since the start of the pandemic in early 2020, cutting intake by 900,000 b/d in April (equivalent to six of domestic demand) because the country continues to grapple with COVID lockdowns.
EU Ban on Russian Coal Ramps Up Prices. After Brussels agreed on a phased-in ban on Russian coal, the regional benchmark API2 gained some 15% week-on-week and is currently trading around $320/mt, further buoyed by the EU ban on Russian wood which is able to presumably add another layer of coal demand in Europe.
Italy’s ENI to spice up Egyptian Gas Output. In another move destined to spice up liquefied gas supplies visiting Europe, the Italian energy giant ENI (NYSE:E) signed a deal to spice up gas production in Egypt, particularly at the supergiant Zohr field, leading to some 3 billion cubic meters of LNG exports more this year.
Saudi Arabia Not Against Splitting Contentious Gas Field. Kingdom of Saudi Arabia and Kuwait invited Teheran to carry negotiations to work out the eastern limit of the Durra gas field that the 2 Arab Gulf monarchies wanted to develop jointly, but a month after Iranian officials called the Saudi-Kuwaiti agreement illegal.
Germany Mulling Fourth Floating LNG Terminal. Having secured three FSRU LNG projects via German energy firms RWE (FRA:RWE) and Uniper (ETR:UN01), the German government is now considering leasing a fourth floating unit to diversify its gas supply faraway from Russia.
Nigeria Approves $10 Billion Fuel Subsidy. Nigeria’s government approved a $10 billion petrol subsidy, increasing the state subsidy tenfold as high global prices and lower production reception (annual plan downgraded to 1.6 million b/d) still push domestic fuel prices up.
Japan Wants More LNG Investment. Japanese companies arrange toaccelerate their investment in upstream projects for liquefied fossil fuelto spice up offtake volumes, with the ramifications of the Russia-Ukraine war intensifying competition for spot LNG cargoes globally, forcing Asian buyers to outbid Europe.
Wind Power Overtakes Coal and Nuclear in US Power Generation. For the primary time ever, wind generation became the second-largest source of electricity generation within the Lower-48 states in late March, overtaking both coal and nuclear and tallying a complete output rate above 2,000 GWh.
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