This week’s Commodity Tracker options Kazakhstan’s oil manufacturing and provide routes, grain exports via the Black Sea, Asia’s urge for food for US oil, and Europe’s tight gasoline market forward of winter.
1. Kazakhstan’s ties with Russia essential problem for oil markets as chief will get second time period
What’s occurring? Kazakh President Kassym-Zhomart Tokayev has gained a second time period in workplace after a snap presidential election. He is hoping to reassure the world on his nation’s function as a dependable, long-term vacation spot for funding and a rising oil producer. Kazakh crude export volumes have fluctuated considerably within the wake of Russia’s invasion of Ukraine, and costs for oil shipped through its key export route, the Caspian Pipeline Consortium, have traded at sizeable reductions.
What’s subsequent? S&P International Commodity Insights sees Kazakhstan’s ties with Russia as probably the most essential problem for oil markets in Tokayev’s second time period. Kazakhstan is looking for different provide routes, with the Baku-Tbilisi-Ceyhan pipeline from the Caspian Sea to Turkey’s Mediterranean coast to this point probably the most promising. Analysts at S&P International see these diversification efforts as having solely a slight influence within the quick time period.
2. Ukrainian grain exports via the Black Sea get better
What’s occurring? UN-brokered secure passage settlement was finally renewed for an additional 4 months beginning Nov. 19, regardless of lingering uncertainty over whether or not the negotiations would achieve success. The Black Sea Grain Initiative framework has enabled practically 1,000 inbound and outbound voyages and allowed over 10 million mt of grains and foodstuffs to achieve the worldwide markets.
What’s subsequent? International agriculture market stakeholders are actually specializing in methods to spice up fertilizer provide, with increased pure gasoline costs in Europe, a key enter to fertilizer manufacturing, in addition to with potential disruptions within the Russian fertilizer provide chain following the outbreak of the Russia-Ukraine battle earlier in February having triggered considerations concerning an rising fertilizer supply-demand imbalance. The renewed deal might additionally tackle considerations of dry bulk market members, who’ve expressed doubts as as to whether the Black Sea Grain Initiative might present sufficient help to easing freight charges.
Associated infographic: Infographic: Black Sea grain shipments at crossroads forward of secure passage renewal deadline
3. Share of US crude in Asia’s import basket drops
What’s occurring? US crude flows to Asia from January to September rose modestly to 1.47 million b/d from 76,000 b/d in the identical months final yr. However by way of market share, Asian crude imports from the US fell to 42% in January-September 2022 from 48% the identical interval in 2021. Analysts mentioned this can be a signal that displays patrons have appeared elsewhere to fulfill the incremental demand to this point this yr.
What’s subsequent? Analysts at S&P International mentioned Asian patrons will compete for US crudes if the arbitrage is sensible, significantly for nations that aren’t importing Russian crudes. In the meantime, oil market stakeholders will likely be watching how a lot Russian crude will hit international markets as soon as the G7 worth cap and EU sanctions come into drive. US crude exports are anticipated to common 3.5 million b/d this yr, earlier than rising to three.7 million b/d in 2023, with flows to Europe more likely to improve as EU’s sanctions on Russian crudes take impact, based on S&P International.
4. European gasoline market stays tight forward of winter
What’s occurring? A light begin to the European winter and full gasoline shops has seen international gasoline costs deflate from August’s record-highs. Europe’s TTF gasoline benchmark maintains a premium over key LNG markers like Platts JKM and DES NWE, however Europe’s lack of Russian pipeline gasoline and LNG outages in Freeport, Texas and Malaysia hold the market tight forward of winter.
What’s subsequent? Europe’s frenzied market intervention drive will see first particulars of a proposed worth cap on the TTF in addition to the design of the brand new LNG benchmark index developed by the European Fee on the Nov. 24 EU power minister council. On the provision entrance, new long-term contracts are anticipated for US LNG provide to the UK, whereas Germany should still pursue Qatari provides with the FIFA Soccer World Cup in world’s largest producer of LNG in 2022 getting underway.
Associated weblog: The LNG video games: Altering market dynamics make for intriguing World Cup fixtures
Reporting and evaluation from Rosemary Griffin, Nikolaos Aidinis Antonopoulos, Sambit Mohanty, Phil Vahn, Oceana Zhou, and Andreas Franke
