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LONDON, March 21 (Reuters) - Global freight movements continued to dwindle in the first two months of 2023 as manufacturers and distributors struggled to reduce excess inventories and cope with rising interest rates and increased caution among buyers. In the United States, the number of containers hauled on the major railroads in the first 10 weeks of 2023 was down by 9% compared with the same period in 2022. As a result, it now seems probable that inventory liquidation and cautious buyer behaviour will continue to weigh on freight movements through at least the second quarter. Thereafter a freight recovery depends on the United States, Europe and the other major economies averting a full-blown recession. Related columns:- U.S. freight movements fall amid excess inventories (March 10, 2023)- U.S. manufacturers flounder amid cost-of-living shock (February 15, 2023)John Kemp is a Reuters market analyst.

LONDON, March 20 (Reuters) - Europe has experienced a mild winter, but the region also managed to cut its temperature-adjusted gas consumption in response to high prices, public information campaigns and industrial closures. Chartbook: Europe gas consumptionOctober was unusually warm across the region and none of the major consuming countries made significant progress in reducing underlying demand. But the country also managed to reduce its consumption per degree day by 8% ensuring total consumption fell by 24%. Related columns:- Europe must prepare for next winter to be colder (March 15, 2023)- With winter almost over, Europe’s gas stocks are at seasonal record high (March 3, 2023)- Europe faces more high gas prices next winter (January 20, 2023)- Crisis over? Europe’s gas stocks at seasonal record high (January 17, 2023)- Europe should thank mild autumn for averting gas crisis this winter (December 16, 2023)John Kemp is a Reuters market analyst.

The core winter season of 2022/23 was the second warmest on record, after the winter of 2019/20, when temperatures were 3.32 C above average. Chartbook: Europe winter temperaturesTemperature records display a clear warming trend for the last four decades, and clusters of warmer-than-normal or colder-than-normal years have been common in the long-term record. From a prudent planning perspective, Europe must prepare for next winter to be colder, putting more stress on gas supplies and prices. Related columns:- With winter almost over, Europe’s gas stocks are at seasonal record high (March 3, 2023)- Europe faces more high gas prices next winter (January 20, 2023)- Crisis over? Europe’s gas stocks at seasonal record high (January 17, 2023)- Europe should thank mild autumn for averting gas crisis this winter (December 16, 2023)John Kemp is a Reuters market analyst.

Such "supercore" inflation has decelerated from a post-pandemic peak of 7-8% in the first half of 2022 but is still running much faster than the central bank’s declared flexible average inflation target of a little over 2%. The Fed has already boosted overnight interest rates by 450 basis points over the last 12 months to 4.50-4.75%, causing the biggest inversion of the yield curve since the double-dip recession in 1981. Interest rate traders currently expect the central bank to raise its overnight rate one more time by 25 basis points to 4.75-5.00% when policymakers meet on March 21-22. Most scenarios are somewhat pessimistic, involving some combination of persistent inflation, rising interest rates, tightening credit conditions and/or slowing business activity. Most of these outcomes would be at least mildly negative for petroleum consumption, which explains why benchmark oil prices have fallen since SVB’s failure.

Responding to SVB’s failure, the central bank promised to make available additional liquidity to banks and other deposit-taking institutions. By reassuring depositors, the central bank aims to prevent runs on other institutions and contagion through the financial system. And by promising to buy high-quality assets at face value, the central bank is trying to forestall a fire sale that could depress valuations and become self-reinforcing. POLICY AND SUPERVISIONThe central bank’s intervention has highlighted the complex interaction between monetary policy and bank supervision. But given the spillovers between monetary policy and supervision, the offer of additional liquidity is probably not enough to insulate monetary policy from financial stability considerations.

☆ Italy's Enel, UK's newcleo link up on nuclear energy technology
▼ + stars: | 2023-03-13 | by ( ) www.reuters.com time to read: +1 min

MILAN, March 13 (Reuters) - Italy's biggest utility Enel (ENEI.MI) and 'clean' nuclear technology company newcleo have signed an agreement to work together on the British start-up's technology projects aimed at providing safe and stable power, they said on Monday. "Generation IV nuclear solutions aim to provide a safe and stable power source and to significantly reduce existing volumes of radioactive waste," Enel and newcleo said in a statement. Under the agreement, newcleo has committed to securing an option for Enel as first investor in its first nuclear power plant, which it will build outside Italy. London-based newcleo plans to design and construct the first-of-a-kind mini lead fast reactor to be deployed in France by 2030. Enel currently has over 3.3 gigawatt (GW) of nuclear capacity in Spain and retains a stake of around 33% in Slovak company Slovenské elektrárne, which recently connected to the grid the first of two turbine generators of the nuclear power plant of Mochovce.

