Oil Hits Highest In Almost 3 Years as Supply Tightens

The rally was slightly dampened by China’s first public sale of state crude reserves.

Brent futures rose 84 cents, or 1.1%, to settle at $78.09 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 68 cents, or 0.9%, to settle at $73.98.

That was the highest close for Brent since October 2018 and for WTI since July 2021, both for a second day in a row.

It was the third week of gains for Brent and the fifth for WTI mostly due to U.S. Gulf Coast output disruptions from Hurricane Ida in late August.

New York Harbor Ultra Low Sulfur Diesel (ULSD) futures also closed at their highest since October 2018.

“As oil prices are on track to close another week of gains, the market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand,” said Louise Dickson, senior oil markets analyst at Rystad Energy.

Some disruptions could last for months and have already led to sharp draws in U.S. and global inventories. [EIA/S]

U.S. oil refiners were hunting to replace Gulf crude, turning to Iraqi and Canadian oil, traders said.

India’s crude imports rose to a three-month peak in August, rebounding from July’s near one-year low.

Some members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have struggled to raise output due to under-investment or maintenance delays during the pandemic.

Russia said it will remain a reliable supplier of energy to global markets. Russian gas giant Gazprom had been accused of doing too little to increase its natural gas supplies to Europe, where prices have soared.

Iran, which wants to export more oil, said it will return to talks on resuming compliance with the 2015 Iran nuclear deal “very soon”, but gave no specific date.

Edward Moya, senior market analyst at OANDA, said: “Extra Iranian barrels of crude seem unlikely to be a 2021 story,” noting negotiations “will be a long drawn-out process.”

Kazakhstan’s biggest oil producer, Chevron-led Tengizchevroil (TCO), will delay components of its $45.2 billion expansion project by three to seven months.

In the United States, drillers added 10 oil rigs this week, putting the oil and gas rig count up for a 14th month in a row.

Brent could hit $80 by the end of September due to stock draws, lower OPEC production and stronger Middle East demand, UBS analysts wrote.

China’s first public sale of state oil reserves capped crude price gains. PetroChina and Hengli Petrochemical bought four cargoes totaling about 4.43 million barrels, sources said.

Analysts also noted indebted China Evergrande remains a risk to oil prices after the company’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Ron Bousso in London and Aaron Sheldrick in Tokyo; Editing by Louise Heavens, Edmund Blair, Emelia Sithole-Matarise and David Gregorio)

U.S. Oil Refiners Use Iraqi, Canadian Crudes to Replace Storm Losses – Traders

Royal Dutch Shell, the largest producer in the U.S. Gulf of Mexico, this week said damage to an offshore transfer facility will limit Mars sour crude supplies into early next year. The Mars sour grade of U.S. oil is used heavily by U.S. Gulf refiners and companies in South Korea and China, two top destinations for U.S. crude exports.

The United States now generally exports more than 3 million barrels of oil per day, most from the U.S. Gulf Coast. With overall fuel demand rebounding to pre-pandemic levels, refiners will need to make up for the Mars shut-ins.

The loss of up to 250,000 barrels per day (bpd) has some U.S. refiners seeking replacements for fourth-quarter delivery, especially Iraq’s Basrah crude, traders said. Others received supplies of sour crude from U.S. storehouses.

Basrah crude has come to the fore during past disruptions. In 2019, when U.S. sanctions on Venezuela cut off heavy crude grades to Gulf refiners, Iraq rapidly boosted cargoes. Canadian heavy-oil suppliers also benefited.

EMERGENCY SUPPLIES

Exxon Mobil and Placid Refining Co have received oil from the U.S. Strategic Petroleum Reserve (SPR), addressing immediate needs for sour crude.

“Refiners that needed to specifically replace Mars barrels requested sour crude from the SPR. Many others are buying extra cargoes of Basrah for October delivery, whose prices were very convenient as sour crudes in general are under pressure,” a U.S. Gulf crude trader said.

Earlier this month, Mars crude traded as high as a $1.50 premium over WTI but on Wednedsay it was offered at a $2.25-per-barrel discount to the U.S. benchmark, returning to pre-storm levels. Most of the nine U.S. refineries that halted output during Ida have returned to production.

Refiner Marathon Petroleum bought Basrah for October loading, one trader said. Refiners able to process and blend heavier crudes also have shown interest in Canadian and Latin American grades, traders added. Marathon declined to comment.

U.S. Energy Information Administration preliminary data through Tuesday showed imports from Mexico and Brazil rising after the storms.

CUSHIONING EXPORTS

Of the up to 250,000 bpd of lost Mars crude production, about 80,000 bpd typically are sent to Asian refineries, according to cargo tracking firm Vortexa.

South Korea has accounted for about two-thirds of Mars exports this year, said Kpler oil analyst Matt Smith. China’s Unipec and South Korea Energy boosted Mars purchases ahead of the storm to take advantage of favorable prices.

Unipec recently bought 200,000 tonnes of Russia’s Urals crude for October delivery amid a broader weakness in price differentials.

South Korea’s second largest refiner, GS Caltex Corp, had a Mars cargo canceled that had been set to arrive in late November, and the company has not yet looked for replacement crude, according to traders.

Unipec’s parent, Sinopec, and GS Caltex did not reply to after-hours requests for comment.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Arathy S Nair in Bengaluru, Marianna Parraga in Houston and Florence Tan in Singapore; Editing by David Gregorio)

Oil Prices Rise on Tight Supply, Renewed Risk Appetite

The market was also supported by a return of appetite for risk assets as concerns eased over a potential default by property developer China Evergrande and its possible fallout on the world’s second-largest economy.

U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.2%, to $72.40 a barrel by 06:45 GMT, while Brent crude rose 18 cents, or 0.2%, to $76.37 a barrel.

