JKempEnergy

The six-month spread from July 2025 to January 2026 has nearly halved to around $1.80 per barrel from $3.20 at the start of the week

BRENT calendar spreads have contracted sharply, a sign traders anticipate more oil will be available in the second half of the year owing to a tariff-driven slowdown in the global economy and the surprise decision by OPEC⁺ to accelerate scheduled output increases:

The region exits winter with storage 4 percentage points below the ten-year average but much lower than at the end of winter 2023/24 (59%) and winter 2022/23 (56%). After two summers of relatively easy storage refills, the region will have to buy much more gas in the summer of 2025:

EUROPE’s gas storage sites ended the main winter heating season less than 34% full on March 31. Colder temperatures and lower wind generation boosted gas consumption resulting in the largest inventory depletion for four years:

OIL FUTURES attract fund buying despite trade war jitters: jkempenergy.com/2025/03/31/o...

It is unclear what impact tariff and trade conflicts and the associated increase in economic uncertainty since then will have on the cyclical upswing over the rest of 2025

GLOBAL INDUSTRIAL PRODUCTION was rising at an accelerating rate at the start of the year, a sign of a strengthening cyclical recovery. Global production was up 2.7% in January 2025 compared with the same month in 2024, the fastest increase for more than two years since October 2022:

Milder weather has slowed the depletion of inventories as the end of the winter heating season approaches and removed some of the more extreme refill scenarios. The spread has narrowed to a backwardation of less than €1 per megawatt-hour from almost €2.50 on March 14 and more than €6 on January 30

EUROPE’s gas futures calendar spread from summer 2025 to winter 2025/26 has softened near to its lowest in five months as fears about a scramble to refill storage this summer recede:

Milder temperatures across North China reduced heating demand while expensive LNG was displaced by cheaper pipeline imports and contracted cargoes were resold to Europe

CHINA’s LNG imports slowed to 10.6 million tonnes in the first two months of 2025, down from 13.2 million in the same period of 2024, and the slowest for the time of year since 2018:

Since 2010, the number of passenger-kilometres travelled on the railways has increased by 80% and airline travel is up by 220% but highway travel by coach and bus has fallen by 66%. The result has accelerated a shift away from consumption of gasoline and diesel towards jet fuel and electricity

CHINA’s long-distance passenger transport has increasingly moved onto the high-speed rail network and aviation and away from the roads:

China is ramping up domestic coal output to cut reliance on imports and improve both energy security and national security. But a mild winter has left inventories above normal and depressed prices

CHINA’s coal production increased to a seasonal record 765 million tonnes in the first two months of 2025 up from 705 million in the same period in 2024 and 734 million in 2023:

U.S. VEHICLE miles travelled increased to 251 billion in January 2025, the highest for the time of year since before the onset of the pandemic in 2020. But traffic volumes have increased at an annual rate of less than 0.2% over the last six years, cotributing to the slowdown in fuel consumption:

CHINA set to miss energy efficiency target: jkempenergy.com/2025/03/13/c...

Investment managers held a remaining long position equivalent to 127 TWh but it was the lowest for more than nine months since the end of May 2024

INVESTMENT MANAGERS sold the equivalent of another 48 terawatt-hours of futures and options on European gas over the seven days ending on March 7. Sales over the latest four weeks have totalled 166 TWh.

Total consumption was 40 million tonnes in the first two months of 2025 unchanged from the same period a year earlier. It is only the third time since 2010 consumption has failed to increase and the last was during the coronavirus pandemic:

INDIA’s petroleum consumption has lost momentum since the fourth quarter of 2024. The country has replaced China as the fastest source of global consumption growth so the loss of momentum has contributed to downward pressure on prices.

Colder-than-average temperatures so far this winter across Northwest Europe have resulted in one of the fastest draw downs of stocks in records dating back to 2011, leaving the region facing a much more demanding restocking season this summer:

Storage typically falls to a minimum around the end of March with the date occurring from as early as March 16 to as late as April 19

EUROPE’s gas storage facilities were 38% full on March 3, with just under one month of winter depletion likely ahead. Storage was below 62% full on the same date in 2024 and the ten-year seasonal average of 42%

U.S. HEATING DEMAND so far this winter has been the highest for six years since 2018/19. The number of population-weighted heating degree days has been 6% higher than last winter and 3% above the prior ten-year seasonal average, accelerating the depletion of gas inventories:

INDIA's coal-fired generation hit a record high in 2024 - illustrating the difficulty of phasing down fossil fuels in developing economies with fast-growing electricity demand: jkempenergy.com/2025/02/26/i...

Cushing inventories were still 19 million barrels (-43% or -1.43 standard deviations) below the seasonal average but the deficit had narrowed from 22 million barrels (-51% or -1.82σ) at the end of January

U.S. CRUDE INVENTORIES at the NYMEX delivery point in Cushing showed a sustained and unusual rise in the first three weeks of February. Stocks increased by 3.6 million barrels, the largest seasonal rise since 2019, and compared with a prior ten-year average of 0.3 million:

There has been a big reduction in heating demand and an increase in wind farm output, resulting in a double reduction in gas consumption for heating and electricity generation, slowing the depletion of inventories and easing concerns about the summer refill

NORTH ATLANTIC OSCILLATION has entered a strongly positive phase ensuring the polar front jet stream takes a more northerly track and bringing lots of warm, wet and windy weather to Northwest Europe: