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LONDON, April 26 (Reuters) - Oil prices have fallen back after a brief spike triggered by the surprise production cuts announced by Saudi Arabia and other members of OPEC+ on April 2. ROUTING THE BEARSIf one of the objectives for Saudi Arabia and its OPEC+ allies was to drive bearish hedge funds out of the oil market, it seems to have succeeded. Following the cut, however, the number of short positions was reduced further to just 78 million barrels by April 11, near to its post-2010 low of just 65 million. In the past, Saudi Arabia's oil minister has described surprise production cuts intended to discourage hedge fund short selling as "ouching". Related columns:- Oil prices stall as short-covering rally is completed (April 17, 2023)- Surprise, squeezing the shorts, and revealed preferences (April 3, 2023)- Oil market has fully absorbed impact of Russia's invasion of Ukraine (March 9, 2023)John Kemp is a Reuters market analyst.

☆ The U.S. Wants a Rare-Earths Supply Chain. Here’s Why It Won’t Come Easily.
▼ + stars: | 2023-04-25 | by ( Yusuf Khan | ) www.wsj.com time to read: +10 min

MP Materials efforts to build a local supply chain demonstrate the challenge for American producers. Challenging China’s dominanceWhile the 60% might not sound that concentrated, the dependence on China is even more pronounced further down the supply chain. James Litinsky, CEO of MP Materials, stands in front of the Mountain Pass mine in 2018. But if you miss one step then you do not have a supply chain that’s secure,” Mr. Litinsky said. Defense Metals’ Ms. Moreno said that little knowledge exists outside of China in building the whole supply chain.

The most recent week saw purchases of NYMEX and ICE WTI (+12 million), Brent (+8 million), U.S. gasoline (+2 million) and European gas oil (+1 million) but sales of U.S. diesel (-3 million). But in products, the long-short ratio has increased to only 2.69:1 (40th percentile) from 2.39:1 (38th percentile) on March 21. And in middle distillates, such as gas oil and ultra-low sulphur diesel, the ratio has actually fallen slightly to 1.70:1 (33rd percentile) from 1.78:1 (35th percentile). Even on the crude side, however, the end of the short-covering process has sapped oil prices of some of their upward short-term momentum. U.S. NATURAL GASInvestors are becoming cautiously more bullish on U.S. gas prices, anticipating prices have already dropped so low the balance of risks is tilted strongly towards the upside.

Distillate stocks stood at 112 million barrels on April 14, down from 122 million on March 3, according to the U.S. Energy Information Administration (“Weekly petroleum status report”, EIA, April 19). The recent run-down in inventories has partially reversed the previous accumulation, which had seen the deficit narrow from -31 million barrels (-22% or –2.05 standard deviations) on October 7. CYCLICAL SLOWDOWNThe broader picture is still that U.S. distillate consumption is falling in line with the slowdown in manufacturing and freight activity. For now, inventories are still well below the long-term average, ensuring prices, calendar spreads and cracks have remained elevated. Related columns:- Global diesel prices fall as economic slowdown intensifies (April 5, 2023)- U.S. diesel consumption falls as economy slows (March 1, 2023)- U.S. diesel stocks start the year critically low (February 2, 2023)John Kemp is a Reuters market analyst.

[1/2] The logo of Baker Hughes (BKR) is seen in this image provided July 21, 2020. Baker Hughes/Handout via REUTERSApril 19 (Reuters) - Oilfield firm Baker Hughes Co (BKR.O) beat first-quarter profit estimates on Wednesday, as stronger oil prices supported demand for its equipment and services. Shares of Baker Hughes were up 1.4% in pre-market trading at $29.90 each. Revenue from Baker's Oilfield Services & Equipment business rose 19% year-over-year, while sales in its Industrial & Energy Technology business grew by 18%. Baker Hughes kicks off first-quarter earnings for the oilfield services industry.

☆ China's CATL unveils condensed matter battery to power civil aircraft
▼ + stars: | 2023-04-19 | by ( ) www.reuters.com time to read: +1 min

SHANGHAI, April 19 (Reuters) - Chinese battery giant CATL (300750.SZ) on Wednesday unveiled a condensed matter battery that it said could supply enough energy to power electric passenger aircraft for civil aviation use. CATL will also be able to start mass production of the condensed matter battery for electric vehicle uses later this year, Wu added. Condensed matter technology is being embraced by battery makers competing to develop new materials to improve energy density of the current generation of lithium-ion batteries, which is under 300 Wh/kg. Chinese electric vehicle (EV) maker Nio (9866.HK) is planning to power its ET7 cars with a semi-solid state battery with 360 Wh/kg energy density developed by Beijing Welion New Energy Technology. Reporting by Zhang Yan, Albee Zhang and Brenda Goh Editing by Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

Land temperatures across the northern hemisphere were +2.02°C higher than the long-term average (1901-2000) between October and March. But Europe’s temperatures were +2.42°C above the long-term average, making it the second-warmest winter ever recorded in the area. By contrast, Asia’s winter temperatures were +2.07°C warmer over the six months as a whole and North America’s temperatures were only +1.23°C above the long-term seasonal average. Chartbook: Winter temperatures 2022-2023Facing pressure on gas and electricity supplies following Russia’s invasion of Ukraine, Europe’s gas and electricity consumption was suppressed in large part by warm weather, helping stretch gas inventories and avoid shortages. Europe’s policymakers, businesses and households were extraordinarily fortunate this winter; that should not make them complacent about winter 2023/24.

Purchases over the three most recent weeks totalled 225 million barrels, among the largest increases over any three-week period in the last decade. As a result, fund managers held a combined position of 515 million barrels (34th percentile for all weeks since 2013) on April 11, up from just 289 million barrels (6th percentile) on March 21. But the pace of buying slackened noticeably last week as most of the short positions that existed in late March had been closed out. By April 11, total shorts had been reduced to just 125 million barrels (7th percentile) as bearish investors were squeezed out of the market. Fund short positions in NYMEX WTI were reduced to 24 million barrels, the lowest for almost six months, and down from 127 million barrels three weeks earlier.

LONDON, April 14 (Reuters) - Europe needs to put a smaller-than-average volume of gas into storage this year after a mild winter left the region with record high inventories. Chartbook: Europe gas storageThe European Union and the United Kingdom have capacity to store around 1,129 terawatt-hours (TWh) of gas, according to data compiled by Gas Infrastructure Europe (GIE). On April 1, the start of the traditional refill season, storage was 56% full - a record high for the time of year - with inventories of 633 TWh (“Aggregated gas storage inventory”, GIE, April 14). DEEPENING CONTANGOPrices and spreads are now moving decisively to limit the amount of gas added to storage this summer. Related column:- Europe’s gas outlook transformed after mild winter (April 13, 2023)John Kemp is a Reuters market analyst.

Inventories in the European Union and the United Kingdom amounted to 632 terawatt-hours (TWh) on March 31, according to Gas Infrastructure Europe (“Aggregated gas storage inventories”, GIE, April 13). Chartbook: Europe gas inventories and pricesRECORD REFILL IN 2022Record end-of-winter inventories are a consequence of a record start-of-winter stock; a mild winter, especially in the first half; and significant cuts in industrial gas use. The European Union and United Kingdom added an unprecedented 788 TWh of gas to storage in 2022 to prepare for a possible interruption of pipeline supplies from Russia. REDUCED CONSUMPTIONEurope’s gas consumption was sharply reduced in winter 2022/23 compared with previous years. Europe emptied around a third of its gas storage space over the whole drawdown period compared with an average of 53% over the previous decade.