Both contracts jumped 2.5% on Wednesday after data from the U.S. Energy Information Administration showed U.S. crude stocks fell by 3.5 million barrels to 414 million barrels in the week to Sept. 17 – the lowest total since October 2018 – in a bigger drawdown than analysts had expected. [EIA/S]

“With Gulf of Mexico production returning slowly, and natural gas prices remaining sky high, the structural outlook for oil remains promising as OPEC+ struggles to meet even its current production quotas,” said Jeffrey Halley, analyst at brokerage OANDA.

Several OPEC+ countries – including Nigeria, Angola and Kazakhstan – have struggled in recent months to raise output due to years of under-investment or maintenance work delayed by the COVID-19 pandemic.

In a sign of strong fuel demand as travel bans ease, East Coast refinery utilisation rates in the United States rose to 93%, the highest since May 2019, EIA data showed.

ANZ Research said market sentiment is also being supported by surging natural gas prices.

“Supply shortage of gas could encourage power utilities to shift from gas to oil if winter turns out to be colder this year,” ANZ analysts said in a note.

Natural gas prices have risen sharply around the globe in recent months. That has been due to a combination of factors, including increased demand particularly from Asia as it enters its post-pandemic recovery, low gas inventories, and tighter-than-usual gas supplies from Russia.

The rise in oil prices came even as the U.S. dollar held near a one-month high after the U.S. Federal Reserve signalled rate hikes could come next year, more quickly than expected.

Oil prices typically fall when the dollar rises as a stronger greenback makes oil more expensive for holders of other currencies.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Tom Hogue and Muralikumar Anantharaman)

Oil Prices Settle Up on U.S. Stocks Draw, Rising Fuel Demand

Despite recent wobbles from U.S. economic figures, overall demand for fuel has rebounded to pre-pandemic levels. Product supplied over the last four weeks has come in at nearly 21 million barrels per day, not far from 2019’s peak.

U.S. crude inventories last week fell by 3.5 million barrels to 414 million barrels, the lowest since October 2018, the U.S. Energy Information Administration said on Wednesday.

“Crude oil prices remain supported as demand recovers around the world and inventories continue to draw,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

U.S. West Texas Intermediate (WTI) crude futures rose $1.74, or 2.5%, to $72.23, while Brent crude futures settled up $1.83, or 2.5%, to $76.19 a barrel.

Oil facilities in the Gulf of Mexico continue to return to production, with weekly output rising 500,000 bpd in the most recent week to 10.6 million bpd, the EIA said. BP on Wednesday said all four of its offshore facilities in the region have resumed operations after Hurricane Ida, brought back online and producing as of Sept. 12.

Also supporting prices has been difficulties by OPEC members struggling to raise output. Rising prices in other markets like natural gas have also supported oil, with energy market shortages causing a supply crunch in Europe and Asia.

“Given the variety of supportive factors in the energy space, notably sky-high natural gas prices … dips in prices right now are likely to be short-lived,” said Jeffrey Halley, an analyst at brokerage OANDA.

Iraq’s oil minister said OPEC and its allies are working to keep crude prices close to $70 per barrel as the global economy recovers, state news agency INA reported on Wednesday.

The U.S. Federal Reserve, which began a two-day policy meeting on Tuesday, signaled interest rate increases may follow more quickly than expected. Tightening monetary policy could cut investor tolerance for riskier assets such as oil.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; editing by David Gregorio, Nick Zieminski and Sonya Hepinstall)

Soaring Gas Prices Ripple Through Heavy Industry, Supply Chains

By Bozorgmehr Sharafedin, Susanna Twidale and Roslan Khasawneh

Some companies, including steel producers, fertiliser manufacturers and glass makers, have had to suspend or reduce production in Europe and Asia as a result of spiking energy prices. That includes two of the world’s largest fertiliser makers, which said they would cut production in Europe. The UK on Tuesday said it agreed to provide state support to one of the companies to restart production of by-product carbon dioxide, which is used in food production, to avert a supply crunch.

Natural gas prices have risen sharply around the globe in recent months. That has been due to a combination of factors: including increased demand particularly from Asia due to a post-pandemic recovery; low gas inventories; and tighter-than-usual gas supplies from Russia.

Gas prices in Europe have risen more than 250% this year, while Asia has seen about a 175% increase since late January. In the United States, prices have surged to multi-year highs and are about double where they were at the start of the year. Electricity prices have also risen sharply as many power plants are gas-fired.

Industrial Energy Consumers of America, a trade group representing chemical, food and materials manufacturers, has in recent days called on the U.S. Department of Energy to stop the country’s liquefied natural gas producers from exporting gas to help keep the energy costs down for industry.

Additional supplies of gas could alleviate pressure. Norway has allowed increased gas exports. More supply could flow from Russia by the end of the year with the country’s new Nord Stream 2 pipeline awaiting approval from Germany’s energy regulator. The pipeline project has drawn criticism from the United States, which says it will increase Europe’s reliance on Russian energy supplies.

PRODUCTION DISRUPTIONS

The pressures so far have been particularly acute in Europe, where gas stocks are much lower than usual heading into winter. Norway’s Yara International ASA, one of the world’s largest fertiliser makers, on Friday said it would cut about 40% of its European ammonia production due to high gas prices. That came after U.S.-based CF Industries Holdings Inc said gas prices were prompting it to halt operations at two of its British plants. Natural gas is the most important cost input for nitrogen-based chemicals and fertilizers.

Yara’s chief executive, Svein Tore Holsether, told Reuters in an interview Monday that the company was bringing ammonia to Europe from production facilities elsewhere, including the United States and Australia. “Instead of using European gas, we are essentially using gas from other parts of the world to make that product and bring it into Europe,” he said.CF Industries didn’t respond to requests for comment.

Some industries are calling on governments to intervene on their behalf. These pleas come as some countries have acted to protect consumers from soaring energy bills, such as Spain, which last week approved a package of measures including price caps.

Among those asking for help is the food industry following a shortage of carbon dioxide (CO2) caused by the suspension of production in some fertiliser plants. CO2 is used in the vacuum packing of food products to extend their shelf life, to stun animals before slaughter and to put the fizz in soft drinks and beer.

