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Supply
- Oil prices fell over 5% to a two-week low on Monday amid talks of a diplomatic solution to the war in Eastern Europe and prospects of reduced demand in COVID-hit China. WTI has fallen 20% since closing at the highest price since 2008 just one week ago.
- In mid-afternoon trading today, WTI futures were down 7.4% at $95.36/bbl, Brent was down 7.5% at $98.85/bbl and U.S. natural gas was down 1.9% at $4.57/MMBtu. Brent and WTI have logged their most volatile 30 days since June of 2020.
- Oil prices could dip later this week after the U.S. Federal Reserve raises interest rates, making dollar-denominated oil more expensive for holders of foreign currencies.
- More oil news related to the war in Europe:
- The EU, which gets 40% of its natural gas and 25% of its oil from Russia, faces increasing pressure to join the U.K. and U.S. in banning Russian energy imports.
- German refineries are voluntarily reducing imports of Russian crude, traders say, even as the German government affirmed its refusal to boycott Russian energy imports due to the potential for disastrous economic impacts.
- Hundreds of thousands of Ukrainians are without gas supplies due to destroyed local infrastructure, even as gas lines moving Russian gas through the country to Europe continue to flow.
- Cargoes of Russian crude and diesel remain unsold or shunned at some ports while others, including in Denmark, continue to unload Russian supertankers for trades made before the war.
- Very Large Crude Carriers are facing a margin squeeze as marine fuel costs have spiked over 40% since Russia’s invasion of Ukraine, while rates to ship from the Middle East have not included premiums charged elsewhere.
- India is entertaining Russian offers for crude and other commodities at discounted prices via rupee-ruble transactions, with an initial sale of 3 million barrels taking place Monday. Still, India indicated it may be forced to release more oil from national reserves to make up for supply shortages.
- Russian forces damaged a high-voltage power line at the Chernobyl nuclear site Monday, resurrecting concerns about radiation leakage.
- Freight carloads on U.S. railroads in the category that includes fracking sand rose 36.3% in February from the year before, a sign that the U.S. drilling sector is stirring in response to soaring oil prices.
- The meteoric rise in the average U.S. gas price has stalled at $4.33 the past three days, as more Americans cancel travel plans and choose to commute on public transit.
- Uber imposed a gas surcharge on fares and deliveries for the next two months.
- The average price at which businesses lock in hedges against oil and gas price swings has gone up between 40%-50% since last year.
- U.S. talks to import more crude oil from Venezuela have stalled, the White House said.
- Volatile natural gas prices are driving up U.S. utility prices, with customers in some parts of the nation seeing power bills rise by 20% recently.
- The U.S. government reported a crude decrease of 1.8 million barrels last week, with stocks roughly 17% lower than at the end of February 2021. Stockpiles at Oklahoma’s Cushing hub rose for the first time this year, traders said.
- The U.K. reaffirmed a commitment to end coal usage by 2024.
- Booming capacity additions in the Swedish wind market could raise generation 70% by 2024, officials say.
- Italian energy major Eni will sell a 49% stake in its power generation unit Enipower to U.S. investment firm Sixth Street to help fund its energy transition.
- A giant solar and battery complex in the Australian outback is expected to meet 15% of Singapore’s energy needs via an undersea cable currently under construction.
Supply Chain
- More supply chain news related to the war in Europe:
- Air cargo carriers including UPS and FedEx are raising surcharges for European and Asian flights due to longer routes and higher fuel costs. Rates on several Asia-Europe routes rose by double-digit percentages last week in a shipping segment that started the year off with disappointing growth.
- The Russian Maritime Register of Shipping was removed from the world’s top association of ship certifiers, a critical step for obtaining insurance and entry into ports. With other certifying agencies such as Lloyd’s Register and Norway’s DNV leaving the country, dozens of Russian tankers and bulk carriers will likely be pulled from operation in the coming months.
- British officials have reportedly asked the nation’s brick makers to prepare for production slowdowns caused by energy shortages.
- Electric vehicle makers are facing major changes to supply chains amid shortages of rare metal exports from Eastern Europe, a top supplier.
- Nickel trading on the London Metal Exchange will resume this Wednesday following a six-day suspension caused by extreme price volatility.
- Russia, the world’s top wheat exporter, temporarily banned grain and most sugar exports to ex-Soviet countries with which it shares a free trade zone “to protect the domestic food market.”
- U.S. lawmakers are pressing the federal government for an action plan to defend against retaliatory Russian cyberattacks on critical infrastructure.
- Container ship queues are rising at ports across China, reflecting impacts from the nation’s COVID-zero policies amid rising infection counts. The backlog has doubled to 72 vessels in just the past two weeks off Qingdao port, one of the nation’s largest.
- Lockdowns in China’s manufacturing hubs of Shenzhen and Changchun are shutting down production at many electronics and auto factories. Roadblocks between warehouses and Shenzhen’s Yantian port, one of the world’s busiest container terminals, could further disrupt the flow of goods.
- Hong Kong’s COVID restrictions are causing its flagship carrier, Cathay Pacific, to operate passenger flights at just 2% of pre-pandemic capacity and cargo routes at under one-third of pre-pandemic capacity, the airline said.
