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Russian Natural Gas for Europe


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Russian Natural Gas for Europe

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  #1 (permalink)
Symple
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Hy every body

I will speak directly to the issue of what it means for Europe to receive or not receive Russian natural gas. The situation could spiral out of control at any moment, as politicians in Europe, on the advice of the US, have started an economic war against Russia with all the sanctions they can find and invent.

The side effects of this war are already showing up in immense price increases of various products throughout the Western Hemisphere, including Third World countries, which in most cases will suffer more from the sanctions against Russia through the western hemisphere.

So let's start with the following maps:





How a Russian Natural Gas Cutoff Could Weigh on Europe’s Economies

https://blogs.imf.org/2022/07/19/how-a-russian-natural-gas-cutoff-could-weigh-on-europes-economies/

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Symple
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The following is an overview in map form of the various gas and oil pipelines going from Russia to Europe.

Here you can also look up which pipeline is discussed in which case, since not all pipelines have the same importance as others. This is important to know, because also pipelines go through Ukraine and Ukraine makes a lot of money with it as well as other states like Turkey.



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Symple
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Below is an overview showing the wheat harvest this year:



Why am I showing this here?

To produce fertilizer you need gas. But since the sanctions from the western countries, include US, prohibit the import of Russian gas, less fertilizer is produced worldwide. In addition, the drought and the heat in many countries make the wheat fields look very bad. So Russia and China do have fertilizer and they do fine with there production of this product.

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Symple
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Today, 19, July, 2022, we have seen this charts in the future markets:

Indices:



Energies:



What was going on that the "Indices", specially the "Dax", just jumped up like this, but in the "Energies" section not much have changed today?

Reuters reported the following:

MOSCOW, July 19 (Reuters) - Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, two sources familiar with the export plans told Reuters.

The pipeline, which accounts for more than a third of Russian natural gas exports to the European Union, was halted for ten days of annual maintenance on July 11.

The sources, speaking on condition of anonymity because of the sensitivity of the issue, told Reuters the pipeline was expected to resume operation on time, but at less than its capacity of some 160 million cubic metres (mcm) per day.

Source: (https://www.reuters.com/business/energy/exclusive-russia-seen-restarting-gas-exports-nord-stream-1-schedule-2022-07-19/)

Now comes the fly in the ointment, for which I have not yet received an answer, and which could under certain circumstances be an absolute debacle for the German economy. The following message comes from Russia's Gazprom:



It is about the contractual point which is called "Force majeure". Force majeure is known as an "act of God" clause and is standard in business contracts and defines extreme circumstances that release a party from their legal obligations.

In this case the declaration does not necessarily mean that Gazprom will stop deliveries, rather that it should not be held responsible if it fails to meet contract terms.

“Depending on what ‘extraordinary’ circumstances have in mind in order to declare the force majeure, and whether these issues are technical or more political, it could mean the next step in escalation between Russia and Europe/Germany,".

So we will see what next will happen.

By the way: Here you will find some more details to the above mentioned: (https://www.reuters.com/business/energy/russias-gazprom-declares-force-majeure-gas-supplies-europe-2022-07-18/)

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Symple
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Jul 20, 2022

The following video is only to catch information about the topic and I will not comment or argue on any politics behind and beside it, as this is not the purpose of this thread and this forum.

Europe concerned over energy crunch if Russia cuts gas deliveries | DW News



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Definitely a frightening picture especially if this continues into the winter. When we had the freeze here in Texas in Feb'21 ang gas prices went from $3 to $300-$1000 depending where you were, the economic damage done was catastrophic but mainly to energy companies. That was just for 2-5 days, on a longer term basis the additional cost will hurt all businesses and potentially cripple energy intensive ones. Of course when we get to Winter, we won't just be worrying about the economic effect but also the danger of loss of life.

I gather another major impact in todays energy shortages in Europe is the lack of French Nuclear Capacity. From the NYTimes 6/18 (requires subscription - don't have Bloomberg and couldn't find a good chart anywhere else) ...

Today, French nuclear production is at its lowest level since 1993, generating less than half the 61.4 gigawatts that the fleet is capable of producing. (EDF also generates electricity with renewable technologies, gas and coal.) Even if some reactors resume in the summer, French nuclear output will be 25 percent lower than usual this winter — with alarming consequences.

