David Fuller and Eoin Treacy's Comment of the Day
Category - Energy

    Email of the day on refilling the US Strategic Petroleum Reserve:

    any comments from US officials as-to when they start to replenish the US strategic oil reserve…….?

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    Oil-Options Covering Adds To Market Chaos, Fueling Crude Selloff

    This note for Bloomberg may be of interest. Here is a section: 

    Exposure to plummeting oil prices via the options market has forced some financial firms to dump crude futures, accelerating a selloff that has sent prices plunging to the lowest in over a year.  

    Banks and other financial institutions typically take on futures positions to offset some of the price hedging they do for oil producers and other customers. But as oil prices collapse rapidly, the firms’ exposure rises, forcing them to exit their futures positions in a strategy known as delta hedging.

    That’s driving some of the day’s selloff, UBS Group AG analyst Giovanni Staunovo said in a note. A massive number of WTI options contracts that were sold at $70 and $75 a barrel needed to be covered once oil futures crashed below those levels, market participants said. For Brent, more than 24,000 put options were open at $80 and $75 a barrel for May, both levels that were breached this week.    

    “Financial institutions now need to avoid having a price risk on their balance sheets,” Staunovo said in his note. “So, they are selling crude futures to offset the risks, amplifying the rout.”       

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    Oil Losses Mount With Ample Supply in Focus Amid Uncertainty

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    Crude has had a bumpy year so far as traders juggle concerns over a global economic slowdown and optimism around China’s long-awaited demand rebound. Inflation accelerated last month, raising the question as to whether the Federal Reserve would feel pressure to raise rates at its meeting next week despite ongoing financial turmoil. Meanwhile, crude supplies are expected to remain in surplus until demand takes off. The International Energy Agency releases its snapshot on the outlook for supply and demand on Wednesday.

    Traders will be watching price action to see if the flat price is supported at recent lows.

    “If buyers don’t show up soon and support oil at $70, we can see an air pocket lower to $62,” said Jc O’Hara, the chief technical strategist at Roth Mkm.

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    Email of the day on carbon emission trading

    you are showing charts and talking a lot about carbon emission certificates in the EU. (MO2 generic future on Bloomberg). is there any tradeable or investable instrument out there? tkx a lot!

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    Tesla Shares Drop After Investor Day Without Any New Models

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    “I’d love to really show you what I mean and unveil the next-gen car, but you’re going to have to trust me on that until a later date,” Franz von Holzhausen, Tesla’s design chief, said at the company’s headquarters in Austin, Texas. “We’ll always be delivering exciting, compelling and desirable vehicles, as we always have.”

    Tesla shares fell as much as 8.6% as of 8:40 a.m. Thursday in New York, before the start of regular trading. Anticipation of the event contributed to a surge in the stock that added more than $300 billion of market value in two months.

    Musk, 51, confirmed Tesla will build a new plant in Monterrey, Mexico, in what he said was probably the most significant announcement of the day. The chief executive officer said Tesla will make its next-gen vehicle there, and that the company will hold a grand opening and groundbreaking at an
    unspecified date.

    When asked when the carmaker will show a prototype and if he could share details about the size, content and performance of the vehicle, Musk responded that Tesla also will hold a “proper sort of product event” at some point, but didn’t say when.

    “We’re gonna go as fast as we can,” said Lars Moravy, Tesla’s vice president of vehicle engineering. “We expect that to be a huge-volume product.”

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    First Solar Shares Surge to 14-Year High as Order Backlog Swells

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    The surging demand comes as the company is poised to benefit from the Inflation Reduction Act, the landmark climate bill signed last year by President Joe Biden that subsidizes domestic manufacturing. Even before the bill passed, First Solar saw strong demand for its modules. It has since announced a new factory in Alabama and Chief Executive Officer Mark Widmar indicated on an earnings call that further expansion is possible.

