Author: BlackMask Financial

Senior Ukrainian officials defended Kyiv’s attacks on oil infrastructure deep within Russian territory following a report that US officials had warned against the operation because of surging oil prices and the prospect of Kremlin retaliation.Deputy Prime Minister Olha Stefanishyna said refineries in Russia are legitimate targets providing resources to President Vladimir Putin’s war machine. Even as the strikes appeared to stop this week, the official was queried on the report in the Financial Times at a conference in the Ukrainian capital Friday. “We understand the calls by American partners,” Stefanishyna responded during a panel discussion at the Kyiv Security Forum. “At the same time, we fight with the capabilities, resources and practices that we have today.” Ukrainian forces attacked more than a dozen refineries inside Russia with explosive-laden drones this month, prompting the country’s daily oil refining rate to fall to the lowest weekly level in ten months. The successful attacks contrast with fighting on the front line, where the balance is shifting in Russia’s favor — though the damage to oil facilities poses a risk to world markets.US officials, who have long warned Kyiv against widespread strikes on Russian territory, told counterparts in Ukraine’s State Security Service, or SBU, and military intelligence that the attacks risk driving up the global oil price and provoking a response by Moscow on Ukraine’s energy infrastructure, the FT reported, citing unidentified officials familiar with the discussion. Another official, Mykhailo Podolyak, an aide to President Volodymyr Zelenskiy, said the report on the US request was “fictional” — and that Ukraine has the right to destroy Russia’s “instruments of war.”

Digital World Acquisition Corp’s shareholders voted on Friday in favor of the company merging with former United States President Donald Trump’s Trump Media & Technology Group (TMTG).The merger proposal was first announced around two and a half years ago. TMTG could go public and start trading on the Nasdaq under the symbol DJT as soon as next week. Trump could gain over $3 billion from the deal. However, he won’t be able to sell his shares for the first six months. In the meantime, New York Attorney General Letitia James is preparing to potentially seize the ex-head of state’s golf course and private estate “Seven Springs.” NN: Talk about a charmed life. All his money problems are solved.

Russia and China vetoed on Friday a resolution at the United Nations Security Council (UNSC), sponsored by the United States, calling for an “immediate and sustained ceasefire” in the ongoing war between Israel and Hamas in Gaza. The veto came amid accusations from Russia’s UN Ambassador Vassily Nebenzya, who criticized the resolution’s language and accused US officials of politicizing the issue for misleading reasons.The objective of the resolution was to protect civilians and facilitate the delivery of humanitarian aid to over two million Palestinians affected by the conflict. The vote saw 11 members in favor, three against, and one abstention.

US envoy urges ‘immediate and sustained ceasefire’ in Gaza

United States Ambassador to the United Nations Linda Thomas-Greenfield said on Friday that her country “wants to see an immediate and sustained ceasefire” in the Gaza Strip along with the agreement that would provide the release of all the hostages held by Hamas. Speaking before the UN Security Council (UNSC), Thomas-Greenfield pointed out that “every day without a ceasefire leads to more needless suffering.”Furthermore, the diplomat called on all UNSC members to back the resolution on Gaza, proposed by the US, that “condemns Hamas for its horrific attacks and sexual violence, that makes clear that all civilians – Israeli and Palestinians – should be able to live without fear of violence, and stresses that a ground offensive in Gaza poses a great threat to civilians.” NN: No cookie today. No piece in the valley for now.

Russia’s average daily oil refining rate fell to the lowest weekly level in ten months after a flurry of Ukrainian drone attacks hit several major facilities.Refiners processed 5.03 million barrels a day of crude from March 14 to 20, according to a person with knowledge of industry data. That’s down more than 400,000 barrels a day from the average for the first 13 days of the month, according to Bloomberg calculations based on historical data. With Russia’s invasion of Ukraine in its third year, Kyiv is using drones to target its enemy’s key industry, seeking to curb fuel supplies to the front line and cut the flow of petrodollars into Kremlin coffers. The attacks this year have targeted 13 major refineries and two smaller plants, taking offline between 480,000 and 900,000 barrels a day of processing capacity, according to a Bloomberg survey.

