MARKET MOVEMENTS:
--Brent crude oil fell 2.1% to $112.87 a barrel
--Nickel prices on the London Metal Exchange fell 5.6% to
$35,150 a metric ton
--Aluminum prices rose 1.3% to $3,615 a ton
--Benchmark European gas futures weakened 1.5% to EUR109.99 a
megawatt hour
TOP STORY:
U.S. Ramps Up Gas Deliveries to Europe Amid Scramble for New
Supplies
The U.S. plans to ramp up shipments of liquefied natural gas to
Europe this year as the continent searches the globe for new
supplies to phase out its reliance on Russian gas following the
invasion of Ukraine.
The plan was announced as U.S. President Biden met with European
Union leaders at a summit in Brussels, where crafting a
trans-Atlantic plan to slash Europe's purchases of Russian energy
is a central topic. The U.S. and the EU on Friday said they would
work to ship an additional 15 billion cubic meters of LNG for the
27-nation bloc this year, using supplies from the U.S. and
elsewhere. The EU imported a record-high 22 billion cubic meters of
LNG last year.
Europe this year is on another record-setting pace as the
continent races to sign new contracts with producers in the Middle
East and Africa before next winter. France has ended subsidies for
new gas heaters in homes and will instead subsidize electric heat
pumps. Italy, the second largest consumer of Russian gas after
Germany, is considering burning coal at some power plants rather
than natural gas.
Western nations want to end the leverage Russia holds over
Europe as the continent's most important energy supplier and cut a
lifeline for the Russian economy. Natural gas presents the biggest
problem for Europe, because the fuel is much more difficult than
oil and coal--Russia's other main energy exports to Europe--to
import by boat from other suppliers.
MARKET TALKS:
Miners Can Continue Outperforming, But Growth Will Slow in
Coming Months
1151 GMT - Mining companies are one of the best-performing
sectors year-to-date, and this can continue in the short term, RBC
Capital Markets says. However, growth will potentially be slower in
the coming months, and rising inflation and interest rates aren't
good for the commodity demand outlook, the bank warns. "We continue
to favor equities with exposures to Ukraine supply demand
disconnects, namely Glencore (thermal coal), Anglo American,
Sibanye-Stillwater (platinum group metals) and the cost-inflation
impervious Anglo Pacific with its royalty structure. But expected
total returns are thinning out and the underlying demand needs to
be watched," RBC says. (jaime.llinares@wsj.com)
---
Petropavlovsk Will Need to Find New Gold Buyer
1135 GMT - Petropavlovsk has been caught up in sanctions on
Russia, with its lender Gazprombank no longer able to buy its gold
production, AJ Bell says. Historically, the bank had an agreement
to buy everything that Petropavlovsk produced, so the gold miner
must now find a new taker for its product, and that's going to be
difficult in the current environment, AJ Bell says. "Petropavlovsk
has bills to pay and it will be tricky to settle up if there is no
cash coming in the door. It's no surprise to see the share price
fall further on the news, now down 92% year to date," the
investment platform says. (jaime.llinares@wsj.com)
---
Petropavlovsk Plunges Further as Main Lender Sanctioned
1128 GMT - Shares in Petropavlovsk fall 19% to 1.45 pence after
the Russian gold miner said its main lender, Gazprombank, has been
added to the sanctions list in the U.K. This interrupts the
company's ability to sell its gold and raises material risks around
the ability to refinance its November 2022 bond, Peel Hunt says.
"We noted that longer term, on the assumption that Russia's
relations with the world start to normalize, we could see a value
for Petropavlovsk shares as high as 18p. With Gazprombank under
sanction, the ability for Petropavlovsk to navigate between today
and that longer-term normalization has just become considerably
trickier," the U.K. brokerage says. (jaime.llinares@wsj.com)
----
High Oil Prices Are Already Weighing On Demand
1116 GMT - High oil prices prompted by sanctions on Russia are
already leading consumers to reduce their demand for crude,
JPMorgan says, something which could weigh on prices. Oil demand
next quarter will be 1.1 million barrels a day less than it
previously forecast, while 3Q and 4Q will each have 500,000 barrels
a day less. Data suggest consumers are already reacting to high oil
prices, which have risen above $100 a barrel on Russia's invasion
of Ukraine, the bank says. Europe--which is most dependent on
Russian energy supplies and has had increasing natural gas
prices--accounts for the largest amount of lost oil demand, JPM
says. (william.horner@wsj.com)
---
Kazakh Crude Could Start Flowing Sooner Than Expected After
Damage to Terminal
1007 GMT - Damage to a Russian oil terminal that is a crucial
gateway for Kazakh oil supplies might be less severe than thought,
adding to pressure on oil prices. Kazakhstan's energy minister said
exports at one of three moorings at the Black Sea site can resume
Friday. Of the oil handled by the terminal, 90% comes from
Kazakhstan and the prospect of long-lasting damage raised fears
that a lot of the country's oil could be cut off. However, there
are concerns that storage facilities were full as crude that was
unable to be exported built up, blocking the terminal's operator
from accepting new supplies and potentially halting Kazakh oil
production, DNB Markets says. (william.horner@wsj.com)
---
Oil Falls After U.S. Agrees to Ship More LNG to Europe
0912 GMT - Oil prices drop after a meeting between U.S.
President Biden and European leaders results in an agreement to
ship more liquefied natural gas to the EU, but no new sanctions
targeting Russian oil exports. Brent crude oil futures drop 2.4% to
$112.60 a barrel. The U.S. and the EU said they will aim to ship an
additional 15 billion cubic meters of LNG to the bloc, part of
efforts to ease the region's reliance on Russian energy supplies.
The fact that the meeting also didn't produce new sanctions
targeting Russian oil exports directly eased fears of such an
outcome, which could have tightened oil markets further, analysts
said. "European reluctance to walk away from the Russian oil weighs
on oil prices," says Swissquote. (william.horner@wsj.com)
---
Copper, Aluminum Prices Set for Higher Volatility Over 2022
0637 GMT - Copper and aluminum prices are set for higher levels
of volatility for the rest of the year, Goldman Sachs says.
Supplies are tight with stockpiles of both metals at around the
same level that they started the year at, GS says. At this point in
the year, they are also at their lowest level since 2008, despite
the first quarter typically being a "seasonal surplus" phase.
"Crucially, the first quarter's seasonal surplus traditionally
creates the inventory buffer required to accommodate any demand and
supply shocks later in the year," the investment bank says.
"Without it, prices must do all the work to balance markets."
Three-month LME copper is 0.1% higher at $10,355.0 a ton while
aluminum is 1.3% lower at $3,578.0 a ton.
(yongchang.chin@wsj.com)
---
Oil Price Volatility Could Persist Amid Energy Export
Disruptions
0454 GMT - Oil prices could remain volatile as the market
grapples with export disruptions and the possible broadening of
Russia sanctions to include oil-and-gas supply, Fitch Solutions
says. "Energy prices [are] volatile, as Western sanctions bring
oil-and-gas into their crosshairs," it says. Export disruptions
have exceeded Fitch's initial expectations, reflecting
"self-sanctioning at the company level." It now expects Russian oil
production for 2022 to contract by an average of 983,000 barrels a
day, sharply lower production than its previous 692,000 barrels a
day growth forecast. Crude prices are flitting between positive and
negative. Front-month Brent is last 0.2% higher at $119.24/bbl
while WTI is flat at 112.38/bbl. (yongchang.chin@wsj.com)
Write to Will Horner at william.horner@wsj.com
(END) Dow Jones Newswires
March 25, 2022 09:15 ET (13:15 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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