In the UK, meat processors had warned they will run out of CO2 within five days, forcing them to halt production. Soft drink manufacturers, who rely on the gas to make carbonated drinks, said supplies were running low.

On Tuesday, the British government said it struck a three-week deal with CF Industries for the American company to restart the production of carbon dioxide in the UK. Britain’s environment minister, who said the state support could run into tens of millions of pounds, also warned the food industry that carbon dioxide prices would rise sharply.

CF Industries said in a statement it is immediately restarting ammonia production at its Billingham plant following the agreement.

WEATHERING THE STORM

Other energy-intensive sectors such as steel and cement are also feeling the pinch.

Soaring gas prices have in the past couple of weeks “forced some steelmakers to suspend operations during those periods of the night and day when the cost of energy rockets,” said Gareth Stace, director general at industry group UK Steel. He declined to identify which companies.

British Steel, the country’s second-largest steel producer, said it was maintaining normal levels of production but that the “colossal” energy-price increases made “it impossible to profitably make steel at certain times of the day.”

Some manufacturers say they are able to cope, so far.

Germany’s Thyssenkrupp AG, Europe’s second-largest steelmaker, said hedging mechanisms it had in place against energy price increases, especially gas, meant it was not curbing production. But it said it was indirectly affected because the industrial gases it used are linked to electricity prices.

HeidelbergCement AG of Germany, the world’s second-largest cement maker, said higher energy prices were driving up production costs but that operations had not been halted as a result.

In China, several steel, ceramic and glass makers have reduced production to avoid losses, according to Li Ruipeng, a local supplier of liquefied natural gas in the northern province of Hebei. And, China’s southwestern province of Yunnan this month imposed limits on production of some heavy industries, including producers of fertilisers, cement, chemicals, and aluminium smelters due to energy shortages, a move that analysts said could reduce exports.

To weather the storm, some energy-intensive industries and utility firms in Asia and the Middle East have temporarily switched from gas to fuel oil, crude, naphtha or coal, analysts and traders said. That trend is expected to continue for the rest of the year and into the beginning of next, according to the International Energy Agency, the Paris-based energy watchdog.

In Europe, demand for coal as an alternative power source has also risen significantly. But options for switching to alternative sources of energy are limited in the region largely due to government policies aimed at encouraging the use of gas over more polluting fuels such as coal.

The glass industry was historically run on fuel oil, but almost all sites in the United Kingdom have now transitioned to natural gas, according to Paul Pearcy, federation coordinator at British Glass, a UK trade association. Only a few sites have fuel oil tanks that enable them to switch energy source if prices skyrocket, he added.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Bozorgmehr Sharafedin and Susanna Twidale in London, Roslan Khasawneh in Singapore; Additional reporting by Guy Faulconbridge, Nigel Hunt, Eric Onstad and Ahmad Ghaddar in London, Jessica Jaganathan and Chen Aizhu in Singapore, Yuka Obayashi in Tokyo, Nidhi Verma in Delhi, Scott DiSavino in New York, Heekyong Yang in Seoul, and Christoph Steitz in Frankfurt, Tom Kaeckenhoff in Düsseldorf, Polina Devitt in Moscow, Arathy S Nair in Houston; Editing by Cassell Bryan-Low)

Oil Edges Up, as Investors Worry About Global Demand

Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and settled just up 44 cents at $74.36 a barrel, after falling by almost 2% on Monday.

The October West Texas Intermediate (WTI) contract, which expired on Tuesday, rose 27 cents to settle at $70.56 a barrel, after dropping 2.3% in the previous session. The more active November contract rose 35 cents a barrel to $70.49.

Brent and the November WTI contract earlier reached session highs of $75.18 a barrel and $71.48 per barrel, respectively.

“It seems to be a very nervous trade today,” said Phil Flynn, senior analyst at Price Futures group in Chicago. “It’s a little bit of ongoing concerns about the potential impact of demand going forward.”

The TASS news agency said Russia believes global oil demand may not recover to its 2019 peak before the pandemic, as the energy balance shifts.

However, the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected as part of the OPEC+ agreement – suggesting a supply gap could grow.

Investors across financial assets have been rocked by fallout from the China Evergrande crisis that has harmed asset values in risk markets like equities.

“Traders worried that it could trigger a domino effect in China’s major debt-driven companies, and a rollover bearish effect for stocks and commodity prices,” said Nishant Bhushan, oil markets analyst at Rystad Energy.

“However, given that all Chinese major banks and lending institutions are controlled by the government, there is a ray of hope in the market that the second biggest economy in the world would be able to absorb shock waves from the Evergrande.”

In addition, the U.S. Federal Reserve is expected to start tightening monetary policy, which could cut investor tolerance for riskier assets such as oil. Fed policymakers began a two-day meeting Tuesday.

U.S. oil production is still recovering from hurricanes that hit the Gulf Coast region. Royal Dutch Shell, the largest U.S. Gulf of Mexico oil producer, said on Monday that damage to offshore transfer facilities from Hurricane Ida will cut production into early next year.

About 18% of the U.S. Gulf’s oil and 27% of its natural gas production remained offline on Monday, more than three weeks after Ida.

Industry data later on Tuesday was expected to show U.S. crude and product inventories fell last week. Government data is due on Wednesday. [EIA/S] [API/S]

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio)

Commodity Markets Set for High Volatility, Says Louis Dreyfus

Prices of agricultural commodities have risen sharply, a trend contributing to increased first-half profits reported by LDC, but remain well below peaks seen a decade ago, Michael Gelchie said.

“Unlike in 2010-2011, we’re likely in store for a period of elevated volatility,” Gelchie told Reuters in a telephone interview.

Continued waves of COVID-19, shipping congestion and question marks over when the U.S. Federal Reserve will start tapering monetary support were all fuelling volatility, he said.

“We still haven’t necessarily seen a normalisation of the supply chain,” Gelchie said.

