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- There are some wild swings going on in the energy market as traders seek to capitalize on shifting sentiments amid a global energy crisis. Yesterday, European benchmark TTF natural gas futures jumped as much as 40% to a record €162.125/MWhr - in the span of a few minutes - after closing 20% higher on Tuesday. But the rally didn't hold as Vladimir Putin chose a timely moment to leverage his country as an oil and gas superpower.
- Snapshot: The Russian leader proposed to stabilize the environment with an offer to export record volumes of vital fuel to the continent. The advance could pressure European officials and regulators into approving Nord Stream 2, a controversial pipeline linking Russia and Germany that is close to launching. Flows of Gazprom (OTCPK:OGZPY) gas to Europe have been analyzed by many energy traders as winter approaches, and the high prices there have spilled over to the U.S.
- Meanwhile, U.S. Energy Secretary Jennifer Granholm raised the prospect of releasing crude oil from the government's strategic petroleum reserve at the FT Energy Transition Strategies Summit. "It's a tool that's under consideration," she declared, as average prices at the pump hover around $3.19/gallon - the highest in seven years. Granholm also didn't rule out a ban on crude exports, saying it was an additional tool that could calm markets and bring oil prices down.
- Outlook: As mentioned on SA earlier this week, some are calling the current situation the first major energy crisis of the clean power transition, with President Biden setting a goal to decarbonize the economy by 2050. J.P. Morgan's Marko Kolanovic suggests following coal prices to determine supply, demand and cost of capital for other fossil fuels, which if stay at elevated levels, could lead to inflationary pushback to ESG investing. "The most likely outcome of the current energy crisis is increased production at significantly higher energy prices, which would stabilize the global economy and energy infrastructure, but also temporarily slow down the energy transition."
- ETFs: XLE, USO, UCO, BNO, SCO, USOI, USL, DBO, NRGU, UGA, OILK, NRGD, OLEM, USAI, NRGO, NRGZ, YGRN, UNG, UGAZF, DGAZ, BOIL, FCG, KOLD, UNL, GAZ