In this week's highlights: Crude prices continue to be buffeted by fears of a global recession and weaker demand; EU energy ministers meet to discuss the European Commission's gas savings plan; and Russian President Vladimir Putin warns that Nord Stream flows could be disrupted amid further maintenance work.
- Global recession fears and weaker oil demand (00:14)
- Eyes on Nord Stream flows after Putin warning (01:44)
- EU ministers to clash on emergency gas plan (02:51)
In this week's highlights: EU energy ministers meet to discuss the European Commission's gas savings plan, and Russian President Vladimir Putin warns that Nord Stream flows could be disrupted amid further maintenance work.
But first, in oil, crude prices continue to be buffeted by fears of a global recession and weaker demand, as you can see in this chart.
There is concern in the market that sanctions on Russia and OPEC's measured easing of output constraints will likely keep the physical oil markets tight in the near term.
Markets are expected to closely watch the US Federal Reserve's decision on interest rates this week after Fed officials indicated that the central bank would likely raise rates by 75 basis points at its July 26 meeting.
On the supply side, oil exports from Libya have been resuming after recent blockades, adding much-needed volumes to the tight physical crude markets. Libya's oil and gas minister said last week that he expects oil production to return to normal levels of 1.2 million b/d in a week to 10 days. The near-term outlook for US shale oil production will also remain sharply in focus after oilfield service giants Halliburton and Baker Hughes both warned of constraints to further US shale drilling this year.
The quarterly earnings season for the oil majors also kicks off this week, with the market looking for signals from the Western energy majors over their near-term demand/supply expectations.
And that takes us to our social media question for the week: Can Europe rely on oil for power generation to avert an energy crisis this winter? Tweet us your thoughts.
In gas, concerns remain over Russian flows through Nord Stream despite the pipeline having restarted on July 21 after its planned annual maintenance shutdown.
Flows resumed at pre-maintenance levels of around 66 million cu m/d, or 40% of the pipeline's capacity, leaving Germany in particular still short of gas.
In addition, Russian President Vladimir Putin has warned that deliveries could be reduced further to around 30 million cu m/d as Gazprom prepares a gas turbine -- used to flow Nord Stream gas -- for maintenance work.
Putin pointed to July 26 as the date that the turbine could be removed for repairs, which would leave just one turbine in operation along the route.
The turbine, however, could be replaced with another one that underwent repairs in Canada and following a sanctions waiver is now being returned to Russia.
But much will depend on how long it takes to re-install the turbine and whether Moscow is satisfied with the conditions of its return.
Meanwhile, sparks are expected to fly on Tuesday, as EU energy ministers meet to discuss the European Commission's 15% gas savings plan. Spain and Hungary have already pushed back on the call to reduce consumption, while others, notably Germany and Italy, will be pleading for solidarity on early action this summer to preserve gas stocks.
Germany has been extremely busy in detailing its own emergency regulation, with further details expected soon on gas-fired power generation restrictions. The country has been prioritizing the movement of coal and fuel oil via railroad due to historically low Rhine river levels.
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