A broader surge in commodity and energy prices also reflected a shift towards a low-carbon economy, given that “the infrastructure to support that costs money,” he added.

LCD, one of the world’s larggest agricultural commodity merchants, earlier on Tuesday announced a sharp rise in first-half profit, supported by higher prices and strong demand for staple crops.

Gelchie declined to comment on the group’s prospects for the rest of the year, noting that prices remained high and crush margins for oilseeds strong.

The improved results further ease financial pressure on LDC after it completed this month the sale of a stake to Abu Dhabi holding firm ADQ, bringing in the first non-family shareholder in the agricultural commodity group’s 170-year history.

The deal with ADQ, which allowed LDC’s parent company to repay $1 billion borrowed from its operating group, would help LDC accelerate investments, Gelchie said, without giving details.

ADQ has secured four seats on an enlarged nine-member supervisory board headed by main shareholder Margarita Louis-Dreyfus.

The deal with LDC also involves a plan to supply food commodities to the United Arab Emirates.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Gus Trompiz; editing by Barbara Lewis)

Gas Price Surge, Just One More Headwind for World Economy

The gas market chaos, which has driven prices 280% higher in Europe this year and led to a 100%-plus surge in the United States, is being blamed on a range of factors from low storage levels to carbon prices to reduced Russian supplies.

So high are tensions that several European Parliament lawmakers have demanded an investigation into what they said could be market manipulation by Russia’s Gazprom.

Whatever the causes, the surge carries major market implications:

1/GROWTH

Analysts say it’s too early to downgrade economic growth forecasts but a hit to economic activity looks inevitable.

Morgan Stanley reckons the impact in the United States, the world’s biggest economy, should be small. While over a third of U.S. energy consumption in 2020 was supplied by natural gas, users were predominantly industrial, it notes.

Overall though, higher gas prices raise the risk of stagflation – high inflation, low growth.

“It is quite clear there is a growing sense of unease about the economic outlook as a growing number of companies look ahead to the prospect of rising costs,” said Michael Hewson, chief market analyst at CMC Markets.

2/INFLATION

Euro zone wholesale power prices are at record highs, potentially exacerbating inflation pressures inflicted by COVID-related supply bottlenecks. In Germany, 310,000 households face an 11.5% increase in gas bills, data showed on Monday.

Noting German factory gate prices were already the highest since 1974, Citi analysts predicted 5% hikes for electricity and gas prices in January, adding 0.25 percentage points to consumer inflation next year.

Higher food costs are another side effect, given a shortage of carbon dioxide which is used in slaughterhouses and to prolong the shelf-life of food. Cuts in fertiliser production could also lift food prices.

Goldman Sachs predicts higher oil demand, with a $5 per barrel upside risk to its fourth-quarter 2021 Brent price forecast of $80 a barrel. Brent is trading at about $74 currently. [O/R]

3/CENTRAL BANKS

Central banks are sticking with the line that the spike in inflation is temporary — European Central Bank board member Isabel Schnabel said on Monday she was happy with the broad-based rise in inflation.

But as market- and consumer-based measures of inflation expectations rise, gas prices will be on central banks’ radar.

“If we have higher inflation, transitory or structural, and have slower growth – it will be a very tricky situation for markets and central banks to assess, navigate and communicate,” said Piet Haines Christiansen, chief strategist at Danske Bank.

This week’s central bank meetings could test policymakers’ resolve. The Bank of England meeting on Thursday is in particular focus, given UK inflation has just hit a nine-year high.

With UK producer price inflation soaring, shipping costs showing little sign of cooling, commodity prices higher up and job vacancies tipping 1 million, there is a growing chance that higher prices will stick around for longer, said Susannah Streeter, senior analyst at Hargreaves Lansdown.

“If they do, more (BoE) members may move quickly to vote for a rate rise sooner than expected next year, but it would be an unpopular course of action with looming tax rises already hard to digest for many consumers,” she said.

4/ STATE BAILOUTS

Britain is considering offering state-backed loans to energy firms after big suppliers requested support to cover the cost of taking on customers from companies that went bust under the impact of gas prices. One firm, Bulb, is reportedly seeking a bailout.

France meanwhile plans one-off 100 euro ($118) payments to millions of households to help with energy bills.

“The story emerging from the UK energy sector will soon be more relevant to the European market than Evergrande,” said Althea Spinozzi, senior fixed income Strategist at Saxo Bank.

And in a week packed with central bank meetings, she added that markets were “right to fret.”

5/COMPANIES

Spain shocked the utility sector last week by redirecting billions of euros in energy companies’ profits to consumers and capping increases in gas prices. Revenue hits at Iberdrola and Endesa were estimated by RBC at one billion euros and shares in the companies sold off heavily.

Since the move, investors have fretted about contagion to other countries, Morgan Stanley said. While seeing those fears as overdone, the bank acknowledged there was a risk of margin squeezes at European utilities in coming months.

Sector shares are down for the third week straight.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Dhara Ranasinghe; graphics by Saikat Chatterjee and Dhara Ranasinghe; additional reporting by Yoruk Bahceli and Sujata Rao; Editing by Sujata Rao and Hugh Lawson)

Oil Falls 2% on Risk Aversion, Dollar Strength

Brent crude fell $1.42, or 1.9%, to settle at $73.92 a barrel after sinking to a session low of $73.52. U.S. West Texas Intermediate (WTI) declined $1.68, or 2.3%, to end at $70.29 after falling to as low as $69.86.

The dollar, seen as a safe haven, rose as worries about Chinese property developer Evergrande’s solvency spooked equity markets and investors braced for the Federal Reserve to take another step toward tapering this week.

“As the U.S. dollar is usually a safe haven, its exchange rate against other currencies strengthens, a development that supplements the risk aversion environment and affects commodity prices, especially oil,” Rystad Energy’s oil markets analyst Nishant Bhushan said.

“Oil gets more expensive for non-dollar markets and prices get a hit as a result, a bearish move backed by the stock market itself in an environment of risk aversion.”