The Dnipro hydroelectric power plant (HPP), a crucial component of Ukraine’s energy infrastructure, ceased operations on Friday due to significant damage following a missile strike. Ihor Syrota, the director of Ukrhydroenergo, reported extensive damage to the plant’s turbine hall, rendering both stations of the Dnipro HPP inoperative. The incident is part of a broader series of attacks on Ukraine’s energy system, described by the Ministry of Energy as the largest in recent times.The national energy company Ukrenergo has announced emergency shutdowns in six regions, and the Ukrainian energy holding DTEK noted serious damage to thermal power plants across the country, leading to widespread power outages.

One of the two high-voltage lines supplying the Zaporizhzhia nuclear power plant with electricity, “Dneprovskaya,” went down in the morning on Friday, the plant administration announced on its Telegram channel According to the report, the power plant is now supplied with electricity by a reserve line of 330 kV and there are no safety threats.It was also noted that the radiation at the plant and the surrounding area is unchanged and is at the level corresponding to the normal operation of power units and does not exceed natural background values. Earlier, different Ukrainian media outlets reported that repeated explosions were heard in the Ukrainian-controlled city of Zaporizhzhia.

Russian strike targets Ukraine’s largest dam

A Russian strike hit the DniproHES dam in Zaporizhzhia, Ukraine’s largest, on Friday, Ukraine’s state hydropower company Ukrhydroenerho said. The attack has led to a fire at the station. “There is currently a fire at the station. Emergency services and energy workers are working on the spot, dealing with the consequences of numerous airstrikes,” stated Ukrhydroenerho, which runs Ukraine’s network of dams. Despite the severe damage, there is reportedly no risk of a breach. The incident is part of what Ukraine’s Energy Minister, Herman Halushchenko, described as the largest recent attack on the nation’s energy infrastructure, aiming to cause a widespread failure of the energy system.In the western Khmelnytskyi region, a local official reported to public broadcaster Suspilne that one person was killed and more were injured due to the strikes. Additionally, the mayor of Kharkiv, Ihor Terekhov, announced that the city’s traffic light system had been disrupted following attacks on power facilities.

BlackMask Blog

At Some  Point They Will Go For Broke

Oil markets will continue to tighten in the second and third quarters amid growing supply risks including the rollover of voluntary supply cuts from OPEC+ into  Q2 2024, Ukraine’s recent attacks on Russia’s refineries as well as constant disruptions to oil flows through the Red Sea, ING Global Market Research has predicted. ING Global has hiked its oil price forecast from US$80/bbl to US$87/bbl for the second quarter and from US$82/bbl to US$88/bbl for the third quarter.Two days ago, J.P. Morgan reported that the attacks have sent 900K barrels of Russian refinery capacity offline and could add a risk premium of $4/bbl to oil price while StoneX energy analyst Alex Hodes has predicted that the attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost oil prices by $3/bbl. Meanwhile, ING Global has predicted that interest rate cuts by the Fed are likely to lead to an increase in speculative interest in the oil futures market. According to ING, long positions have increased significantly in the current year compared to the previous year from around 100k lots to a little over 230k lots currently. ING, however, has pointed out that positioning remains fairly modest compared to pre-2022 levels despite the unfolding risks hanging over the markets. ING says it’s possible that OPEC’s large spare capacity is making speculators worry that oil prices have limited upside.  Several other analysts share a similar sentiment. Standard Chartered, on the other hand, says OPEC+ has ample room to maneuver without upsetting the balance in oil markets. According to StanChart,  a 0.9 mb/d increase in output by OPEC in the third quarter would still leave the global market with an inventory draw of 0.5 mb/d for the quarter on top of the 1 mb/d draw across H1-2024. The analysts reckon that OPEC can hike Q3 output by as much as 1.5 mb/d Q/Q without increasing inventories. NN: As   you can see you can find any opinion you want.

 

Israeli Strategic Affairs Minister Ron Dermer (pictured) insisted on Thursday that his country’s army will continue its operation in the Gazan city of Rafah until it claims it despite the United States’s opposition to that .Speaking on the Call Me Back podcast, Dermer stressed the importance of capturing Rafah as it shelters a quarter of Hamas’s members. He added that Israel is willing to learn the US’s stance on the matter but that the operation must be concluded even if an agreement on evacuating civilians from there is not reached. The minister’s comments came a day ahead of US Secretary of State Antony Blinken’s visit to Israel.