☆ U.S., EU Try to Defuse Subsidies Dispute to Focus on Russia and China
▼ + stars: | 2023-03-10 | by ( Andrew Duehren | Kim Mackrael | ) www.wsj.com time to read: 1 min

WASHINGTON—President Biden and European Commission President Ursula von der Leyen will meet Friday as the U.S. and Europe try to move beyond a spat over subsidies for clean-energy technology and preserve a trans-Atlantic relationship that had strengthened following Russia’s invasion of Ukraine. Since Congress passed the climate and healthcare law called the Inflation Reduction Act last year, European officials have loudly complained about provisions that they fear disadvantage their own industries. They have taken aim at U.S. subsidies for electric vehicles that impose new requirements on the source of the materials used in the vehicles, as well as a wider range of tax incentives that officials believe could draw investment out of Europe and into the U.S.

The unplanned increase in inventories and elevated ratio to sales has reached levels consistent with previous slowdowns in the manufacturing and freight cycle in 2018/19, 2015/16 and 2008/09. The ISM manufacturing orders index tumbled to a low of just 42.5 (6th percentile for all months since 1980) in January before recovering slightly to 47.0 (11th percentile) in February. Chartbook: U.S. inventories and freightReduced ordering has sharply cut the volume of freight handled through U.S. container ports and carried on railroads and by trucking firms. The freight slump is consistent with previous slowdowns in the manufacturing and freight cycle and implies the manufacturing sector is already in recession (“Freight transportation services index”, BTS, March 8, 2023). Manufacturers’ difficulties stand in contrast to the resilience displayed by the much larger services sector, where spending, prices, margins and employment are still increasingly rapidly.

In the past twelve months, the oil market has absorbed the impact of Russia's invasion of Ukraine and the sanctions imposed in response by the United States, the European Union and their allies in Asia. As a result, benchmark oil prices have retreated by nearly 40% from their post-invasion high on March 8, 2022, after adjusting them for core inflation. Like all equilibria in the oil market, this one is likely to prove temporary and fragile - lasting until one or more of the risks around recession, inflation and China's post-pandemic rebound materialise or fade away. Conversely, if the global economy slides into a full-blown recession, inventories will rise and prices and spreads are likely to soften further. For the moment, however, the oil market has returned to balance less than twelve months after one of the largest shocks since the World War Two.

HONG KONG, March 9 (Reuters Breakingviews) - European financial centres are rolling out the red carpet for Chinese companies. Its free-float market capitalisation of $1.9 trillion is just a tenth of the New York Stock Exchange, January data from the World Federation of Exchanges show. Yet as tensions between Washington and Beijing rise and Chinese companies in New York face the threat of delisting, traditionally neutral Zurich has become an attractive alternative. That removes the risk that overseas regulators will demand access to mainland companies’ books - the source of a lengthy spat between the U.S. Public Company Accounting Oversight Board and Beijing. Deutsche Börse (DB1Gn.DE), which operates Frankfurt’s stock exchange, is technically ready to launch the China-Germany Stock Connect, board representative Niels Tomm said in November.

☆ 'Our phones are ringing off the hook': Amid a global downturn, the finance world is chasing Middle Eastern money
▼ + stars: | 2023-03-09 | by ( Natasha Turak | ) www.cnbc.com time to read: +5 min

The region's 10 largest sovereign wealth funds combined manage nearly $4 trillion, according to the Sovereign Wealth Fund Institute. The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before. Follow the capitalAs oil prices made a roaring comeback in the last two years, the Gulf's public wealth funds went on a spending spree. It added that GCC sovereign wealth funds "played an important role in 2020 during the Covid-19 pandemic and now again in 2022 during times of financial distress." Our phones are ringing off the hook," one manager from a UAE investment fund said, declining to be named due to professional restrictions.

[1/5] Plants grow through an array of solar panels in Fort Lauderdale, Florida, U.S., May 6, 2022. REUTERS/Brian SnyderMarch 6 (Reuters) - U.S. imports of solar panels are finally picking up after months of gridlock stemming from implementation of a new law banning goods made with forced labor, according to two Chinese solar companies. The gains are a relief to major Chinese suppliers including Trina Solar (688599.SS) and Jinko Solar (JKS.N), who are finally getting products into the lucrative U.S. market after long delays. Trina rival Jinko Solar Holding Co Ltd (JKS.N) has also had shipments released from detention, a source close to the company said. It would not specify how many of those were solar products.

