Oil prices fell over 1% to pre-invasion levels Friday after several days of volatile trading. For the full week, Brent rose about 4.7%, while WTI rose about 0.6%.
In mid-morning trading today, Brent futures were up 2.7% at $100.61/bbl, WTI was up 3.6% at $94.92/bbl, and U.S. natural gas was 0.2% higher at $4.48/MMBtu.
War in Eastern Europe continues to ripple through global oil markets:
Tanker rates rose sharply last week on combined effects of a “war risk” premium, Russian supply volatility and higher fuel costs. Some traders reported a $13,971 leap for medium-sized Aframax tankers on Friday, while rates to load Russian crude are almost three times higher than pre-invasion levels.
OPEC+ will likely stick to a modest 400,000-bpd output increase for April when the group convenes this Wednesday, delegates say, despite the risk of oil prices surging past $100/bbl.
Boosting production at the Netherlands’ massive Groningen gas field is a last resort to help energy-starved Europe, officials say, as concerns over triggering earthquakes outweigh surging demand.
Germany will support two new LNG terminals in a bid to quickly reduce reliance on Russian gas.
Europe’s energy bill could surge to a record-high $1.2 trillion this year, almost four times the level of 2021, Citigroup estimates.
Average U.S. diesel prices are up 44 cents per gallon this year, while the national average price of $4.055/gallon last week was the highest in nine years.
Active U.S. oil and gas rigs rose by five to 650 last week, the 18th consecutive weekly rise and 248 rigs more than the same time last year, Baker Hughes said.
The U.S. added just 7.44 billion cubic feet per day of interstate natural gas pipeline capacity in 2021, a six-year low, with more than two-thirds of the increase in Texas and Gulf Coast markets:
Last week’s auction of offshore wind rights between Long Island and New Jersey fetched a record $4.37 billion, over three times the revenue from all U.S. oil and gas lease sales over the past five years.
Union workers locked out of their jobs at a Texas oil refinery for nearly 10 months have agreed to a contract with Exxon Mobil and are set to resume work in early March.
Mexico’s trade deficit widened fivefold in January from a year earlier on a 55% rise in oil imports, as state refiners struggle to meet the administration’s goal of oil self-sufficiency.
Supply Chain
War in Eastern Europe continues to ripple through supply chains:
The U.S., Japan and Taiwan each announced sanctions aimed at punishing Russia by restricting sales of semiconductors and other cutting-edge technologies.
The Baltic Exchange Dry Index, a benchmark for the price of moving major raw materials by sea, fell 1.7% to 2,040 Monday amid lower rates for the largest and second-largest vessels.
Combined exports from the ports of Seattle and Tacoma fell 36% in January to the lowest level in records dating to 2015, as more vessels skipped calls to avoid congestion.
Deere raised 2022 income forecasts despite a 26% decrease in profit last quarter, saying strong demand for farm and construction machinery will outweigh higher production costs.
The U.S. Justice Department is working with other countries to identify and prosecute companies that illegally exploit supply chain disruptions for profit.
The White House is set to unveil tighter nitrogen oxide emissions standards on heavy-duty trucks in the coming weeks, a move facing criticism over the potential to worsen supply chain congestion.
Icelandic container line Eimskip projects continued high earnings this year after seeing profit jump nearly 10-fold to $45 million in 2021.
Domestic Markets
The U.S. reported 7,464 new COVID-19 infections and 182 virus fatalities Sunday. Although daily case counts are down over 90% from their January peak, the streak of daily fatalities above 2,000 continues and has now extended more than twice as long as the 2,000+ daily death streak of last fall’s Delta wave.
Over 70% of Americans can now stop wearing masks and no longer need to social distance or avoid crowded indoor spaces, according to the CDC’s revised pandemic guidelines.
New York state will lift its indoor school mask mandate March 2, while New York City’s COVID-19 vaccine mandate for bars and restaurants will end March 7.
California dropped most of its remaining pandemic measures but retained an emergency status that allows state testing and vaccination programs to continue along with expanded tele-health services.
Nearly half of the 500 million free COVID-19 tests recently made available by the White House have not been claimed as cases plummet across the nation. Booster-shot rates are also down, with just half of eligible Americans having received one.
The U.S.’s disability information hotline is being expanded to help people with ordering COVID-19 tests.
U.S. core inflation rose 5.2% in January from a year ago, the sharpest 12-month increase in almost 40 years.
Personal spending in the U.S. jumped a surprisingly high 2.1% month over month in January, the biggest increase since March of last year in a sign that consumption remained robust despite high inflation and COVID-19 infections. Meanwhile, savings rates have dipped to pre-pandemic levels.
A measure of U.S. consumer sentiment was revised upward for February, while remaining at the lowest level of the past decade, the University of Michigan said.
New orders for U.S.-made durable goods rose 1.6% month over month in January, the fourth straight month of increases and nearly double market expectations.
Amazon-backed electric vehicle (EV) startup Rivian is slowly ramping up production and hopes to have a 10% share of the EV market by 2030, executives said.
International Markets
The economic fallout of war in Eastern Europe is spreading:
Russia’s central bank more than doubled its key interest rate to 20% to stem the collapse of the ruble, which fell to a record low this morning, worth less than one U.S. penny.
Early estimates suggest Russia’s GDP growth could fall two percentage points this year due to sanctions.
The BA.2 subvariant of Omicron now accounts for 1 in every 5 new COVID-19 cases across the globe and is 30% more transmissible than its parent strain, the World Health Organization says.
Hong Kong reported an 821% spike in new COVID-19 cases over the last two weeks, reporting over 26,000 new infections and 83 virus-related deaths Sunday, overwhelming hospitals and pushing its morgues to near capacity.
Retail sales in Australia were strong in January despite the continued threat of the Omicron variant, jumping 1.8% to $23.3 billion.
Mexico’s economic activity was flat in the fourth quarter of 2021, narrowly avoiding recession territory, as a decline in services offset increases in industrial output and agricultural production.
Germany’s producer prices skyrocketed 25% in January in the sharpest annual growth on record.
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