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The Federal Reserve raised interest rates by 0.75 percentage points for the second straight meeting as policymakers try to bring inflation under control.

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Markets expecting
The Federal Reserve on Wednesday is expected to raise its benchmark interest rate by three-quarters of a percentage point for the second straight meeting in an effort to tamp down inflation that's been running at a four-decade high.

Federal reserve interest rates later

28.18 USD +0.11 (0.39%)

31,919.16 +157.62 (0.49%)

11,798.05 +235.48 (2.04%)

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American Petroleum Institute (API) reported a large draw this week for crude oil of 4.037 million barrels, while analysts predicted a draw of 1.121 million barrels.

The build comes as the Department of Energy released 5.6 million barrels from the Strategic Petroleum Reserves in Week Ending July 22, to 474.5 million barrels.

U.S. crude inventories have shed some 65 million barrels since the start of 2021, with a 2 million barrel loss since the start of 2020, according to API data.

In the week prior, the API reported a build in crude oil inventories of 1.860 million barrels after analysts had predicted a much smaller build of 333,000 barrels

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Russia’s oil giant Rosneft on Tuesday said it had launched construction works on an oil terminal for its Vostok Oil project in the Arctic, expecting the port to become the country’s biggest oil terminal by the end of this decade.

Vostok Oil, in Russia’s Far East, comprises several groups of oil fields holding an estimated 44 billion barrels of oil. Initial work on the project began in January 2021. The total cost of its development has been estimated at $170 billion over the lifetime of the fields. The Vostok Oil project in Russia’s Far North is close to the Northern Sea Route that Rosneft wants to use to ship oil to Asia.

Rosneft has also started drilling at the Payyakhskoye field, part of the massive Vostok Oil, the project’s chief executive Vladimir Chernov told Russian media on Tuesday. Rosneft expects oil to start flowing from the field in 2024, and the project Vostok Oil to deliver crude via the Northern Sea Route by 2027, Chernov was quoted as saying.

Western analysts, however, doubt that Rosneft will be able to keep the timeline for the massive project’s development as Western sanctions are depriving Russia and its state-owned oil and gas firms of access to capital and technology.

Last year, Rosneft was looking to attract some of the world’s largest oil trading houses to the Vostok Oil project, offering them to become investors in exchange for oil supply contracts.

This year, investors are abandoning Russian projects after Putin invaded Ukraine. One of those major traders, Trafigura, said earlier this month that it had exited its 10-percent non-operational passive shareholding in Vostok Oil, selling the stake to a Hong Kong-registered trading company for an undisclosed price.

The Western sanctions, which ban exports of technology for oil and gas to Russia, will also affect the timeline of the Vostok Oil development, analysts say.

The Payyakhskoye field, at which Rosneft started drilling today, could see first production by 2029 instead of in 2024, the Russian giant says, according to research firm Rystad Energy.

“Any delays in one part of the huge supply chain involved in the project will lead to the delay of the whole project,” Daria Melnik, senior analyst at Rystad Energy, told The Wall Street Journal earlier this month.

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Gasoline Cracks Plummet Amid Oversupply Fears. Gasoline cracks across the world have fallen by more than 100% over the course of July, with Asian margins dropping to a marginal discount to Brent after hitting a premium of $38 per barrel earlier, with oversupply leading to high stock builds recently.

Germany’s Coal Sector Runs into Resource Availability Issues. Coal operators in Germany have run into a series of difficulties in bringing back idled coal plants, coming from low coal availability and aged production units. So far it appears that only one coal plant of the 16 that were planned has been reconnected.

US Energy Authorities Assist GM Battery JV. The US Energy Department announced it would loan $2.5 billion to a joint venture of General Motors (NYSE:GM) and LG Energy Solution (KRX:373220) to finance lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.

Algeria Records Further Two Oil and Gas Discoveries. Italian oil and gas major ENI (NYSE:E) has made another two oil and gas discoveries in Algeria’s gas-rich Berkine basin, working in a JV between ENI and Sonatrach, only four months after it had reported two significant finds in the same region.

Europe Greenlights Third Party Russia Deals. Brussels has tweaked its Russia sanctions regime, allowing European countries dealing with Russian state-owned companies Rosneft and Gazprom to buy and ship oil to third countries provided they do not reach EU destinations.

US Shale Firms Complain of Growth Headwinds. According to a recent survey by the US Federal Reserve Bank of Dallas, almost all oil and gas executives believe the ongoing supply chain delays are having a material impact on new projects, primarily focusing on shortages of labor and soaring equipment costs.

Tuesday, July 26, 2022

For the second straight week, the main oil futures contracts have seen a marked rejuvenation in open interest, primarily coming from bullish long positions. This suggests that, despite ongoing fears of an economic recession, traders believe that the selloff earlier this month was overdone. This has also translated into the markets largely ignoring the return of Libyan oil. In addition, Europe’s natural gas woes have strengthened demand prospects for middle distillates, with diesel switching in the winter months now a very real possibility. With the Brent-WTI spread as wide as ever, ICE Brent has been flirting with the $107 per barrel mark in today’s trading session.

Gazprom Squeezes Gas Supply Even Further. Russia’s Gazprom (MCX:GAZP) squeezed pipeline gas supply to Europe even further this week, with Nord Stream 1 flows dropping to 33 Mcm per day as the Russian firm argued that it needed to halt the operation of yet another gas turbine at a compressor station.

OPEC+ Compliance Drops to Lowest in Years. Proving that OPEC+ has been facing difficulties in ramping up new production capacity, the oil group’s underproduction rose to a whopping 2.84 million b/d in June, bringing the overall compliance rate to a staggering 320%.