☆ Chinese battery maker SVOLT plans five Europe plants - Bloomberg News
▼ + stars: | 2023-04-13 | by ( ) www.reuters.com time to read: +1 min

April 13 (Reuters) - Chinese battery maker SVOLT Energy Technology Co is set to expand its footprint in Europe to as many as five factories, Bloomberg News reported on Thursday. SVOLT is looking at locations in eastern, northern and western Europe, with one larger site in the 20-gigawatt range, according to the report. The company is targeting production capacity of at least 50 gigawatt-hours in Europe by the end of the decade, SVOLT Europe head Kai-Uwe Wollenhaupt said in an interview with Bloomberg. Besides, SVOLT is in talks with several European car makers about battery cell supply agreements, the Bloomberg report said. Data shows some 44% of planned battery capacity in Europe by 2030 is expected from Asian companies, with Chinese battery giant CATL on top of the list.

The buying came as OPEC+ announced cuts totalling more than 1 million barrels per day on April 2 and after fund managers had already purchased 61 million barrels the previous week. Purchases centred on crude, in both Brent (+73 million barrels) and NYMEX and ICE WTI (+60 million barrels), with small sales of European gas oil (-2 million) and U.S. diesel (-3 million) and no change in U.S. gasoline. CRUDE SQUEEZEWith its surprise announcement, OPEC+ successfully squeezed the shorts in crude petroleum, with bearish positions reduced to the lowest for 11 weeks since late January. Since March 21, funds have purchased a total of 174 million barrels of crude, the fastest rate since December 2019 and before that September 2017. Bearish short positions were cut by 113 million barrels while fund managers added 61 million barrels of new bullish long positions.

☆ U.S. trade chief Tai defends pursuit of non-traditional trade deals
▼ + stars: | 2023-04-05 | by ( David Lawder | ) www.reuters.com time to read: +4 min

She said past trade deals focused on "aggressive liberalization and tariff elimination" made the U.S. and other countries too dependent on China for critical materials. Her remarks come amid growing calls from U.S. business and agricultural trade groups for Congress to approve new "fast track" negotiating authority for USTR to pursue traditional free trade deals. These groups argue the U.S. is falling behind the growing network of free trade deals forged by China and the European Union in recent years, putting U.S. farmers and food companies at a disadvantage against many foreign competitors in key markets. Republicans in the U.S. Senate and House of Representatives also pelted Tai with complaints about the lack of new tariff-reducing trade deals during hearings last month. Tai told reporters it has been difficult to explain the need to break away from the traditional vision of ever-liberalizing trade deals.

☆ U.S. trade chief Tai to defend pursuit of non-traditional trade deals
▼ + stars: | 2023-04-05 | by ( David Lawder | ) www.reuters.com time to read: +3 min

WASHINGTON, April 5 (Reuters) - U.S. Trade Representative Katherine Tai on Wednesday will defend the Biden administration's decision not to pursue traditional free trade deals and argue her approach of working to ease non-tariff barriers is better for workers and supply chain resilience. Her remarks come amid growing calls from U.S. business and agricultural trade groups for Congress to approve new "fast track" negotiating authority for USTR to pursue traditional free trade deals. These groups argue the U.S. is falling behind the growing network of free trade deals forged by China and the European Union in recent years, putting U.S. farmers and food companies at a disadvantage against many foreign competitors in key markets. Republicans in the U.S. Senate and House of Representatives also pelted Tai with complaints about the lack of new tariff-reducing trade deals during hearings last month. Tai told reporters it has been difficult to explain the need to break away from the traditional vision of ever-liberalizing trade deals.

But manufacturers across the eurozone have reported business activity has been falling for nine months since June 2022 according to purchasing managers’ surveys. U.S. manufacturers have reported business activity has been falling for five months since November 2022 according to the Institute for Supply Management (ISM)’s purchasing survey. But the deficit had narrowed from 63 million barrels (-15% or -2.05 standard deviations) at the end of June 2022, according to data from Euroilstock. U.S. distillate fuel oil inventories were 18 million barrels (-14% or -1.08 standard deviations) below the prior 10-year seasonal average on March 31. In Singapore, distillate inventories have risen in 12 of the 15 most recent weeks by a total of 3 million barrels, according to data from Enterprise Singapore.