Federal Reserve officials maintained their outlook for three interest-rate cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren’t alarmed by a recent uptick in inflation.Officials decided unanimously to leave the benchmark federal funds rate in a range of 5.25% to 5.5%, the highest since 2001, for a fifth straight meeting. Policymakers signaled they remain on track to cut rates this year for the first time since March 2020, but they now see just three reductions in 2025, down from four forecast in December, based on the median projection. Chair Jerome Powell, speaking to reporters after the Fed’s decision Wednesday, demurred when asked whether officials would lower rates at their coming meetings in May or June, repeating that the first reduction would likely be “at some point this year.”

He largely shrugged off recent data showing an uptick in inflation in recent months, saying, “It is still likely in most people’s view that we will achieve that confidence and there will be rate cuts.”

At the same time, he said the data supported the Fed’s cautious approach to the first rate cut, and added that policymakers are still looking for more evidence that inflation is headed toward their 2% goal. Powell also said it would be appropriate to slow the pace of the Fed’s balance-sheet unwind “fairly soon,” after policymakers held a discussion on their asset portfolio this week.“The decision to slow the pace of runoff does not mean our balance sheet will shrink, but allows us to approach that ultimate level more gradually,” he said. “In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility of money markets experiencing stress.” The Fed’s post-meeting statement was nearly identical to January’s, maintaining the guidance that rate cuts won’t be appropriate until officials have more confidence inflation is moving sustainably toward their 2% target.The Federal Open Market Committee also reiterated its intention to continue reducing its balance sheet by as much as $95 billion per month. Some officials, including Dallas Fed President Lorie Logan, have called for an eventual slowing of the pace at which the Fed is shrinking its portfolio of assets .

BlackMask Blog

Living In LaLa  Land

 

 

• StoneX: Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl.
• Standard Chartered: energy markets kicked off the new year with an overly pessimistic view of oil demand.
• Standard Chartered: global demand will hit a new all-time high of 103.01 mb/d in May.

Crude oil futures have rallied close to a five-month high with concerns about tightening supplies driving up prices in recent days, only coming down to earth on Wednesday and paring some of those gains while awaiting an interest rate signal from the U.S. Federal Reserve.    According to StoneX energy analyst Alex Hodes, Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl. Analysts at J.P. Morgan estimates that 900K barrels of Russian refinery capacity have gone offline after the attacks, adding a risk premium of $4/bbl to oil prices. Brent futures have extended their year-to-date gain to nearly $10 per barrel. That figure is 0.25 mb/d higher than StanChart’s latest forecast, a development that has prompted the analysts to revise their 2024 demand growth forecast to 1.69 mb/d from 1.64 mb/d previously. The analysts have also predicted we are going to see a sustained period of inventory draws in H1-2024, with the cumulative draw during the first half of the year coming in at 185 mb compared with a H1-2023 build of 230 mb. StanChart says demand indications remain robust, and have predicted that global demand will hit a new all-time high of 103.01 mb/d in May, a record which will be broken in June and again in August when demand is expected to clock in at 103.62 mb/d and 104.31 mb/d, respectively.  StanChart has predicted that tightening oil markets will continue to power the oil price rally and has reiterated its long-held forecast for Brent to average $94/bbl in Q2-2024.

StanChart has predicted that oil markets will continue to be supply-constrained for the better part of the year. The analysts see limited growth for U.S. crude production, with U.S. supply not likely to move significantly higher than November 2023’s all-time high of 13.319 mb/d. Meanwhile, Russia will continue to struggle to optimize its upstream and downstream oil system, with logistical constraints due to  war damage as well as a lack of critical spare parts contributing to a negative outlook for Russian crude and refined products output. More importantly, StanChart sees OPEC+ having ample room to maneuver starting in the third quarter. The analysts have pointed out that a 0.9 mb/d increase in OPEC output in the third quarter would still lead to an inventory draw of 0.5 mb/d for the quarter on top of the 1 mb/d draw across H1-2024. Indeed, OPEC has room to increase Q3 output by as much as 1.5 mb/d Q/Q without increasing inventories. The Energy Information Administration (EIA) is the most bearish of the leading energy agencies; however, using its model, OPEC could increase output by 0.8 mb/d Q/Q without triggering an inventory build. StanChart notes that Q3 crude balances are such that OPEC could significantly increase crude output without depressing prices or negatively affecting inventories.