EU Ministers Oppose Gas Cut Mandates. The European Commission is seeking to push through a plan that would require each EU member state to cut their gas use by 15% from August 2022 to March 2023, but opposition from France, Italy, and others will see it softened to voluntary participation.

Libyan Production Is Back on Track. Less than one week after the Tripoli government lifted the blockade of oil ports and infrastructure, production rates in the country have surged above 1 million b/d, almost doubling month-on-month.

US LNG to Europe Still Going Strong. When President Biden vowed to provide European buyers with an additional 15 bcm of LNG this year, the pledge was met with skepticism, but in H1 this year the US sent more than it did in all twelve months of 2021 (39 bcm vs 34 bcm), getting within touching distance of fulfilling the pledge.

Guyana Launches New Licensing Round. With one single Exxon (NYSE:XOM) operated block already wielding 11 billion of oil reserves, the President of Guyana has called on US companies to participate in the upcoming Q3 auction, seeking to avoid dependence on one dominant consortium.

Mexico Maximizes Fuel Oil Exports to the US. Exports of Mexican fuel oil to the United States rose to the highest level on record in H1 2022, averaging 5.3 million barrels a month, as higher residue output has been met with increased US demand, seeking to replace sanctioned Russian volumes.

Gasoline Cracks Plummet Amid Oversupply Fears. Gasoline cracks across the world have fallen by more than 100% over the course of July, with Asian margins dropping to a marginal discount to Brent after hitting a premium of $38 per barrel earlier, with oversupply leading to h

IMF demands interest rate rises as intensifying inflation shock stalls global growthY

Alliance News) - Stock prices in London were lacking direction at midday on Tuesday, with the overall market on hold ahead of a key Federal Open Market Committee monetary policy decision due on Wednesday.

The US central bank is widely expected to jack up borrowing costs by 75 basis points as it battles rampant inflation.

LONDON, July 25 (Reuters) - The world's largest energy traders, independents and majors, are poised to post record earnings for the first six months of the year due to volatility in markets caused by the Ukraine war and despite LNG supply problems, sources with the companies said.Vitol, Glencore, BP, Shell and TotalEnergies have yet to report first-half 2022 results, but sources familiar with the companies indicated very strong returns and some rivals have already reported sky-high earnings."It is another record year," one of the sources said. "LNG outages will be a challenge to everyone and a big challenge to those who rely heavily on U.S. and Russian LNG."Geneva-based Gunvor Group, one of the top five independent oil traders, reported record first-half profits, as did rival Trafigura for the six months through March 31, while also expecting robust results in the second half.One source said Vitol would show strong results in the first half after reporting a record profit of over $4 billion in 2021. Vitol declined to comment.A second source said BP did 70-80% better in the first quarter than last year, when trading returns were lacklustre compared to a stellar 2020 and 2019. The source added the trading division was beating targets in the second quarter.BP does not disclose trading results but the major said its first-quarter results were driven by an "exceptional" performance in its oil and gas trading division.Shell said strong oil and gas trading helped boost its profits to a record in the first quarter. In a note ahead of its results, Shell said second-quarter trading profit would be strong, though lower than in the exceptional preceding quarter.A third source said Glencore's energy trading, including in oil, was robust in the first half. The firm combines results from oil and coal trading and reported adjusted earnings of $1.4 billion last year.In a results preview, Glencore said it expected its marketing segment, which includes energy products, to have an adjusted EBIT of over $3.2 billion, almost as much as it made in 2021.BP, Shell and Glencore will report this and next week, while privately held Vitol does not officially disclose full financial results. The majors do not separately disclose profits from trading."We are seeing similar across the sector with most reporting ongoing strong trading...the initial results year-to-date reflect ongoing record profitability," a banking source familiar with the matter said.The chief executive of TotalEnergies said in April oil trading was exceptional in the first three months, outperforming standard results by $500 million.GAS SHORTAGERussia's invasion of Ukraine has created a perfect storm of supply disruptions across most commodities as the financial system grappled with the heaviest-ever western sanctions on Moscow. Global trade w

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Amid the gas turbine chapter of the Russia gas flow saga, Gazprom has halted yet another turbine at its main compressor station in the Nord Stream 1 gas pipeline, according to Bloomberg's Javier Blas.

Gazprom announced on Monday that not only does the Russian gas producer have trouble with a turbine currently being returned to it by Canada, but it is also now halting a second turbine at its main compressor station. The flows along Nord Stream 1 will drop starting on Wednesday to 33 mcm per day—this is a 50% drop from the current flow, and amounts to just 20% of Nord Stream 1's full capacity.

In an earlier statement made Monday on the status of the first gas turbine that is making its way back to Russia, Putin's Press Secretary Dmitry Peskov mentioned that they "still have problems with other units."

Russia restarted gas flows through Nord Stream 1 after routine maintenance had the pipeline down for 10 days. As of today, flows along Nord Stream 1 have recovered to 40% of the pipeline's maximum capacity. Gazprom has said that 40% limit is due to the delay in returning the turbine to Gazprom, although there is some debate whether there are actual paperwork delays with the return of the turbine or simply Gazprom dragging its feet.

"Gazprom received from Siemens documents issued by the Canadian authorities. However, after studying the documents, Gazprom had to conclude that they do not eliminate the previously identified risks and give rise to additional questions," Gazprom's earlier statement read, adding that "the issues regarding the sanctions imposed by the EU and the UK remain unsolved for Gazprom," and that resolving this issue is "important for delivering the engine to Russia and performing urgent major repair of other turbine engines from the Portovaya CS."

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