• Wed. Sep 28th, 2022

Russian Oil Stops Flowing To Parts Of Europe – Commodity Roundup

ByRandall B. Phelps

Aug 9, 2022

— Brent crude oil rose 1.3% to $97.91 a barrel.

— European benchmark gas fell 1.4% to 192.01 euros per megawatt hour.

— Gold futures were flat at $1,804.70 per troy ounce.

— Three-month copper prices rose 0.3% to $7,970 per metric ton.

— Wheat futures rose 1.6% to $7.93 a bushel.


TOP STORY:

Russian oil stops flowing to parts of Europe

Russian oil has stopped flowing through a pipeline that supplies countries in central and eastern Europe, dealing another blow to a region struggling with the loss of vital energy supplies from Russia.

Transneft PJSC, the government-owned pipeline operator, said on Tuesday that crude oil exports through Ukrainian territory stopped on August 4. not receive funds.

This decision cuts off supplies via the southern branch of the Druzhba pipeline which carries oil to Slovakia, Hungary and the Czech Republic. The countries are heavily dependent on Russian oil and gas and are among the most exposed economies in Europe now that those supplies have been cut off.


OTHER STORIES:

US solar shipments hit by import ban in China’s Xinjiang region

The U.S. solar industry faces further disruption as U.S. authorities crack down on human rights abuses in China’s Xinjiang region, which produces nearly half of the world’s supply of a crucial panel component solar.

Several Chinese solar panel suppliers, among the world’s largest, have had their shipments to the United States held up or returned in recent weeks as customs officials enforce a new law, according to executives and analysts from the ‘industry.

The scale of the disruption is still hard to gauge: The Uyghur Forced Labor Prevention Law, or UFLPA, came into effect at the end of June, and importers, suppliers and customs officials still don’t know what it will take do to get goods. in the country, say industry executives and analysts.

German chemical industry hit hard by natural gas prices

Germany’s chemical industry has been hit hard by rising natural gas prices as the war in Ukraine continues, according to the Ifo Institute.

In a report on chemical business confidence, the economics research group said business expectations had fallen to minus 44.4 points in July 2022, down sharply from positive sentiment of 11.8 points the previous day. same month last year.

Deliveries of Russian gas to Germany since the invasion of Ukraine have been sharply reduced, with prices in Europe having more than doubled since the start of the year and difficult industries like the German chemical sector, which depend on fuel.

Norway takes steps to limit electricity exports

Norway could limit its electricity exports to Europe if the water level in the reservoirs used for its hydroelectric plants remains low, which could remove much-needed supply from countries already facing energy shortages this winter .

About 90% of Norway’s electricity generation comes from its more than 1,700 hydropower stations, but lower rainfall in southern Norway throughout spring and summer has left reservoirs low, prompting the country to prioritize replenishing water supplies and securing domestic electricity supplies, the government said in a statement late Monday.

Concretely, this will involve control mechanisms that limit exports when reservoirs are low, and ministers will work this week to lay down the framework allowing this new mechanism to be put in place as quickly as possible, the government said.


MARKET TALKS:

Malaysian palm oil rises following Indonesia export tax hike

10:54 GMT – Malaysian palm oil prices closed higher, buoyed by a decision by Indonesia’s top producer to raise export taxes on edible oil, as well as expectations that data from this week will show that Malaysian exports rose in the first 10 days of the month, says Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics. At the current benchmark price for palm oil in Indonesia, the tax per metric ton increases to $52 from $33 previously under the new regulations, he notes. The benchmark Bursa Malaysia Derivatives contract for October delivery closed up 1.3% at MYR 4,125 per tonne. (yingxian.wong@wsj.com )

The gas crisis in Europe could last until winter 2023

09:34 GMT – High natural gas prices in Europe and the gas supply crisis are likely to drag into next year as the continent struggles to replenish depleted reserves without a flow of Russian gas, according to the Economist Intelligence Unit. Russia has reduced its supplies through the Nord Stream gas pipeline to around 20% of its capacity. The EIU expects these flows to fluctuate between zero and 20% in the coming months, making it difficult for European countries to fill their gas storage before the high-demand winter period. But next year is unlikely to see any improvement and the winter of 2023 could also be difficult, according to the EIU. “We also forecast a difficult winter 2023/24, with high inflation and sluggish growth persisting until at least 2024.” (william.horner@wsj.com )

Oil drops as traders eye Iran nuclear talks

0746 GMT – Oil prices are falling, with the prospect of Iranian oil exports returning to world markets amid talks between the United States and the Middle Eastern country. Brent is down 0.9% at $95.75 a barrel while WTI is down 1% at $89.87 a barrel. “The United States and Iran have weeks to decide whether to relaunch the 2015 nuclear deal, which would open the door for Iran to resume oil exports,” said Commonwealth’s Vivek Dhar. Bank in a note. “The deal hinges on Iran disposing of its stockpiles of enriched uranium before the United States lifts economic sanctions,” Dhar added, as European Union diplomats presented to the two countries. the final draft of the agreement. (yusuf.khan@wsj.com )

Sugar production costs rise due to higher natural gas prices

07:31 GMT – Sugar prices should be supported by higher natural gas prices, amid falling European production. European sugar beet production is expected to fall as the continent experiences a hot and dry summer, according to Commonwealth Bank of Australia analyst Tobin Gorey. “This fall leaves the market with a lot more refining to do. Refining, however, has become a lot more expensive with rising natural gas prices,” he says. Accordingly, Gorey states in a note that “the premiums required for refiners in the Middle East will be much higher than usual. Precisely how much more is the ‘present thing’ of the sugar market”. (yusuf.khan@wsj.com )

Metals increase as macro mood improves

07:29 GMT – Metals markets rise in early trading as macro sentiment improves on low-risk drivers. Three-month copper is up 0.2% at $7,965.50 a metric ton while aluminum is up 1.1% at $2,466 a ton. “The macro mood is feeling better this morning,” Dave Whitcomb, head of research at Peak Trading Research, said in a note. There was “a slight rally in risk” after Nancy Pelosi’s visit to Taiwan, with agricultural commodities also boosted by improving sentiment, Whitcomb said. Most are looking to the release of US consumer inflation data on Wednesday, he said. “Investors and the Fed want to see a weaker print of inflation, which would help reinforce the narrative ‘the Fed’s worst hikes are behind us,'” Whitcomb said. (yusuf.khan@wsj.com )

Iron ore futures fall amid bets on rate hike

0210 GMT – Iron ore futures are lower in the Asian morning session amid the Fed’s rate hike after last Friday’s stronger-than-expected US jobs report. Those expectations will likely weigh on risk sentiment as global bearish headwinds begin to set in again in the industrial metals complex, according to TD Securities strategists in a research report. High fears of macroeconomic growth and recession, as well as the continued reduction in Chinese mobility under the country’s “Covid-Zero” policy, should offset any renewed optimism, they add. The most traded iron ore contract in January 2023 on the Dalian Commodity Exchange is down 0.5% at CNY 729.5 per metric ton. (ronnie.harui@wsj.com )


Write to Yusuf Khan at yusuf.khan@wsj.com