Coal has been beaten by gas in Germany for the first time in ten years. Find out what else has been happening in the energy markets in our quick video overview. (more…)
After months of uncertainty, the result of the UK referendum will finally be known early this Friday morning. The campaign commenced with Remain ahead in all early polls. The Leave campaign then began gathering steam, building up momentum with Boris Johnson and Nigel Farage key figures in promoting the benefits of leaving the European Union. The polls then flipped with Leave campaign ahead by 4-6 points in numerous reputable polls, spooking global markets, which began to believe that Brexit was a strong possibility. Volatility gauges (also known as fear gauges) on both the UK and US markets reached levels last observed during the Lehman’s crash in 2008. The FTSE suffered heavily at the start of the previous week, with £98bn wiped off the value of the UK’s biggest companies in only four days of trading. This was replicated across global markets with Euro Stoxx 600 down €580bn in the same period. Asian and American indexes also suffered heavy losses. In commodities, oil futures slid 10% with demand destruction across the EU seen as bearish for crude products. The flight from equities and other riskier assets saw investors plough into traditional safe havens such as the yen, gold, and government bonds. The German 10-year bond saw negative yields for the first time, with investors effectively paying the German government for the privilege of parking their cash. UK-10 year bonds yields also fell to record lows without turning negative. The pound slumped to its lowest level in 2 months against a basket of global currencies as fear crept in that the UK could be close to leaving the EU.
It has been the topic of many a conversation, dividing opinion from the people on the street to offices, factories, and homes across the country. Widespread coverage in the media with the nos and yeses receiving plenty of air time and column inches have only served to make predicting the result or even the consensus more unpredictable. The Brexit referendum takes place on the 23rd June 2016.
Let’s take a look at some of the pros and cons of both sides:
Notable Ins: David Cameron, Mark Carney, George Osborne, and Richard Branson
Notable Outs: Boris Johnson, Ian Duncan Smith, Nigel Farage, and Michael Caine
Last month, LNG cargo deliveries to the UK were up 150% compared to the same period last year, driven by a surge in spot cargoes from Qatar and Nigeria. This increase is a consequence of waning Asian demand, increased supplies from new players in the market, and a switch in strategy from the world’s biggest LNG exporter, Qatargas.
Qatargas is under pressure from a number of new players in the market, which has created a supply overhang and a subsequent fall in price. To date, Japanese imports of LNG are down 3.1% year-on-year, all due to mild winter, a cooler summer, and the restart of one nuclear reactor with more to follow. Additionally, South Korea demand is down 11.6% to date this year as they are using less gas-for-power generation and increasing coal-fired and nuclear generation.
Figures this week confirmed that OPEC’s strategy to stunt US crude production, which started in November 2014, is now bearing fruit with US production now at November 2014 levels. Eleven months after OPEC ramped up output, US output peaked at 9.1 mbpd in June this year and has since fallen by around 500,000 bpd. OPEC meanwhile has seen an increase in demand ramp-up from 29.3 mbpd in 2014 to with demand forecast to reach at least 31.3 mbpd in 2016. However, this has come at a cost as OPEC crude prices are about 46% lower than 2014, equating to around $370 billion dollars in lost revenue.