It has slipped to levels consistent with the onset of the last four recessions in 2020, 2008, 2001 and 1990, implying the manufacturing sector is experiencing a cyclical slump even if there is still momentum in services. But the manufacturing and freight downturn is already depressing domestic consumption of diesel and other distillate fuel oils, the most cyclically sensitive part of the petroleum market. Consumption of diesel and other distillate fuel oils has been falling since the second quarter of 2022, in line with the slowdown in manufacturing and freight activity. The volume of distillate fuel oil supplied to the domestic market was down -4.4% in the three months from November to January compared with the same period a year earlier. Related columns:- U.S. diesel consumption falls as economy slows (March 1, 2023)- U.S. manufacturers flounder amid cost-of-living shock (February 15, 2023)- U.S. manufacturing downturn will cut diesel consumption (January 5, 2023)John Kemp is a Reuters market analyst.

☆ Premarket stocks: What the OPEC cuts mean for Putin and Russia
▼ + stars: | 2023-04-04 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +8 min

OPEC+ was formed in 2016 to coordinate and regulate oil production and stabilize global oil prices. What it means for Putin: OPEC+’s decision to cut oil production could have big implications for Russia. After Russia invaded Ukraine last year, the United States and United Kingdom immediately stopped purchasing oil from the country. Higher-priced oil could help Russia pay for its war on Ukraine and also boosts revenue in Saudi Arabia. Current regulations, Dimon argued, could actually lull banks into complacency without actually addressing real system-wide banking issues.

Companies Cummins Inc FollowApril 3 (Reuters) - Cummins Inc (CMI.N) said on Monday it would invest more than $1 billion across its U.S. engine manufacturing network to upgrade some facilities to support new clean energy technologies. Cummins said the investment would go towards its facilities in Indiana, North Carolina and New York, to upgrade its clean energy technology including fuel-agnostic engine platforms that would run on low-carbon fuels like natural gas, diesel and eventually hydrogen. The Columbus, Indiana-based company, known for its diesel and natural gas engines, has accelerated its push towards clean energy solutions to sell to its industrial and commercial transportation customers, as the trucking industry is expected to face tougher greenhouse emissions regulations this year. The $1 billion announced is in addition to the investment of $1.5 billion that the engine maker announced last month. Reporting by Kannaki Deka in Bengaluru; Editing by Rashmi AichOur Standards: The Thomson Reuters Trust Principles.

This marked a sharp turnaround after fund managers sold a total of 281 million barrels over the two preceding weeks, the fastest rate of selling for almost six years. Most of the buying came from the closure of previous bearish short positions (-48 million barrels) rather than initiation of new bullish longs (+13 million). Buying was concentrated in NYMEX and ICE WTI (+49 million barrels), U.S. gasoline (+14 million), U.S. diesel (+5 million) and European gas oil (+1 million) with sales of Brent (-9 million). Short positions in NYMEX and ICE WTI were slashed (-51 million barrels) but no new bullish positions were established and in fact long positions were trimmed marginally (-2 million). U.S. GAS POSITIONSFund managers are becoming less bearish about the outlook for U.S. gas prices following the full re-opening of Freeport LNG’s export terminal.

LONDON, March 31 (Reuters) - China’s liquefied natural gas (LNG) imports fell sharply in 2022 because of the disruption caused by lockdowns to control the coronavirus epidemic and the massive exit wave of infections when they were lifted. But the import rebound could be smaller than some analysts anticipate because domestic gas production is rising strongly and the country has mostly completed its transition to natural gas for urban residents. Both LNG and pipeline imports remained subdued in the first two months of this year with any rebound delayed until later in 2023. China’s LNG purchasers have proved price-sensitive and will likely wait for prices to decline before increasing imports and refilling storage. PIPELINES NOT LNGThe shift from LPG and especially gasworks gas has turbocharged consumption of natural gas over the last decade.