- Container ships saw an average delay of 7.38 days to get to ports across the globe in January, down slightly from December but the sixth straight month the figure has exceeded seven days.
- Some shippers say domestic trucking has overtaken ocean transport as their biggest distribution headache this year, with tight capacity increasingly blurring the line between truckload and less-than-truckload markets.
- Nearly 8,000 employees in Georgia’s trucking industry have passed away from COVID-19, accounting for roughly a quarter of the state’s virus fatalities.
- DHL parent Deutsche Post saw revenue rise 22.5% in fiscal 2021 to a record 81 billion euros.
- Despite higher prices for its goods, Campbell Soup’s quarterly sales dipped 3% from the year-ago period on labor and supply constraints.
- Foxconn, the largest assembler of Apple’s iPhone, is holding talks about building a $9 billion chip and electronics factory in Saudi Arabia.
- China’s semiconductor imports fell roughly 5% in the first two months of 2022, the first drop in two years, while their value rose 20%.
- The White House awarded over $400 million in grants yesterday to modernize and electrify municipal bus fleets in 39 states.
Domestic Markets
- The U.S. reported 39,024 new COVID-19 infections and no virus fatalities Monday.
- CDC wastewater analysis suggest another bump in U.S. COVID-19 cases could be on the horizon.
- About 18 million children under the age of 5 are the only Americans not yet eligible for vaccination, although that could soon change.
- U.S. demand for easy-to-use, at-home coronavirus treatments is picking up sharply.
- JPMorgan Chase is lifting a ban on hiring unvaccinated people and will scrap mandatory testing requirements next month.
- The U.S. Producer Price Index rose 0.8% month over month in February.
- Unemployment was down in most states in January, with at least 10 states reporting all-time lows in data going back to 1976.
- China remained the top U.S. trading partner in January, with trade rising 14% year over year on a 51% surge in Chinese imports and an 11% decline in U.S. exports.
- The number of self-employed workers in the U.S. stood at 10 million in February, 400,000 higher than at the beginning of the pandemic.
- Ford’s new “Electric University” training program will boost electric vehicle servicing capabilities in its dealer network.
International Markets
- More news related to the war in Europe:
- By Sunday, over 350 companies had either suspended, halted, or restricted their Russian operations in reaction to the Kremlin’s invasion of Ukraine.
- Citigroup is cutting more ties with Russia and will halt all new business in the nation. The firm has nearly $10 billion of exposure in Russia, the most of any U.S. bank, and warned it could lose nearly half that in a worst-case scenario.
- Pfizer and Bayer will continue supplying medicines to Russia while pulling back from other non-essential spending. Bayer warned it would withhold seeds for crops in Russia next year if the war continues, while Pfizer said it would donate profits from its Russian business to humanitarian aid for Ukraine.
- Taiwanese computer maker ASUS will exit all Russian operations and evacuate its staff from the country.
- German insurance giant Allianz SE is barring all new business in Russia.
- Running out of options to prop up the ailing ruble, Russia’s central bank announced a new way to calculate the dollar exchange rate yesterday by expanding the currency’s trading time range and taking in a larger number of transactions throughout the day. Analysts say the move is not likely to change underlying sentiment in the currency, however.
- Russia’s 20% emergency interest rate will likely be extended at the end of this week.
- Israeli officials announced yesterday that the nation would comply with all international sanctions against Russia. Many Israeli tech companies have already suspended or pulled their commercial operations from the country.
- Singapore took the rare step of joining in Western sanctions on Russia over fears that the invasion could spark a world order “profoundly inimical to the security and survival of smaller states.”
- Russian airlines will start seizing foreign aircraft from lessors that have exited the market.
- Ukraine’s GDP could contract anywhere from 10% to 35% this year depending on whether the war ends, analysts say.
- The Ukrainian refugee exodus is nearing 3 million people, according to the latest figures.
- The U.K. and its airlines are scrapping all remaining travel restrictions this week despite a recent rise in COVID-19 cases and hospitalizations.
- France ended the bulk of its COVID-19 restrictions yesterday.
- COVID-19 cases across Europe picked up last week.
- China reported 1,337 new COVID-19 cases Monday. Authorities locked down and imposed a travel ban on the 24 million residents of northeastern Jilin province, the first time China has sealed off an entire region since April 2020.
- Hong Kong reported over 27,000 new COVID-19 cases Monday. The island averaged over 280 fatalities and 21,000 cases per day the past week.
- Hundreds of flights were cancelled across Germany Monday after members of a key labor union walked off the job in a dispute over pay.
- Chinese stocks saw their worst day since the 2008 financial crisis Monday on concerns over the economic effect of lockdowns and the nation’s ties to Russia.
- Volvo’s new line of electric vehicles will have double the range of previous models, the automaker said.
- The electric vehicle unit of China’s heavily indebted Evergrande property developer has been given the green light to start sales.
At M. Holland
- M. Holland’s 3D Printing group offers a rapid response alternative for producing selected parts where resin availability is tight. For more information, email our 3D Printing team.
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