Japanese oil-to-gas switch remains elusive
Crude prices remained elevated, at 82.2 $/b for ICE Brent front-month price, despite the SPR release announcement and a relatively neutral EIA weekly snapshot. Total crude…
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Risks of energy shortages came back to the fore on Thursday after Germany triggered the second step of its emergency gas plan with the German economy minister Robert Habeck warning of a potential “Lehman Brother effect” in the energy sector in case of a full cut in Russian gas supply. Rationing of gas for industrial and residential users is not part of this second stage, but Robert Habeck warned that it could not be ruled out. In the meantime, EU leaders agreed at a summit on Thursday to make Ukraine and Moldova candidates to join the bloc. In terms of economic figures, May-22 PMI data for Europe and the US surprised on the downside, showing a deterioration in both manufacturing and services activities.
On the agenda today, the release of the German IFO Business Climate Index will be closely watched in the light of yesterday’s news over a potential rationing of gas supplies to industrial users. Watch out for the University of Michigan Index to assess the deterioration of consumer confidence. Surging inflation rates, recession risks and gas shortages in Europe should be on the menu of the G7 meeting in Bavaria planned this weekend.