Still, oil drew some support from signs that some U.S. Gulf output will stay offline for months due to storm damage.

Brent has gained 43% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, and some recovery in demand after last year’s pandemic-induced collapse.

Losses on Monday were limited due to supply shutdowns in the U.S. Gulf of Mexico due to two recent hurricanes. As of Friday producing companies had just 23% of crude production offline, or 422,078 barrels per day.

Crude pared its decline on Monday after Royal Dutch Shell said it expects an installation in the Gulf of Mexico to be offline for repairs until the end of 2021 due to damage from Hurricane Ida.

The facility serves as the transfer station for all the output from the company’s assets in the Mars corridor of the Mississippi Canyon area to onshore crude terminals.

Rystad Energy analyst Artem Abramov estimated the lost production will remove 200,000 to 250,000 barrels per day (bpd) of Gulf of Mexico oil supply for several months. The Gulf contributes about 16% of U.S. oil production, or 1.8 million bpd.

For a look at all of today’s economic events, check out our economic calendar.

(Reporing by Alex Lawler; Additional reporting by Sonali Paul in Melbourne, and Roslan Khasawneh and Koustav Samanta in Singapore; Editing by Marguerita Choy and David Gregorio)

Equinor Wins Permission to Hike Troll, Oseberg Gas Exports, DN Reports

The increase would be valid for the next gas year, which starts on Oct. 1 and runs for 12 months, the minister was quoted as saying. He did not say by how much the production would be increased.

Equinor and the ministry were not immediately available for comment.

Day-ahead gas prices at the Dutch TTF hub, a European benchmark, have more than tripled this year to record levels, driving up power prices as the winter heating season approaches with below-average levels of gas in storage.

The situation is prompting Britain to consider state-backed loans to energy firms and big suppliers to ask for government support to cover the cost of taking on customers from companies that have gone bust.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Terje Solsvik and Victoria Klesty, editing by Gwladys Fouche)

UK Vows to Manage Fallout From Soaring Gas Prices

Business minister Kwasi Kwarteng said he had been reassured that the security of gas supply was not a cause for immediate concern but he would work with providers to “manage the wider implications of the global gas price increase”.

Kwarteng held emergency talks with executives from National Grid, Centrica, EDF and the regulator Ofgem on Saturday and is due to hold further discussions with industry figures on Sunday and Monday.

A jump in gas prices has already forced several domestic energy suppliers out of business and has shut fertiliser plants that also produce carbon dioxide, used to stun animals before slaughter and prolong the shelf-life of food.

Consumer groups and opposition politicians have warned that some customers and businesses will struggle to pay higher bills. The BBC reported that at least four small British energy companies were expected to go bust next week.

The Business department said the pressures facing companies was discussed during the meeting. Kwarteng said no customer would go without gas or electricity because an alternative supplier would be found if one went bust.

“Protecting customers during a time of heightened global gas prices is an absolute priority,” he said on Twitter.

RENEWABLES

The government has been moved to act after low gas storage levels, decreased supplies from Russia, demand from Asia, low renewables output and nuclear maintenance outages combined to more than triple European gas prices this year, hitting record highs.

The impact was immediately felt in the UK food sector where the shortage of CO2, also used in beer, cider and soft drinks, compounded an acute shortage of truck drivers, which has been blamed on the impact of COVID-19 and Brexit.

Nick Allen of the British Meat Processors Association said on Saturday the pig sector was two weeks away from hitting the buffers, while the British Poultry Council said its members were on a “knife-edge” as suppliers could only guarantee deliveries up to 24-hours in advance.

“Doing nothing is not an option,” Allen told Reuters, adding that given the exceptional circumstances, the government needed to either subsidise the power supply to maintain fertiliser production or source CO2 from elsewhere.

Richard Walker, managing director of Iceland Foods, said a CO2 shortage would hit meat products, atmospheric packaged products such as cheese and salads, and long life bakery items.

“We need to sort it, quickly,” he said.

Dermot Nolan, former head of Ofgem, told the BBC he expected prices to stay high for up to four months and it was not clear what the government could do to affect market rates – meaning they will remain a focal point in the run-up to the COP26 climate conference in Scotland in November, where governments will seek to agree new rules to suppress emissions.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Kate Holton; Editing by Edmund Blair, David Holmes and Gareth Jones)

Oil Falls as Storm-Hit U.S. Supply Trickles Back Into Market

Brent crude futures fell 33 cents to settle at $75.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 64 cents to settle at $71.97 a barrel. For the week, Brent was up 3.3% and U.S. crude was up 3.2%, supported by tight supplies due to the hurricane outages.

Friday’s slump followed five straight sessions of rises for Brent. On Wednesday, Brent hit its highest since late July, and U.S. crude hit its highest since early August.

“The reason oil prices reached such highs in the last few days was clearly supply disruptions and drawdowns in inventories, so now that U.S. oil production is returning, oil as expected trades lower,” said Nishant Bhushan, Rystad Energy’s oil markets analyst.

Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production. Restarts continued with about 28% of U.S. Gulf of Mexico crude output offline, Reuters reported on Thursday.

U.S. energy firms this week added oil and natural gas rigs for a second week in a row although the number of offshore units in the Gulf of Mexico remained unchanged after Hurricane Ida slammed into the coast over two weeks ago.

Fourteen offshore Gulf of Mexico rigs shut two weeks ago due to Ida remained shut, energy services firm Baker Hughes Co said. Last week, four offshore rigs returned to service.

The oil and gas rig count, an early indicator of future output, rose nine to 512 in the week to Sept. 17, its highest since April 2020, Baker Hughes said.

The dollar climbed to a multi-week high on Friday, making dollar-denominated crude more expensive for those using other currencies. The dollar got a boost from better-than-expected U.S. retail sales data on Thursday.

