S&P Global — 14 October 2024
Daily Update: October 14, 2024
Another Winter for European Natural Gas Markets
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
European gas demand peaks during the winter months as cold weather and short days increase the heating needs of homes and workplaces. During the early days of Russia’s invasion of Ukraine, concerns over reduced shipments led to rationing and a scramble for supply. Now, over two years after the war began, European markets appear to have fully adjusted to a new normal.
Gas storage levels in Europe are nearly full heading into the fall. European Commission officials report that Europe has made good progress in preparing for increased demand this winter. LNG shipments from the US and some Middle Eastern countries have helped to make up the shortfall of Russian natural gas supplies. Norway has also become a major supplier of natural gas through pipelines. However, shifting supply chains do not tell the full story of European natural gas markets.
"We've also taken measures to reduce our demand, 18% on average across the board,” Matthew Baldwin, the European Commission's deputy director-general for energy, said in a recent interview. “So we've done a number of measures to help control the situation. We've had record amounts of renewables coming into our power supply system. We now have more energy generated by renewables than from gas.”
Despite the ongoing war in Ukraine, Russian gas continues to be transported by pipeline across Ukrainian territory, albeit at considerably lower levels than before the conflict began. However, Russian gas flows will cease as the five-year gas transit agreement between Russia and Ukraine expires at the end of 2024. Ukraine has refused to consider any further transit agreements for Russian natural gas while hostilities persist.
Russian energy company Gazprom has several transit agreements ending in the next few months and has made little progress on negotiating new agreements. Turkey is also reexamining its commercial relationship with the Russian company.
"We are a growing market,” Turkish Energy Minister Alparslan Bayraktar said Oct. 10. “Our needs are increasing, but at the same time we are focusing on security of supply. We are looking for more reliable supply for the Turkish market and for competitive and affordable gas supplies."
Hedge funds appear to be anticipating higher European demand for natural gas this winter. Net-long positions on natural gas climbed 15% last week. Long positions are near record highs as traders expect strong demand from Asia and Europe to push LNG prices upward through the winter months.
Today is Monday, October 14, 2024, and here is today’s essential intelligence.
India Plans For Cleantech Ramp-Up, But Faces Gaps In Innovation, Infrastructure And Policy Risks
Increasing concerns about energy security and urges to restore global manufacturing are spreading. In the past years, all major cleantech markets announced local content requirements, which were followed by some emerging markets. India's ambition to become a manufacturing hub for clean energy technology is driven by its goals to reduce carbon emissions and boost economic growth. The government has been actively promoting initiatives like the Production-Linked Incentive scheme to attract investments in solar modules and batteries.
—Read the article from S&P Global Commodity Insights
US Workers Without High School Diplomas Push 'Prime Age' Workforce To New High
The share of eligible workers without high school diplomas in the American workforce is climbing faster than the more educated groups that make up the bulk of the domestic jobs market, elevating the labor participation of "prime age" workers to their highest levels in decades. Some 47.6% of workers in America without a high-school diploma were working or looking for work in September, up from 45.9% the same month five years ago, according to the latest US Bureau of Labor Statistics data.
—Read the article from S&P Global Market Intelligence
US Insurers See Wall Street Rebound After Dire Milton Forecast Blows Over
Milton made landfall around 8:30 p.m. on Oct. 9 at Siesta Key in Sarasota County, Florida, as a Category 3 storm with sustained winds of 120 mph. The storm's passage through the Sunshine State left 12 dead and 3.4 million people without power, but its landfall was well south of Tampa Bay, avoiding some forecasters' worst-case scenarios. The dire predictions led to Florida-focused insurers losing between 15% to 23% of their value on Monday, while the S&P 500 Insurance Index fell 3.1%.
—Read the article from S&P Global Market Intelligence
Turkey Cuts Corn Import Duty To 5% To Stabilize Supply Amid Surging Prices
Turkey's corn importers will pay a lower duty of 5% on the next 1 million t of the feed grain that enters the country, the government stated Oct. 10 in its Official Gazette, relaxing the standard 130% rate until the end of the year. The quotas will be allocated between feed mills and starch/glucose producers. Previously, the Government have temporarily reduced the import duty to zero in September 2021. Market sources said the duty would return to 130% after Dec. 31, once the agreed volume is reached.
—Read the article from S&P Global Commodity Insights
Listen: California’s Battle Against High Gasoline Prices
California gasoline prices are notoriously volatile, and state's lawmakers are taking notice. California's Senate is considering a bill proposed by Governor Gavin Newsom that would require state refiners to increase gasoline inventories and would also give the state additional control over refinery maintenance programs. How much does California's boutique blend play into the state's high gasoline prices? What is the plan for fuel storage in the state amid the energy transition? Will California become even more dependent on fuel imports as refining capacity continues to shrink?
—Listen and subscribe to the podcast from S&P Global Commodity Insights
Any Deal To Acquire Slumping Intel Is Fraught With Challenges
While Intel Corp. has struggled to keep up with the staggering pace of innovation set by its peers, analysts say a sale to one of those companies would not be a quick or easy solution. The US-based chipmaker faces a steep climb back to relevance after being lapped by NVIDIA Corp., Broadcom Inc. and Taiwan Semiconductor Manufacturing Co. Ltd. on next-generation AI chips. In this environment, the company has become a potential takeover target with reports indicating that Qualcomm Inc. and Arm Holdings PLC have expressed interest in some or all of Intel's assets.
—Read the article from S&P Global Market Intelligence
Webinar: Beyond ESG With Building Capacity for Nature (Oct. 16, 2024)
Investors, corporates and market stakeholders are increasingly recognizing that nature-related concepts, from biodiversity to natural capital to ecosystem dependencies, are inseparable from a robust climate strategy. As we look ahead to the United Nations Biodiversity Conference (COP16) at the end of October, our next Beyond ESG webinar will explore the critical question of how companies and investors can gain the knowledge and capacity to understand, manage and disclose on nature-related risks and opportunities.
—Register for the webinar from S&P Global Sustainable1