Nothing like trade wars and real wars to create volatility in the markets on a traditional volatile Thanksgiving week. President Trump caused a moment of panic after he warned of bigly tariffs on Canada, Mexico and China.
Trump posted on Truth Social that, “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders, This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Now it’s not clear yet whether that includes Canadian crude oil but if it does, it will be another blow to the Gavin Newsom California economy. You see Newsom has worked to cut California oil production. Because of this California is dependent on Canadian oil. Good Luck Gavin.
Maybe Turkey will have better luck. Bloomberg is reporting that Turkey is in talks with the US over a sanctions waiver that would allow the country to keep using Russia’s Gazprombank to pay for natural gas imports. Without an exemption, “we won’t be able to pay Russia,” Energy Minister Alparslan Bayraktar told reporters late Monday. “If we can’t pay, we can’t buy the goods.”
S&P Global is reporting that Iranian crude oil offer levels for China’s independent refineries have been rising in November, as suppliers and shipowners remain cautious amid expectations of tighter sanctions under the Trump administration, refinery and trade sources told S&P Global Commodity Insights on Nov. 26.
Oil prices are creeping back up as the Israeli Hezbollah cease fire deal is still in doubt as the war continues to rage. In the Russia Ukraine war, there seems to be an increase in tensions. Lebanese Foreign Minister Bou Habib: Hopefully by tonight, we will have a ceasefire. Bou Habib says that Lebanon is to send 5,000 troops to south Lebanon as part of truce deal.
The Guardian reported that Russia said it was expelling a British diplomat that it accused of espionage and summoned London’s ambassador to the foreign ministry in Moscow. According to the FSB, Russia’s security service, the British diplomat replaced one of six diplomats expelled in August, also on espionage charges. It said the diplomat provided false information on his documents and carried out espionage and sabotage activities. Russian forces staged their largest ever drone attack on Ukraine overnight, cutting power to much of the western city of Ternopil and damaging residential buildings in Kyiv region, Ukraine’s officials said.
The other bearish overhang is talk about tensions in the OPEC Plus alliance. Reports of overproduction by the UAE and Iran seeming not wanting a quota and Kazakhstan is looking for a larger quota. Also reports say that Libya’s NOC: said that oil production hits 1.5 mln bpd on Tuesday in a statement. Iraq’s total oil exports in October were 103.145 mln barrels according to the oil ministry. Iraqi PM, Saudi energy minister and Russian deputy PM stress the importance of maintaining stability of oil markets and balancing fair prices. We will see how that goes.
Also, we are seeing reports that China is Set to Import Record-High Volume of Coal in November. China is on track to import this month the highest volume of thermal coal, the one used in power generation.
Natural gas is riding the weather as the Energy Information Administration (EIA) warns the world that if we have a real winter, then Europe and Asia might have some major issues.
If fact the only reason that Europe and Asia an energy crisis did not have the EU burning wood to stay warm was because winters have been mild.
The EIA points out that, “The last two winters in the Northern Hemisphere were exceptionally mild, keeping global natural gas markets well supplied and balanced at relatively low prices. Prices going into this winter are only slightly higher than last year at the same time, based on current forward natural gas and liquefied natural gas (LNG) prices in Europe and Asia. If the weather remains mild this winter as in the past two winters, we expect a relatively stable global supply-demand balance with prices like the previous two winters. But if Europe and Asia experience colder temperatures this winter than in the past two years or other operational and market risks materialize, global supply-demand balances could tighten, leading to elevated natural gas prices and potential price spikes.
The EIA says that several issues could affect global natural gas balances this winter. LNG supply growth. The EIA expects limited LNG capacity additions to come online this winter, mostly in the United States. So why did the Biden Administration pause approvals for LNG export facilities? Shifts in pipeline flows. The EIA says that less natural gas could be supplied by pipeline to Europe if the Russia-Ukraine natural gas transit contract set to expire at the end of 2024 is not renewed.
Operational issues. There could be delays in the start-up of new projects, issues with the availability of natural gas feedstock for exports, unplanned outages at LNG export facilities, and geopolitical events that could alter LNG trade flows, potentially reducing available supply.
Below normal temperatures. A cold winter with sustained, lower-than-normal temperatures in one or more regions in the Northern Hemisphere could occur as El Niño changes to La Niña this year. This change in climate patterns may increase natural gas demand, creating competition for spot LNG supplies between Europe and Asia. Colder weather in the United States could reduce storage inventories and increase U.S. domestic Henry Hub prices, affecting LNG export prices from the United States. Other LNG import markets, including Brazil and Egypt, could also increase LNG demand, intensifying competition for spot LNG among regions.
That’s why you have to watch the weather and download the Fox Weather ap to keep up with the latest on the cold and the Thanksgiving Holiday storms.