U.S. consumer sentiment steadied in early September after plunging the month before to its lowest level in nearly a decade, but consumers remain worried about inflation, a survey showed on Friday.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; additional reporting by Julia Payne in London, Sonali Paul in Melbourne and Roslan Khasawneh in SingaporeEditing by David Goodman, Louise Heavens and David Gregorio)

Group of EU Lawmakers Seeks Probe of Gazprom’s Role in Gas Price Surge

Gas prices in Europe have surged in recent months, helping to drive European electricity costs to multi-year highs, with wholesale power prices not forecast to fall significantly this year.

In a letter to the EU’s executive Commission, dated Sept. 16, around 40 of the Parliament’s 700 lawmakers said they suspected Russia’s Gazprom had acted to push up gas prices.

“We call on the European Commission to urgently open an investigation into possible deliberate market manipulation by Gazprom and potential violation of EU competition rules,” said the letter.

In response to the accusations, Gazprom said it supplied its customers with gas in full compliance with existing contracts.

The European Commission said it had received the letter and would reply in due course.

The lawmakers said they were suspicious of the company’s “effort to pressure” Europe to agree a fast launch to its Nord Stream 2 gas pipeline, which still has to clear regulatory hurdles that could take months to complete.

Gazprom announced last week that it had completed construction of the Nord Stream 2 pipeline to Germany, doubling its gas exporting capacity via the Baltic Sea.

The EU lawmakers cited incidents including recent shut-ins of some of Gazprom’s production and said the company had refused to book gas transport capacities through existing pipelines.

“All these factors allow to suspect that the record natural gas price surge in Europe in the recent weeks may be a direct result of Gazprom’s deliberate market manipulation,” the letter said.

Nord Stream 2 has faced sanctions from the United States and criticism from other countries wary of the EU increasing its reliance on energy imports from Russia.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Kate Abnett; additional reporting by Vladimir Soldatkin, Thomas Balmes; Editing by Louise Heavens)

The Crypto Daily – Movers and Shakers – September 17th, 2021

Bitcoin, BTC to USD, fell by 0.74% on Thursday. Partially reversing a 2.13% gain from Wednesday, Bitcoin ended the day at $47,782.0.

A mixed start to the day saw Bitcoin rise to a mid-morning intraday high $48,530.0 before hitting reverse.

Falling short of the first major resistance level at $48,813, Bitcoin slid to a late intraday low $47,061.0.

Bitcoin fell through the first major support level at $47,093 before a partially recovery to $47,700 levels.

The near-term bullish trend remained intact, in spite of the latest return to $43,000 levels. For the bears, Bitcoin would need a sustained fall through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Thursday.

Crypto.com Coin rose by 2.04% to buck the trend.

It was a bearish day for the rest of the majors, however.

Cardano’s ADA fell by 3.52% to lead the way down.

Binance Coin (-1.62%), Chainlink (-2.93%), Ethereum (-1.30%), Litecoin (-2.08%), Polkadot (-1.82%), and Ripple’s XRP (-2.71%) also struggled.

Bitcoin Cash SV (-0.33%) saw a relatively modest loss, however

In the current the week, the crypto total market fell to a Monday low $1,958bn before rising to a Thursday high $2,245bn. At the time of writing, the total market cap stood at $2,181bn.

Bitcoin’s dominance fell to a Monday low 40.36% before rising to a Wednesday high 41.91%. At the time of writing, Bitcoin’s dominance stood at 41.28%.

This Morning

At the time of writing, Bitcoin was up by 0.09% to $47,825.0. A mixed start to the day saw Bitcoin fall to an early morning low $47,711.5 before rising to a high $47,886.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a bullish start to the day.

At the time of writing, Bitcoin Cash SV was up by 0.85% to lead the way.

BTCUSD 170921 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall back through the $47,791 pivot to bring the first major resistance level at $48,521 into play.

Support from the broader market would be needed for Bitcoin to break back through to $48,500 levels.

Barring a broad-based crypto rally, the first major resistance level and resistance at $49,000 would likely cap the upside.

In the event of a broad-based crypto rally, Bitcoin could test resistance at the 23.6% FIB of $50,473 before any pullback. The second major resistance level sits at $49,260.

A fall back through the $47,791 pivot would bring the first major support level at $47,052 into play.

Barring an extended sell-off on the day, Bitcoin should steer clear of sub-$46,000 levels. The second major support level at $46,322 should limit the downside.

U.S. Gulf Crude Oil Ramps Up After Hurricane Losses – Data

Hurricanes Ida and Nicholas damaged platforms, pipelines and processing hubs, shutting in most offshore production for weeks. Restarts continued on Thursday with about 28% of U.S. Gulf of Mexico crude output offline. Some vessels remained at sea waiting to load U.S. crude.

But of more than 50 tankers set to load U.S. crude for exports or to discharge imported oil in Texas and Louisiana through early October, the majority remained on track on Thursday, according to Refinitiv Eikon vessel tracking data. Just 22% were showing delays.

Some exporters of Mars crude, which is produced in the Gulf, have offered customers alternatives including switching to other crude grades, re-scheduling loadings or changing ports, traders involved in the sales said.

PRICES EASE

That strategy resulted in Mars prices easing in recent days. After spiking to a $1.50 per barrel premium above the U.S. WTI, the highest since January, Mars for October delivery slid to a 50-cents per barrel discount to the U.S. benchmark on Wednesday, the lowest in two weeks.

However, some analysts said Mars would be the last grade to come back to the export market because of damage to a key offshore transfer hub. Royal Dutch Shell, which declared force majeure on contracts, continues to assess damage to the West Delta-143 platform, which controls the flow of oil from three large fields.

Some tankers that were scheduled to load at Louisiana ports in the last three weeks have diverted to Galveston Offshore Lightering Area (GOLA) and Corpus Christi, Texas, for loadings. Those ports are fully working after brief suspensions due to Hurricane Nicholas this week.

Corpus Christi exported 1.69 million bpd of crude in August, up about 100,000 bpd from July, the port said. Export data for September was not available.

SHIPS AT SEA

In contrast, the largest privately-owned U.S. export terminal, the Louisiana Offshore oil Port (LOOP), has yet to receive its first vessel since Ida, Refinitiv data showed. Its storage caverns were only 26% utilized in August, the company said.

