On Wednesday (October 6), natural gas prices in Europe ushered in a sharp drop after two days of skyrocketing. In the previous two days, the price of natural gas rose by 60%, while oil prices fell back by more than 2%. Russian President Vladimir Putin stated that Russia will increase the supply of natural gas to Europe to ease the impact of the global energy contraction suffered by Europe. At the same time, the US government is considering using emergency oil reserves to ease the trend of soaring gasoline prices. There is also news that Russia and the United States are discussing reopening the Iran nuclear agreement.
Russian President Vladimir Putin said on Wednesday that the sales of natural gas to Europe may hit a record high, and the flow of natural gas transported to Europe through Ukraine may exceed the contract between the Russian state-owned gas company Gazprom and Kiev, Ukraine. Critics have accused Russia of blocking supplies.
This argument caused European natural gas prices to collapse. Natural gas futures prices fell by more than 10% since the highest price since 2008, which was the day before, and crude oil also fell.
Matthew Weller, head of global research for FOREX.com and City Index, said Wednesday that Wednesday brought some good news to energy-stressed European countries, as Russia increased its natural gas exports to Europe. These news broke the well-known natural gas price increase at least temporarily.
FactSet’s data shows that UK natural gas futures prices have soared by more than 400% so far this year.
On the same day, U.S. Secretary of Energy Granholm said that the U.S. government is considering using emergency oil reserves to ease the trend of soaring gasoline prices. As the new crown epidemic has cooled and demand has increased, US gasoline prices have hit a seven-year high.
Granholm said at the Energy Transition Summit organized by the Financial Times when he talked about the prospect of the U.S. government using the Strategic Petroleum Reserve (SPR) to ease the rise in oil and motor fuel prices, “This is a tool under consideration.”
According to data from the US Department of Energy, SPR stored in coastal caves in Texas and Louisiana currently contains approximately 617.8 million barrels of crude oil, the lowest level in approximately 18 years.
Granholm also did not rule out the possibility of resuming the ban on crude oil exports, which was lifted when Obama assumed the presidency in 2015. She said, “This is a tool we haven’t used before, but it’s also a tool.”
The EIA crude oil and gasoline inventory data released on Wednesday both recorded an increase, which has triggered concerns about weak demand and is also negative for oil prices. EIA crude oil inventories increased by 2.345 million barrels, and gasoline inventories increased by 3.256 million barrels. Refined oil inventories fell only slightly by 396,000 barrels.
U.S. oil production increased to 11.3 million barrels per day, recovering from the shutdown caused by the storm more than a month ago, and production rebounded to near the peak during the epidemic, but still far below the 13 million barrels per day set in 2019 Record.
According to another report, the Russian Ministry of Foreign Affairs said on Wednesday that Russian Foreign Minister Lavrov had discussed the restoration of the Iranian nuclear agreement with US Secretary of State Blincol. Restarting the previously shelved Iran nuclear agreement may affect the confidence of the oil market bulls.
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