The Commodity Report #75
Some facts about the gas crisis in Germany (nobody talks about) & other developments in the energy sector
Welcome to another 263 people who subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.914.
Some facts about the gas crisis in Germany (nobody talks about)
With the beginning of this week’s newsletter, I probably won’t make any new friends in my home country. What makes me sad is that literally nobody is speaking about the untapped natural gas reserves we have underground in Germany that are indeed accessible.
A short calculation:
In 2021 Russia delivered 55 billion cubic meters to Germany or 55% of the total German gas consumption.
According to the federal association for natural gas, oil and geo-energy in Germany, just under 5.2 billion cubic meters of natural gas were produced in 2021. Estimated proven and probable natural gas reserves were 32 billion cubic meters at the end of 2021. Only a few people know that Germany has untapped natural gas reserves that would need to be extracted with the appropriate but existing technology. The volumes are staggering:
450 billion cubic meters of technically developable natural gas from coal seams (easier to extract)
up to 2.3 trillion cubic meters of technically developable natural gas from shale rock (harder to extract and more harmful to the environment)
So we have the amount we need to get over a long period of time without Russian gas, and we also have the companies that can actually do it with, for example, Wintershall. What we don’t have is the knowledge and implementation power at the political level.
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Crude oil supported by tight fuel supply outlook
The crude oil market is still struggling for direction, with no overriding theme being strong enough to set the agenda.
Nevertheless, we tell our clients to act cautiously in this environment. You don’t want to be too involved on the long side of industrial commodities when growth is still expected to slow further, and therefore demand destruction is likely to continue. That’s the only argument for not being bullish on oil at the moment, but it’s essential.
Kuemmerle Report now cheaper
I went through your feedback for the Kuemmerle Report and made some changes. I lowered the price from
$34 to $29.
Moreover, I added more analysis and trading opportunities to the weekly report. All you need to know is now accessible on less than 10 PowerPoint slides.
The collapse in natural gas prices
Not enough people are talking about the collapse in natural gas prices. Henry Hub (U.S. nat gas) has been cut in half over the past two months. Even more extreme, TTF (European nat gas) has lost as much as 70% over the last two months from the peak. BTW we called for the peak in European energy prices at the end of August
Last but not least, this is the chart people should have in mind when they hope for the ominous FED Pivot. Be careful out there, guys; this market isn’t easy.
Also interesting is the correlation between NY City Rainfall and the ROC of Real GDP in the US, highlighted by Tom McClellan.
And at the end, a few thoughts by JP Morgan’s CEO Jamie Dimon about the current energy crisis. I subscribe to most of his views as well.
This week look out for the following:
ISM Manufacturing PMI on Tuesday
JOLTS Job Openings on Tuesday
FOMC Meeting on Wednesday
ISM Services PMI on Thursday
Job Market Report on Friday
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Till next Monday, Lukas
(The Commodity Report is not investment advice)