The increase in US consumer prices eased in August, according to the Labor Department. Despite the positive data, the country is still facing its highest rate of inflation in 13 years.
Rachel Blevins and Brent Jabbour talk to Dean John Quelch of the Miami Herbert Business School about the latest figures to find out whether the inflation rate could reach the Federal Reserve’s traditional 2% annual target.
Supplies of natural gas to Europe via the completed Nord Stream 2 pipeline will not start on October 1, according to the CEO of Russian energy major Gazprom, Alexey Miller.
Responding to media reports on Wednesday suggesting that deliveries via the pipeline could begin next month, he said: “No. Supplies will not start on October 1.”
Gasflow via Nord Stream 2 were expected to begin as early as October, with volumes exceeding expectations. Russia’s Gazprom said it is ready to begin gas deliveries once the new pipeline obtains the required EU certification. However, this process could take up to four months under EU rules.
The certification delay has sent European natural gas prices to record highs, exceeding $960 per 1,000 cubic meters as of Wednesday.
The European market is severely short of supplies due to increased demand amid the post-pandemic recovery and a drop in deliveries from its key supply source, Norway’s Troll gas field, due to unplanned outages. A recent accident at the Gazprom plant in Russia has also forced the company to cut its supply to European underground storage facilities.
According to Gazprom’s statement last week, gas supplies via the Nord Stream 2 pipeline could total 5.6 billion cubic meters this year, if the EU gives the green light.
The world’s top oil importer, China, has reduced its crude imports by 5.7% since the start of 2021, but boosted natural gas purchases by over 20%, a report from the country’s State Statistical Office says.
From January to August, China imported 346.36 million tons of oil, which is 5.7% less than in the same period last year. At the same time, the country increased the volume of natural gas imports by 22.2%, to 79.31 million tons.
As specified in the document, in August alone, China purchased 44.53 million tons of crude (down 6.2% year on year) and 10.44 million tons of gas (up 11.5%).
Meanwhile, domestic oil production over the past eight months increased by 2.4%, amounting to 133.22 million tons. Domestic refining was also up by 7.4% to 470.79 million tons.
According to the report, China’s energy companies produced 136.1 billion cubic meters of gas in the reporting period (an increase of 10.8%). Over the past month alone, the country’s gas production increase amounted to 15.9 billion cubic meters, which is 15.5% higher than before the pandemic in August 2019.
Previously, China’s crude oil imports rebounded in July from a six-month low after state-backed refiners set out to increase output after returning from maintenance. However, independent refineries slowed their restocking due to official probes into trading and taxes.
Beijing has been carrying out investigations since April regarding illegal trading of import quotas, in part to lower a fuel surplus that has been hard on state-owned refiners’ profits.
A major fertilizer manufacturer has been forced to shut down two factories in the UK as energy prices continue to soar in Europe.
The US-based CF Industries Holdings announced the shutdown of its manufacturing complexes in Billingham and Ince, with no timeline for when production may restart, as European power prices surge to multi-year highs.
The step comes amid an extreme squeeze for energy supplies across Europe and the UK that has sent spot prices for natural gas soaring by up to 20% – more than four times the level seen this time last year. The crunch was reportedly triggered by limited flows from the region’s top suppliers, Russia and Norway. Shipments of liquefied natural gas have also slowed, as Asia has started buying up cargoes to meet its own demand.
The October gas futures contracts at the Dutch TTF exchange climbed to a record high of €79 ($93.31) a megawatt-hour this week. The contract has risen more than 250% since January, according to Reuters, while benchmark power contracts in France and Germany have doubled.
Analysts at Goldman Sachs expect these soaring prices to evoke power outages during the upcoming winter with blackouts pushing bills even higher, raising concerns over the costs to businesses already shouldering higher costs for raw materials.
The shutdown of the CF Industries plants may have an impact on global pricing for fertilizers, with other producers following suit, according to Alexis Maxwell, an analyst at Bloomberg Intelligence.
“The market will read this as [evidence that] other European producers are likely to shut down, and nitrogen prices will continue to rise on the supply-side shortage,” the analyst said.
The rise of natural gas prices could hurt the economic competitiveness of the European Union on a global scale, Ole Hansen, head of commodity strategy at Saxo Bank, told RIA Novosti.
European gas prices have been hitting record highs lately due to low storage volumes and the fast-approaching winter, as well as low supplies from Russia and uncertainty about the Nord Stream 2 gas pipeline.
Russia’s Gazprom said earlier it was ready to begin gas deliveries to Europe once the new pipeline obtains the required EU certification. But that process could take months due to squabbling among European countries about approving more imports from Russia.
The certification delay sent European prices to a multi-year high of almost $970 per 1,000 cubic meters on Wednesday.
According to Hansen, the surge in prices could lead to power outages in the EU this winter.
“If the price growth is not pegged down in the near future, then there’s a risk of a harsh winter with power outages and a decrease in the competitiveness of energy-intensive industries, which are under pressure from a sharp rise in gas and electricity prices,” he said. The expert added that the energy-intensive industries, which are located mainly in Germany and France, will suffer the most.