LONDON, March 7 (Reuters) - India’s power generators and coal mines are being stretched to the limit to meet surging demand for power stemming from a fast-growing economy and rapid electrification. Coal units increased generation by almost 16 billion kWh (+18%) compared with a year earlier, in part to offset reduced output from expensive gas-fired units. Chartbook: India electricity and coalBut domestic mines and the rail network are struggling to keep pace with the strong demand from power producers for fuel. Mine production and coal trains despatched to power plants both increased last year by 12%, which was impressive but still below generators’ requirements. The government has also ordered privately owned generators that rely on expensive imported coal to maximise output to relieve power shortages (“India to use emergency law to maximise coal power output”, Reuters, January 30).

Stocks in the European Union and United Kingdom amounted to a seasonal record 685 terawatt hours (TWh) on March 1, and storage was almost 61% full, according to data from Gas Infrastructure Europe (GIE). Storage fill is at record levels and far above the 39% seasonal average for the last decade (“Aggregated gas storage inventory”, GIE, March 3). Chartbook: Europe gas stocks and pricesOn average, stocks fall to a post-winter minimum around March 30, with the low occurring at the earliest on March 16 (winter 2011/12) and at the latest on April 19 (winter 2020/21). Related columns:- Europe nears end of winter with bulging gas stocks (February 17, 2023)- Crisis over? Europe’s gas stocks at seasonal record high (January 17, 2023)- Europe's gas prices slump to moderate storage build (January 4, 2023)John Kemp is a Reuters market analyst.

Nearly 80% of distillates are used in freight transport, manufacturing and construction, so fuel consumption is closely geared to the manufacturing and freight cycle. Growth in both manufacturing activity and distillate consumption peaked in the first half of 2021 as the economy rebounded after the first wave of the pandemic. Distillate consumption also fell below prior-year levels in six of the nine months between April and December 2022 as demand dropped. Slower consumption created some scope to stabilise depleted distillate inventories towards the end of 2022. Notwithstanding the impact of poor weather, growth seems to have been decelerating slightly since November, as oil prices and drilling rates have fallen.

While this optimistic scenario is plausible, it remains less likely than the economy entering a significant and extended cyclical slowdown or full-blown recession in the course of 2023. Rates are now expected to rise further and remain higher for longer in response to the persistent strength in the job market and service sector inflation. Expectations for the end of 2023 are still trending higher as service sector inflation has continued rising faster than originally anticipated. Service sector activity levels also strengthened significantly in January according to business surveys conducted by the Institute for Supply Management. Similar strength in service sector activity and inflation has been visible across the Eurozone and other major economies.

[1/2] The Shell Oil Company's drilling rig Polar Pioneer is shown in Port Angeles, Washington May 12, 2015. The number of rigs drilling for oil peaked in late November, roughly 25 weeks after prices peaked, slightly longer than average. The current slowdown in drilling is therefore likely to reduce production growth through the end of 2023 and probably into 2024. Related columns:- U.S. oil production’s post-pandemic rebound set to slow (Reuters, December 2, 2022)- Is the U.S. shale oil revolution over? (Reuters, November 22, 2022)- U.S. oil drilling rises in response to higher prices (Reuters, February 25, 2022)John Kemp is a Reuters market analyst.

Europe’s distillate stocks were -41 million barrels (-10% or -1.43 standard deviations) below the ten-year average at the end of January. Singapore’s distillate inventories were -3 million barrels (-30% or -1.53 standard deviations) below the ten-year average on February 19. At the end of the last three recessions, U.S. distillate fuel oil inventories stood at 151 million barrels (April 2020), 163 million barrels (June 2009) and 139 million barrels (November 2001). By contrast, inventories currently stand at just 122 million barrels, according to data from the U.S. Energy Information Administration (EIA). So far, there has been only modest progress in rebuilding distillate stocks and defanging the inflation threat.

LONDON, Feb 22 (Reuters) - U.S. gas prices have slumped close to their lowest level on record, after adjusting for inflation, as traders respond to signs of a persistent production surplus in the domestic market. Chartbook: U.S. gas prices and inventoriesThe U.S. gas market appears to have been running a persistent surplus since early September 2022, which has sent futures prices tumbling. The storage surplus marked a significant turn around from a deficit of -427 billion cubic feet (-13% or -1.52 standard deviations) on September 9. Gas prices are now sending the strongest possible signal for fuel-switching to blunt the accumulation of excess stocks. Related columns:- U.S. gas prices slump to maximise power burn (Reuters, February 10, 2023)- U.S. gas prices slump on production surplus (Reuters, January 12, 2023)John Kemp is a Reuters market analyst.