Tagging a couple of other Europeans which I think might be interested in this thread @GFIs1, @myrrdin, @Sagal

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Symple
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Jul 21, 2022



Here are some ley Nord Stream 1 news, as this morning the gas flow started in reduced from, to the luck of the Europeans, again:

- Nord Stream said gas delivery has resumed on Thursday morning, according to DPA. It was also reported that Nord Stream 1 gas pipeline nominations were at 29.3mln kWh/h from 06:00CET, according to the operator. Deliveries are reportedly around pre-maintenance levels of circa 40%

- Nord Stream data shows that gas flows are back to 40% capacity (pre-maintenance amount), according to Bloomberg.

- NEL and OPAL gas grids, connected to Nord Stream 1, show prelim. physical flows into Germany of 9.9mln KWH/H and 12.5mln KWH/H for 05:00-06:00BST.

- Head of German network regulator said gas nominations for Nord Stream 1 for today are still at 30% capacity and this is binding for the next 2 hours, while more changes over the day would be unusual, according to Reuters; German grid has signalled that Nord Stream gas flows have increased in the second hour.

- German Energy Regulator Bundesnetzagentur says real gas flows are above nominations re. Nord Stream 1, pre-maintenance level of 40% capacity could be surpassed today.

- Nord Stream 1 flows are at 29.3mln KWM/H at 07:00-08:00BST, according to the operator; at 29.3mln KWM/H at 08:00-09:00BST, according to the operator; at 29.3mln KWM/H at 09:00-10:00BST, according to the operator.

All this, I call it "theater" what we see here, would not have to be if it were not politically wanted, because Nord Stream 2 was at any time in recent months to 100% capable of use.

Everyone thinks about it what he wants, only the logic, when it comes to energy supply for Europe, should always come first and not any ideologies. Following a map of NST 1 and NST 2:



Now the gap in Europe's supply of the required liquefied gas is to be closed via the so-called southern gas corridor. Here, of course, you can make up your own mind with which governments you are now doing business.



How are futures reacting in the indices and energy markets today?

Indices:



Asia is going its own way. The European and American markets show rather restrained, which is also absolutely appropriate.

Energies:



Oil and gasoline markets follow the current down trend as NG is following its uptrend. To my mind, and this is NO advice, the current trend in NG could stay in its uptrend. Why?



Halliburton Warns Frack Growth "Almost Impossible" This Year

Fracking, or hydraulic fracturing, is an oil extraction technique that involves high-pressure water blended with sand and chemicals, forced into underground rocks known as shale to capture oil and gas. The process was revolutionized by horizontal drilling in the 1980s and 2000s, transforming America into the world's largest oil producer overnight.

American shale drillers have shown how quickly they can boost oil production over the years. But after several years of divestment and decarbonization, the days of fracking roaring back to life are over.

Halliburton Co.'s CEO Jeff Miller confirmed this to analysts during a conference call Tuesday. He said the oilfield equipment market is so tight that oil explorers are already discussing 2023 projects.

Miller said oil companies don't have enough fracking equipment for newly leased wells this year. He said diesel-powered and electric equipment are in short supply, "making it almost impossible to add incremental capacity this year."


Source: (https://www.zerohedge.com/commodities/halliburton-warns-frack-growth-almost-impossible-year)

As a final point for today:

Germany's Energy Crisis About To Get Even Worse As Rhine Water Levels Plummet. And this will have again an other, bad impact on whole Europe.





Water levels on the River Rhine have steadily declined and fallen to emergency levels this week, indicating more headwinds for the German economy already careening towards recession.

One of the most vital waterways in Europe's economic heartland is below a very important 78 centimeters (31 inches) threshold at a measuring station in Kaub, Germany. As of Wednesday, Kaub sits at 68 centimeters (27 inches) and is dropping fast, indicating that barge transport disruptions could be imminent.

Riverlake, a vessel broker, already says barges hauling goods between Upper Rhine from Rotterdam have reduced weight to about a third of capacity to improve draft in shallow parts of the waterway, according to Bloomberg. For some context, barges on inland waterways haul about 5%-10% of German freight, with about 80% of that on the Rhine, including a third of domestic shipping of crude oil, natural gas, and coal, Berenberg economist Salomon Fiedler wrote Wednesday in a note to clients.