LOOP oil exports “show few signs of a pickup following Hurricane Ida,” said Reid I’Anson, senior commodity analyst at data provider Kpler. The port’s August departures included a single vessel taking 2 million barrels of Mars crude, “the lowest absolute total leaving LOOP in any given month since February,” he said.

Weekly U.S. crude exports in September have slipped to between 2.34 million barrels per day (bpd) and 2.62 million bpd, according to preliminary data from the U.S. Energy Information Administration, from 3 million bpd in late August.

REFINERS GET SUPPLIES

With about 500,000 barrels per day (bpd) of refining capacity offline since Ida, most Gulf Coast refineries have been able to meet demand with crude loans from the U.S. Strategic Petroleum Reserve and arriving supplies.

The Aframax tanker Crude Centurion, carrying 500,000 barrels of Mexican Maya crude, on Thursday was docked and discharging at a Phillips 66 refinery in Belle Chasse, Louisiana, according to Refinitiv data.

U.S. regulators are still reviewing offshore platforms and approving resumption of production. Of the 288 platforms evacuated during Ida, 42 remained unoccupied on Thursday, the Bureau of Safety and Environmental Enforcement (BSEE) said.

“Facilities sustaining damage may take longer to bring back online,” BSEE said in a written statement to Reuters.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Marianna Parraga in Houston and Devika Krishna Kumar in New York, additional reporting by Liz Hampton in Denver; Editing by David Gregorio)

Japan’s Mitsui and Partners to Exit Mexico’s Gas Power Project

The divestiture from Falcon, which runs 2.23 gigawatts (GW) of gas-fired plants, comes amid a growing global trend away from fossil fuels in the race to cut harmful carbon dioxide emissions and slow climate change.

Trading house Mitsui, which has a stake of 40% in MT Falcon, said the deal followed a review of its asset portfolio. It plans to book a loss of 7.8 billion yen ($71 million) from the sale in the current financial year ending March 31, it added.

City gas provider Tokyo Gas, which holds a stake of 30% in the project, and Japan’s biggest power generator JERA, the owner of a 20% stake, said their decisions were also part of portfolio reviews, but declined to comment on financial impact.

Tohoku Electric Power, which has a stake of 10% in the project, confirmed the plan, but did not comment on the reason or its financial impact.

Mitsui and JERA decided this year to sell their stakes in Indonesia’s PT Paiton Energy, which runs coal power plants.

JERA is a joint venture of Tokyo Electric Power Company Holdings Inc and Chubu Electric Power Co Inc.

For a look at all of today’s economic events, check out our economic calendar.

($1=109.2800 yen)

(Reporting by Yuka Obayashi; Editing by Clarence Fernandez)

Italy Working on Measures to Curb Power Prices – Minister

“About 80% of the rise comes from gas,” the minister told Rai Radio 1, indicating the short-term measures could be worth some 3 billion euros ($3.5 billion).

On Monday Cingolani said retail power prices in Italy were set to rise by 40% in the next quarter, driven by higher international gas prices and carbon permit costs.

Governments across Europe are coming under pressure to curb energy bills to help families and small businesses as economies slowly emerge from the coronavirus pandemic.

Asked about recent measures taken by Spain to reduce power prices and if Italy could follow suit, Cingolani said the two countries were very different.

“It is not easy to translate strategies from one country to another,” he said.

On Tuesday Spain passed emergency measures to reduce sky-high energy bills by redirecting billions of euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

Those measures include plans to limit the profits that hydropower and other renewable power generators can make from surging electricity prices.

The news sent shares in Spanish utilities into a tailspin and also triggered a sharp fall in shares in Italy’s biggest utility Enel, which controls Spain’s Endesa, on fears Rome could take similar drastic measures.

Enel shares recovered somewhat in early Thursday trade, up 1.4% at 07:25 GMT.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.8482 euros)

(Reporting by Stephen Jewkes and Francesca Piscioneri, editing by Giulia Segreti and Emelia Sithole-Matarise)

Canadian Pacific Clinches $27-Billion Kansas City Southern Deal as Rival Bows Out

The combination will create the first direct railway linking Canada, the United States and Mexico, with a network spanning 20,000 miles and approximately $8.7 billion of annual revenue. It marks the end of a high-stakes bidding war.

The $300 per share cash-and-stock deal that Canadian Pacific clinched is higher than the $275 per share cash-and-stock deal that it had secured in March to buy Kansas City Southern. That deal was scrapped when Canadian National wooed Kansas City Southern in May with a $325 per share cash-and-stock offer.

Kansas City Southern shares were little changed at $281.55 in Wednesday trading in New York.

Canadian National suffered a blow when the U.S. Surface Transportation Board (STB) rejected a temporary “voting trust” structure last month that would have allowed Kansas City Southern shareholders to receive the deal’s consideration without having to wait for full regulatory approval.

Canadian Pacific has had its proposed voting trust cleared by the STB and so Kansas City Southern shareholders will receive the $300 per share in cash and stock even if the regulator shoots down the deal. The regulatory certainty this provided convinced Kansas City Southern’s board to switch to a deal with Canadian Pacific, even though its offer was lower than Canadian National’s.

Canadian National had also faced pressure from some of its investors, including hedge fund TCI Management Ltd, to abandon its pursuit of Kansas City Southern. Canadian National shares jumped 3.7% on Wednesday to C$150.97, as its investors expressed relief the attempted deal was abandoned.

This is because a new offer would need to compensate Kansas City Southern for the regulatory risk of sticking with the Canadian National deal. This would have likely required a significantly higher price, as well a regulatory break-up fee that would be much higher than the $1 billion Canadian National offered previously.

The STB said last month that even though the overlap of Canadian National’s and Kansas City Southern’s networks was confined to 70 miles (113 km) between Baton Rouge and New Orleans, the two railways operated parallel lines in the central portion of the United States and could be under less pressure to compete if the voting trust for that deal was approved.

