Oil extended its longest losing streak this year ahead of the release of Federal Reserve, which could provide further clues on monetary tightening in the U.S.
West Texas Intermediate fell to $75 a barrel after falling for a fifth straight session. The prospect of more aggressive interest rate hikes from the Fed to tame inflation has kept prices down, even as evidence of a strong recovery in China is mounting after the end of Covid Zero.
Oil’s weak start to the year dampened early optimism that rising Chinese demand would boost prices. Morgan Stanley became the latest bank to revise its forecasts, insisting the market will see a surplus in the first quarter and a balance in the second before moving to a smaller-than-expected deficit in the second half.
Concerns over a U.S. slowdown and China’s virus curbs have pushed futures around $10 a barrel as defensive and bullish narratives collide, with renewed supply disruptions in Kazakhstan on Wednesday failing to move the needle.
German gas supply secure for next winter
Germany is unlikely to face gas shortages next winter and should hold off on converting floating liquefied natural gas terminals to fixed ones.
Germany would have a sufficient supply of around 88 billion cubic meters (mcm) this year if demand is 12.4% below the 2018-2021 average.
Total supply could rise to 94 bcm, about the same stage as in previous years, if Germany’s import capacity for liquefied natural gas is used up to 95.5%.
With LNG terminals in Belgium and the Netherlands and floating facilities in Germany, there is sufficient import capacity for LNG to meet growing demand in Germany.
However, due to the improved gas supply situation, the institute advocates suspending the conversion of floating LNG terminals to fixed terminals and says that the gas industry has seized the opportunity that arose during the spring of 2022 uncertainty to build projects that are far more than the reasonable capacity forecast.
The institute said that Germany is phasing out fossil-fueled natural gas in the medium term, meaning natural gas flaring must end as part of its path to climate neutrality.
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