Citing a report by the Kiel Institute, Fiedler said if Kaub sustains water levels below 78 centimeters for several weeks or longer, German industrial production will be "about 1% lower than in a month with no low-water days." He said the following month would be an impact of 1.5%.

The water crisis on the 800-mile (1,288-kilometer) river that runs from Switzerland to the North Sea is similar to the one in 2018. The previous crisis resulted in transport disruptions that hit industrial production. One noticeable difference is the economy today is sliding toward a recession as it contends with an energy crisis, high inflation, faltering economic growth, and supply chain bottlenecks -- unlike anything ever seen before.


Source: https://www.bloomberg.com/news/articles/2022-07-15/lack-of-water-in-europe-s-most-important-river-starts-to-bite?sref=6uww027M

In case Bloomberg is not available for you then use this one: https://www.zerohedge.com/markets/rhine-water-levels-drop-below-threshold-could-halt-barge-shipments

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 SMCJB 
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I found this very interesting

Symple View Post
Halliburton Warns Frack Growth "Almost Impossible" This Year

Halliburton Co.'s CEO Jeff Miller confirmed this to analysts during a conference call Tuesday. He said the oilfield equipment market is so tight that oil explorers are already discussing 2023 projects.

Miller said oil companies don't have enough fracking equipment for newly leased wells this year. He said diesel-powered and electric equipment are in short supply, "making it almost impossible to add incremental capacity this year."

Not trying to be political but one of the 'rallying chants' of the right in the US is that Biden is partly/mostly/completely to blame for energy prices and inflation due to his energy policies (Keystone Pipeline/Federal land Leases etc) but what Halliburton Co.'s CEO Jeff Miller is saying is that all that's immaterial because we don't have the people or the equipment to expand drilling even if it was available!

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SMCJB View Post
I found this very interesting

Not trying to be political but one of the 'rallying chants' of the right in the US is that Biden is partly/mostly/completely to blame for energy prices and inflation due to his energy policies (Keystone Pipeline/Federal land Leases etc) but what Halliburton Co.'s CEO Jeff Miller is saying is that all that's immaterial because we don't have the people or the equipment to expand drilling even if it was available!

What made this a problem post covid that didn't exist pre-covid? Just-in-time manufacturing to blame?

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Symple
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SMCJB View Post
I found this very interesting

Not trying to be political but one of the 'rallying chants' of the right in the US is that Biden is partly/mostly/completely to blame for energy prices and inflation due to his energy policies (Keystone Pipeline/Federal land Leases etc) but what Halliburton Co.'s CEO Jeff Miller is saying is that all that's immaterial because we don't have the people or the equipment to expand drilling even if it was available!

I'm going to carefully go out on a limb here to shed a little more light on this difficult topic of whether or not just the one man can be blamed for high gas prices in his own country or not. However, I must also say that politicians generally do not arouse any enthusiasm in me. Furthermore, the whole reasoning here is not of a political nature, but rather in the sense of today, which is "The Day of the Brain". Have fun reading.

In addition to the real, existing political factors such as green climate policy or the sanctions policy against Russia, to name just two, there are factors such as production locations or also the production at these individual locations, etc.

Regarding to the EU: The hike in Energy prices already started at begin of 2020, as seen in the following picture below:





Now the question rises: What causes the rise in energy prices? Answers can be found in dept in the following article: (https://www.cleanenergywire.org/factsheets/energy-crunch-what-causes-rise-energy-prices)

What the article does not, cannot, address, since it was written on 07 Feb. 2022, is the influence that the definitive cancellation of Nord Stream 2 has on the situation after 24. Feb. 2022, after which the crisis in Ukraine took a tougher turn.

This decision not to use NST 2 now had an impact on the whole world. And this is where the U.S. comes in heavily, as this is a political decision, but it is about exerting absolute economic pressure on Russia. At least this was the basic idea behind it.

At the same time, the USA is putting massive pressure on Europe to accept this decision, and the EU, especially the German government, which until now has been opposed to using NST 2 because the pipeline was built primarily for its own purposes, has agreed.

