Nord Stream 1 Flow Reductions Prompt Questions of Russian Retaliation for Sanctions
July 26, 2022
Gazprom has reduced rates on the Nord Stream 1 pipeline to 20% of normal after the restart from maintenance just a few days ago. The line was first at 40% but is now cut back to 20% because Gazprom says they are waiting on a turbine that was repaired in Canada but has not been returned yet. Many others say this move is a retaliation for the sanctions imposed by the West. This has put some fear back into the market, and natural gas futures are up over 80 cents at 9.556. Crude oil is also higher along with ULSD and RBOB.
The Fed begins its two-day meeting today and expects a 75 basis point increase to be added to the Federal Funds Rate. Traders claim this is already baked into the market, so what the Fed says about the state of the economy may be more focused on by traders.
There has been a lot of chatter about whether the US is headed for a recession or not. The most standard definition is two consecutive quarters of negative GDP. The US Q1 GDP was finalized at (1.6%) and we get another report on GDP this week. There will be plenty of debate about this as we move forward.
There are reports that there is a large speculative short in front month (August futures) RBOB. These short need to be rolled forward as expiration is coming at the end of this week. That mean these positions must be bought back(market goes higher) and the next month sold. The spread between August and September futures has been crazy, it is currently at 26 cents and just four days ago it was at 14.
According to the Department of Energy, US crude oil inventory in the SPR fell by 5.6 million barrels to 474.5 million barrels in the week ending July 22. That level is the lowest since June 1985. All of the 5.6 million barrels released into the market was sour crude oil.