LONDON, March 29 (Reuters) - India’s electricity transmission system is coming under increasing strain as booming power demand outstrips growth in despatchable generation. Peak demand met was up by 8% compared with a year ago and 11% compared with 2021 (“Monthly report”, Grid India, March 23, 2023). Frequency is related to the balance between generation and load - excess generation causes frequency to accelerate, excess load causes frequency to drop. The increasing incidence of under-frequency shows controllers struggled to schedule enough firm generation to meet increasing demand on the system. Peak electricity demand in January (210,618 megawatts) and February (209,665 megawatts) was only slightly lower than at the height of last summer in June 2022 (211,856 megawatts).

Hedge funds and other money managers sold the equivalent of 142 million barrels in the six most important contracts in the seven days ending on March 21, after selling 139 million barrels in the week to March 14. Fund managers have slashed their combined position to just 289 million barrels (6th percentile for all weeks since 2013) from 570 million (46th percentile) on March 7. The fund community liquidated 163 million barrels of previous bullish long positions in the two most recent weeks, while establishing 115 million barrels of new bearish short ones. The most recent week saw heavy sales across the board, including Brent (-63 million barrels), NYMEX and ICE WTI (-48 million), U.S. gasoline (-15 million), U.S. diesel (-6 million) and European gas oil (-10 million). Anticipating the erosion of the surplus, funds have bought the equivalent of 774 billion cubic feet in the last seven weeks.

Working stocks in underground storage amounted to 1,900 billion cubic feet on March 17, according to the U.S. Energy Information Administration (EIA), the highest for the time of year since 2020 and before that 2017. Stocks were 242 billion cubic feet (+15% or +0.54 standard deviations) above the prior ten-year seasonal average (“Weekly natural gas storage report”, EIA, March 23). The seasonal storage surplus was a total transformation from a deficit of 263 billion cubic feet (-8% or -0.98 standard deviations) on Jan. 1 and 427 bcf (-13% or -1.52 standard deviations) on Sept. 9. But liquefied natural gas (LNG) exports increased to a record 3,866 billion cubic feet, an even faster increase of 8.6% compared with 2021. Related columns:- U.S. gas prices near record low amid over-production (Feb. 22)- U.S. gas prices slump to maximise power burn (Feb. 10)- U.S. gas prices slump on production surplus (Jan. 12)John Kemp is a Reuters market analyst.

☆ Copper prices could soar 33% in the next year as global inventories hit lowest since 2008, top metals trader says
▼ + stars: | 2023-03-24 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

Copper could climb as high as $12,000 per metric ton in the next year, Trafigura said. "What's the price of something the whole world needs but we don't have any of?" "What's the price of something the whole world needs but we don't have any of?" Inventories are now at the lowest seasonal level since 2008, helping copper prices rise 6% this year to become the best-performing industrial metal. In its best-case scenario, S&P Global predicts that by 2035, the world will be lacking 1.6 million tons in needed copper.

LONDON, March 22 (Reuters) - Portfolio investors dumped petroleum futures and options at one of the fastest rates on record in the early stages of the banking crisis, as traders anticipated an increased probability of a recession hitting oil consumption. Hedge funds and other money managers sold the equivalent of 139 million barrels in the six most important futures and options contracts over the seven days ending March 14. Fund managers have sold a total of 148 million barrels since the end of January, taking their combined position to 432 million barrels (20th percentile for all weeks since 2013). In the most recent week, there were heavy sales of Brent (-65 million barrels), NYMEX and ICE WTI (-59 million), U.S. gasoline (-12 million) and European gas oil (-7 million), with only minor buying of U.S. diesel (+4 million). Related column:- U.S. bank failure places oil prices under pressure (March 13, 2023)John Kemp is a Reuters market analyst.

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