As a result, research on business cycles moved in other directions, and policymakers increasingly aimed to eliminate cyclical instability altogether. Oil and gas cycles have been closely correlated with each other and with U.S. manufacturing activity. On average, troughs in oil prices occur within ±3 months of a turning point in U.S. manufacturing activity, while troughs in gas prices occur within ±4 months. Some softness in manufacturing activity as well as oil and gas prices should therefore be expected at this point. If the current slowdown proves to be a mid-cycle soft patch, gas and especially oil prices are likely to rise strongly later in 2023.

LONDON, Feb 17 (Reuters) - Europe is on course to end the winter with a near-record volume of gas in storage as a result of industrial closures, high prices and a milder-than-normal season. The projected carry out would be the second-highest on record and only just below 609 TWh at the end of winter 2019/20. Chartbook: European gas inventories and pricesRelatively mild temperatures so far this winter have played a part in reducing heating demand and gas consumption. At the same time, high prices continued to maximise the inflow of liquefied natural gas (LNG) to Europe at the expense of importers in China and South Asia. Europe’s gas stocks at seasonal record high (Reuters, January 17, 2023)- Europe's gas prices slump to moderate storage build (Reuters, January 4, 2023)John Kemp is a Reuters market analyst.

LONDON, Feb 16 (Reuters) - Resurgent passenger aviation following the coronavirus pandemic has created shortages of jet fuel, pushing up airlines’ operating costs and fares. U.S. jet fuel inventories stood at just 36.5 million barrels on Feb. 10, according to data from the U.S. Energy Information Administration (EIA). Chartbook: U.S. jet fuel inventoriesKerosene-type jet fuel is produced by similar refinery processes to diesel and other distillate fuel oils, but at higher quality specifications. But with shortages of both jet fuel and other middle distillates, the average price paid for jet fuel climbed to $3.37 per gallon ($142 per barrel) in 2022 up from $2.00 per gallon in 2019. With China lifting domestic and international travel restrictions, global consumption of jet fuel is set to rise sharply, which will stretch jet fuel supplies even further in 2023.

☆ Meet the GOP leaders in charge of critical House environmental committees
▼ + stars: | 2023-02-15 | by ( Emma Newburger | ) www.cnbc.com time to read: +9 min

Westerman, a representative for Arkansas's fourth congressional district, has a background in engineering and is a licensed forester. He's also introduced legislation to plant 1 trillion trees globally by 2050 in order to pull carbon out of the atmosphere. Cathy McMorris Rodgers, chair of House Committee on Energy and CommerceRep. Cathy McMorris Rodgers (R-WA) during a House Energy and Commerce Environment and Climate Change Subcommittee hearing on Capitol Hill on April 2, 2019 in Washington, DC. "We'll be focusing on promoting innovative technologies to facilitate our clean energy transition," Lucas told CNBC. Lucas said the committee would also conduct "robust oversight" of the spending being distributed to advance the country's clean energy sector.

Manufacturing output for the three months from November 2022 through January 2023 was almost 1.8% lower than in the three months between March and May 2022. Chartbook: U.S. manufacturing productionThe weakness of manufacturing production is consistent with business surveys which have showed activity falling every month since November. Since inflation was running faster than this, however, the volume of new orders had likely fallen in real terms by several percentage points. Related columns:- Labour hoarding exaggerates strength of U.S. job market (Reuters, February 6, 2023)- U.S. manufacturing is in recession (Reuters, February 1, 2023)- Recession now or later? Unenviable alternatives for 2023 (Reuters, January 26, 2023)- U.S. manufacturing has probably entered recession (Reuters, January 19, 2023)John Kemp is a Reuters market analyst.

Chartbook: U.S. gas prices and inventoriesFreeport’s eventual reopening should provide an outlet for some excess inventory, but with stocks in Europe also very full, exporters will have to compete for price-sensitive customers in Asia. Slumping futures prices will discourage drilling and incentivise electricity generators to run their gas-fired units for more hours at the expense of coal. Discounted futures prices will also boost combustion from the power sector, helping limit the accumulation of inventories this summer. Gas prices are now trading below the cost of coal, once the superior efficiency of gas-fired units is taken into account, which will encourage maximum gas burn this summer. Related columns:- Europe’s gas supply stabilises after colder weather (Reuters, February 3, 2023)- U.S. gas prices slump on production surplus (Reuters, January 12, 2023)John Kemp is a Reuters market analyst.

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