    The years-long backlog of orders caught the attention of analysts and investors. Goldman Sachs Group Inc. analyst Brian Lee boosted the price target on the stock to a Wall Street-high of $260 from $231 on Wednesday, noting the company is “booking well into the 2nd half of the decade at this point.”

    The US is expected to significantly boost its reliance on solar power in its push to slash carbon emissions. First Solar, the country’s biggest panel maker, has focused on dominating that market.

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    France Forges Pact to Make Nuclear Part of EU Clean Energy Shift

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    “The US, the UK, South Korea, China, India and even Japan are contemplating using nuclear energy as an important means to decarbonize their economies, and we need to be on the same level playing field,” Pannier-Runacher said Monday.

    The next battleground is a definition of “green hydrogen” in an EU directive known as RED3, which would set targets for using the fuel in industry and transport. France is pushing for nuclear to be considered a clean energy source, while countries such as Spain and Germany are focusing on hydrogen derived from renewables such as wind or solar.

    The EU sees hydrogen as a key pillar of its efforts to slash emissions by 55% by 2030. The outcome of the negotiations could jeopardize a flagship project to pump the fuel from Barcelona to Marseille and then onto Berlin via a pipeline, known as BarMar or H2Med.

    France’s Hydrogen Pipeline With Spain at Risk Over Green Rules For “green investments,” France has already reached a compromise with Germany to allow nuclear energy and natural gas to receive funding from environmental investors. While that added the two energy sources to the so-called EU taxonomy — a list of activities deemed in line with the bloc’s transition to climate neutrality — there are still concerns the move could divert investment away from renewables.

    The French initiative was welcomed by a number of other EU nations. “We are happy that nuclear somehow came back to the discussion in the EU  — years ago it was kind of a forbidden topic,” said Anna Moskwa, Poland’s minister of climate and environment. “It is of our common interest to build stable sources, that is why Poland decided to develop nuclear.”


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    European Gas Reaches Tipping Point to Price Out Coal in Power

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    European gas prices rose amid expectations of higher demand from power producers, after a recent slump improved the profitability of the fuel compared to coal. Benchmark futures have been fluctuating near €50 over the last few days after plunging about 35% since the start of the year. Together with surging carbon prices, that could rein in an increased reliance on coal to produce electricity, but also prevent gas prices from falling further. 

    Last year, coal-fired power generation in Europe increased by about 1.5 percentage points versus 2021, ending a steady decline in coal usage rates, according to Eurasia Group. That was mainly driven by a surge in gas prices after Russia cut supplies. 

    Not all countries in Europe still use significant amounts of coal, but for those that do — such as Germany and the Netherlands — the switch to gas is becoming more likely, according to Fabian Ronningen, a senior analyst for power and renewables research at Norwegian consultant Rystad Energy AS. 

    “The situation we have seen over the last few weeks has been the closest competition between coal and gas in a very long time,” he said. It remains to be seen whether increases in gas generation will outpace the rise in coal usage this month, he added, since infrastructure bottlenecks and fuel availability
    can have an impact.

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    US Natural Gas Futures Slump to a 28-Month Low on Warm Weather

    This article from Bloomberg may be of interest. Here is a section: 

    US natural gas futures slumped to the lowest in 28 months as weather forecasts have shifted milder since last week, further eroding the prospect for heating demand this winter.

    Gas for March delivery dropped 4% to $2.183 per mmbtu as of 8:51 a.m. in New York
    Futures touched $2.168 earlier, the lowest since Sept. 2020

    Weather across the eastern two-thirds is looking warmer next week when compared with Friday’s outlook, with above-usual temperatures expected for southern states: Maxar.
    See WHUT for a map of latest 6-10 day weather forecast: NOAA

    “The market appears ready to push natural gas steeply lower until storage surpluses stop ballooning and/or production responds more vigorously to lower prices,” analysts at EBW AnalyticsGroup said in a note to clients

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    George Soros on Climate Change, China, Elections

    This video of George Soros’s speech at the Munich security conference over the weekend may be of interest.