“There have been significant changes to the U.S. regulatory landscape since Canadian National launched its initial proposal which have made completing any Class I merger much less certain, including an executive order focused on competition issued by President Biden in July,” the company said in a statement on Wednesday.

There is a silver lining for Canadian National. It is now entitled to a $700 million break-up fee from Kansas City Southern, in addition to the $700 million it paid the latter to pass on to Canadian Pacific as a break-up fee for terminating their March deal. Canadian Pacific had said it will cover both payments.

CANADIAN PACIFIC NOT IN THE CLEAR YET

There are still potential pitfalls for Canadian Pacific. While no major Canadian Pacific shareholder has come out against the Kansas City Southern deal, as happened with Canadian National, Canadian Pacific still needs a majority of its investors to vote for the new agreement.

It is also possible that the STB shoots down Canadian Pacific’s deal for Kansas City Southern, even though it approved the voting trust for it. More likely, however, would be for the STB to require some concessions from Canadian Pacific, such as limited divestments or commitments on how much its charges customers, to clear the deal, people familiar with the matter said. It is possible that some of the concessions could erode Canadian Pacific’s profitability.

The STB did not immediately respond to a request for comment.

If the STB rejects the deal, Canadian Pacific’s voting trust would have to divest Kansas City Southern. Canadian National could then attempt to buy it, though the U.S. railroad has also attracted acquisition interest in the past from private equity firms.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Greg Roumeliotis in New YorkAdditional reporting by Aishwarya Nair, Aakriti Bhalla and Abhijith Ganapavaram in Bengaluru; Editing by Rashmi Aich, Arun Koyyur and Bernadette Baum)

Record 60 Cargo Ships Wait to Unload at Busiest U.S. Port Complex

With the pandemic still raging around the world, U.S. consumers have not fully resumed previous spending on restaurants and travel, yet they continue to splurge on goods ranging from appliances and home exercise equipment to sweatpants and toys.

Volume at the Port of Los Angeles – the busiest U.S. gateway for trade with Asia – is up 30.3% so far this calendar year.

The global supply chain has been reeling due to overwhelming demand for cargo;, temporary COVID-19 closures of ports and factories in Asia; shortages of shipping containers and key products like resin and computer chips; and severe weather. Transportation costs have spiked, exacerbating delays and fueling product shortages.

“Disruptions continue at every node in the supply chain,” said Gene Seroka, executive director at the Port of Los Angeles.

Containers are waiting on Port of Los Angeles docks a peak of six days for truck pickup, Seroka said. Containers on chassis are waiting 8.5 days “on the street” for warehouse space or to be returned empty to the port. There are nearly 8,000 containers ready to be whisked away by train, with the wait clocking in at 11.7 days, Seroka said.

Ports around the United States are opening gates on weekends to give truckers more time to pick up goods – and companies like Walmart Inc are investing millions of dollars to beef up their near-port operations.

August cargo volumes at the Port of Los Angeles nearly matched the year-earlier surge, when businesses raced to restock pandemic-depleted supplies and retailers rushed in holiday goods.

Total volume at the Port of Los Angeles reached 954,377 20-foot equivalent units (TEU) in August, down 0.8% from a year earlier, port authorities said. Loaded imports were down 5.9%, at 485,672 TEU.

The port sent 367,413 TEU of empty containers to factories in China and elsewhere – a 17% rise from last year. That far outstripped loaded exports which fell 22.9% to 101,292 TEU.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio)

The Crypto Daily – Movers and Shakers – September 15th, 2021

Bitcoin, BTC to USD, rallied by 4.88% on Tuesday. Reversing a 2.34% decline from Monday, Bitcoin ended the day at $47,152.0.

A mixed start to the day saw Bitcoin fall to an early morning intraday low $44,699.0 before making a move.

Steering clear of the first major support level at $43,311, Bitcoin rallied to a late intraday high $47,238.5.

Bitcoin broke through the first major resistance level at $46,741 to end the day at $47,000 levels.

The near-term bullish trend remained intact, in spite of the latest return to $43,000 levels. For the bears, Bitcoin would need a sustained fall through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Tuesday.

Cardano’s ADA fell by 0.21% to buck the trend on the day.

It was a bullish day for the rest of the majors, however.

Chainlink surged by 14.49% to lead the way, with Binance Coin (+3.80%), Crypto.com Coin (+5.92%), and Ethereum (+4.58%) also finding strong support.

Bitcoin Cash SV (+2.33%), Litecoin (+2.06%), Polkadot (+2.28%), and Ripple’s XRP (+3.07%) trailed the front runners, however.

Early in the week, the crypto total market rose to a Monday high $2,186bn before tumbling to a Monday low $1,958bn. At the time of writing, the total market cap stood at $2,137bn.

Bitcoin’s dominance fell to a Monday low 40.36% before rising to a Tuesday high 41.71%. At the time of writing, Bitcoin’s dominance stood at 41.38%.

This Morning

At the time of writing, Bitcoin was down by 0.30% to $47,012.0. A mixed start to the day saw Bitcoin rise to an early morning high $47,199.0 before falling to a low $46,974.5.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Crypto.com Coin (+0.85%) and Polkadot (+0.69%) found early support.

It was a bearish start for the rest of the majors, however.

At the time of writing, Litecoin was down by 0.55% to lead the way down.

BTCUSD 150921 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid the $46,363 pivot to bring the first major resistance level at $48,027 into play.

Support from the broader market would be needed for Bitcoin to break out from $47,500 levels.

Barring a broad-based crypto rally, the first major resistance level would likely cap the upside.

In the event of a broad-based crypto rally, Bitcoin could test resistance at $50,000 before any pullback. The second major resistance level sits at $48,903.

A fall through the $46,363 pivot would bring the first major support level at $45,488 into play.

Barring an extended sell-off on the day, Bitcoin should steer clear of sub-$45,000 levels. The second major support level sits at $43,824.