Following a statement from Biden which he made on 08 February 2022:

US President Joe Biden said on Monday that the Nord Stream 2 gas pipeline would be halted if Russia invades Ukraine and stressed unity with German Chancellor Olaf Scholz as the West rallies to avert a war in Europe.

At a White House press conference with the new German leader, Biden, a longtime opponent of the decade-old pipeline project to Germany from Russia, said Russian forces crossing into Ukraine would trigger a shutdown.

"If Russia invades, that means tanks or troops crossing the ... border of Ukraine again, then there will be ... no longer a Nord Stream 2. We, we will bring an end to it," Biden said. Asked how, given the project is in German control, Biden said: "I promise you, we'll be able to do it."


Biden warns US will 'bring an end' to Nord Stream 2 pipeline if Russia invades Ukraine: (https://www.upstreamonline.com/politics/biden-warns-us-will-bring-an-end-to-nord-stream-2-pipeline-if-russia-invades-ukraine/2-1-1164578)

Statement by President Biden on Nord Stream 2: (https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/23/statement-by-president-biden-on-nord-stream-2/)

Now that we have this situation with the already existing energy crisis, with the situation in Ukraine, with all the sanctions against Russia (and ear in mind: Russia is the world's biggest exporter of crude and fuel and is also the biggest exporter of natural gas), including Swift shutdown for the Russians, abandonment of NST 2 and Russia's demand that energy purchases from them must be paid in rubles, the soup is boiling. (I have not even gone into other factors such as China, etc., as this would go beyond the scope of this article).

Well, since the EU can't do without NG and the economy will be ruined if replacement suppliers are not found as soon as possible, what to do?

And here again the USA come into play with the plan to replace the Russian gas by their overpriced fracking gas. This in turn is causing protests in the EU, as many Europeans now feel they have been taken to the cleaners. But the liquid gas is urgently needed, no matter from where, no matter what it costs.

Am 25. Mar. 2022, Joe Biden announces the following:

U.S. President Joe Biden on Friday said the United States will begin shipping large amounts of liquefied natural gas to European nations vowing to wean themselves off cheap Russian gas, the main source of income underpinning Russian President Vladimir Putin’s regime.

US to deliver natural gas to Europe, Biden gets close to warzone: (https://www.courthousenews.com/us-to-deliver-natural-gas-to-europe-biden-gets-close-to-warzone/)

Coming to the situation in the US:

The USA itself has a problem with high liquid gas prices. What is the reason for this?

Following are just a few factors: Weather, LNG exports, lack of storage. Further, it should be mentioned: U.S. refineries are already running at 94 percent capacity, and U.S. refineries in the Gulf of Mexico are running at 98 percent capacity, the highest in 30 years. If the refineries are operated at a higher capacity, there is a risk that the plants will be damaged.

And as Halliburton Co.'s CEO Jeff Miller said: We don't have enough fracking equipment for newly leased wells this year. He said diesel-powered and electric equipment are in short supply, "making it almost impossible to add incremental capacity this year."

If you want to know more, here we go: Why are U.S. natural gas prices soaring?: (https://www.reuters.com/business/energy/why-are-us-natural-gas-prices-soaring-2022-05-06/)

In the political realm, certainly evaluate these statements:

- May 12, Biden's Interior Department blocked a proposal to open up more than one million acres of land in Alaska for oil and gas drilling. Two days later, Biden's Environmental Protection Agency blocked plans to expand an oil refinery in the U.S. Virgin Islands.

- "I guarantee you, we're going to end fossil fuel," Biden promised a student climate activist in 2019. "I am not going to cooperate with them," he said, referring to the oil and gas industry.

Finally, a global comparison of gas prices:

Think U.S. gas prices are high? Here’s how far $40 goes around the world: (https://www.washingtonpost.com/world/interactive/2022/gas-prices-around-the-world/)

What is the next step and can one man be blamed for the fact that gas prices in a country are higher than ever before? Can one man, whom one does not like in any way, be made to look like the only one to blame for the debacle?

I think I have been able to prove with the above list of facts that this is not the case, because the issue is simply too complex.

By the way, the Russians have promised Iran technical support in their production of liquid gas, which will then be taken by India and China will take the gas, which will now no longer flow to Europe.

Symple

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