Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Energy-General/Are-Carbon-Taxes-To-Blame-For-Europes-Energy-Crisis.html

Are Carbon Taxes To Blame For Europe’s Energy Crisis?

By Irina Slav - Sep 27, 2021, 4:00 PM CDT

https://oilprice.com/Energy/Energy-General/Are-Carbon-Taxes-To-Blame-For-Europes-Energy-Crisis.html

• Europe’s energy crisis was, in part, caused by the desire of governments to make fossil fuels ‘prohibitively expensive’
• The common claim that energy can be clean, reliable, and cheap has fallen flat, teaching policymakers a painful lesson
• The harsh reality about carbon taxes is that they increase the cost of living and likely reduce quality of life

The European energy crisis seems to be the only thing anyone is talking about these days. Analysts opine over why it happened and how likely it is to spread globally (very, is the answer). The focus of most analysis has been overwhelmingly on the supply and demand gap that caused the crisis. In contrast, the underlying reason for the crunch hasn’t received nearly as much attention.

The fact is, Europe has been producing a lot less gas of its own in its drive to ‘go green’. It has made sure nobody really wants to produce gas because carbon taxes make fossil fuel production a lot more expensive. And there are more of these taxes coming, taxes which will only exacerbate this problem.

“Europe’s decarbonisation agenda requires making fossil energy use more expensive. That was always going to be a tough sell. Now that higher prices are suddenly here, it is going to be harder still.” This is what FT’s European Economics Commentator Martin Sandbu wrote in a recent article.

Indeed, the price aspect of the energy transition has been kept out of the public eye by government officials and environmentalist organizations who have all been hard at work hammering home the notion of falling costs for wind turbines and solar panels. As the current energy crunch shows, it’s not all about the falling costs of turbines or panels: even if those costs fall to zero, without sun or wind they cannot generate any electricity.

The harsh truth about a global energy transition

Only a few voices have dared warn that the energy transition will be anything but cheap. One of the big reasons for this would be the strategy of making fossil fuel production and use prohibitively expensive.

The noble idea behind this strategy is to discourage fossil fuel use, which would automatically lower emissions. It’s no wonder that carbon taxes are a popular measure for controlling emissions. They are simple and straightforward, and their effect is immediate. However, there are also side effects; these include higher electricity bills and, eventually, higher prices for everything.

“Gone will be that £19 London-Mallorca return flight on Ryanair,” wrote the FT’s Simon Kuper in an article about “real carbon taxes.” “Our clothes, petrol, meat and coffee will all get pricier. We’ll need to send an army of workers around the rich world’s houses ripping out boilers, installing heat pumps and insulating attics.”

According to Kuper, the current carbon taxes in Europe are more virtue-signaling than climate action. Carbon, he wrote, needs to become a lot more expensive to make a difference in emissions. But with it, everything else will become expensive. Politicians are aware of this, and it is the reason why they have not pushed for much higher taxes, especially after European businesses started complaining about the current carbon prices on the European emissions market.

One could look at this as a classic carriage-before-the-horse situation, in which authorities are pushing for what will effectively be a radical change in people’s way of life before they have ensured this change will be affordable for everyone - instead, European governments followed the Paris Agreement blindly.

On the other hand, the situation could be seen as unavoidable, as many critics have argued. The reason it was inevitable is that renewable energy and related technology has simply not been around long enough to become as dirt cheap as coal used to be before demand caused prices to skyrocket despite, one might note, carbon taxes. There is also the uncomfortable fact that renewable energy generation depends on the weather, which adds a substantial cost in terms of alternative backup sources of energy, which is what we are currently seeing in Britain and Europe.

Carbon taxes, according to pretty much everyone, are the only way to make sure our species reduces its carbon footprint. The higher these are, the better, proponents say, because high carbon taxes would speed up the transition to low-carbon energy. What they don’t say, including all those asset managers making net-zero commitments and urging governments to act more aggressively on emissions, is that this transition to low-carbon energy also means a transition to a lower standard of life.

Politicians like to advertise the energy transition as clean, reliable, and cheap. Yet this, as anyone who has ever worked in manufacturing or services knows, is the equivalent of fast, cheap, and good. You can never have all three at once.

You could therefore have clean and reliable, but it wouldn’t be cheap. Or you can have clean and cheap but, as we can see, it’s unreliable. As for reliable and cheap - these would be the detested fossil fuels that some governments are trying so hard to get rid of that they are willing to shoot themselves in the leg with carbon taxes.

By Irina Slav for Oilprice.com

[Tom Nolan + 2,443]

Big Oil "Environmentalism" - Why Big Oil Conquered The World

https://www.bitchute.com/video/M9rPTE9qbwM/

More information...   https://www.corbettreport.com/corbett-report-documentaries/

 

[Tom Nolan + 2,443]

NatGas Chaos Takes First Hedge Fund Victim

https://www.zerohedge.com/energy/natgas-chaos-takes-first-hedge-fund-victim

[Tom Nolan + 2,443]

All Hell Is Breaking Loose In Energy Markets

https://www.zerohedge.com/markets/all-hell-breaking-loose-energy-markets

https://assets.zerohedge.com/s3fs-public/styles/inline_image_mobile/public/inline-images/net gas price europe.jpg?itok=vB6rsLDv

[Tom Nolan + 2,443]

September 10th

UPDATE 4-Russia completes Nord Stream 2 construction, gas flows yet to start

https://finance.yahoo.com/news/2-russia-completes-nord-stream-080809741.html

* Germany is yet to certify Nord Stream 2 pipeline

* Russia wants to start gas supplies via NS2 this year

...Before Germany's energy regulator approves Nord Stream 2, it must comply with European unbundling rules that require pipelines owners to be different from suppliers of gas flowing in them to ensure fair competition....

[Tom Nolan + 2,443]

Natural Gas Price Fundamental Daily Forecast – Expiration Driven Rally Likely to End with Major Reversal Top

Professionals rarely buy strength at the start of injection season, they short, so we could be looking at a major selling opportunity.

james Hyerczyk

6 hours ago (Sep 28, 2021 06:22 AM GMT)

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-expiration-driven-rally-likely-to-end-with-major-reversal-top-781095

 

Natural gas futures are skyrocketing for a second session on Tuesday with the expiration of the October contract expiration fueling the move amid a potential global energy supply crunch. Translation: Weak shorts are agressively covering and speculators are buying with both hands.

But… speculators may have jumped the gun on this move because there isn’t any cold in the near-term forecast. This makes the market vulnerable to a series of steep sell-offs once the expiration process is complete later today

The rally wasn’t a complete surprise. EBW Analytics Group analysts advised clients Monday to expect options expiration and final settlement of the October contract to potentially lead to “steep price moves untied to fundamental shifts.”

At 05:51 GMT, December natural gas futures are trading $6.238, up $0.399 or +6.83%.

Bespoke Sees Risks of Sizable Pullback

Bespoke Weather Service analysts seemed to be on the same page with the guys at EBW, but they added that higher European benchmarks also contributed to the move.

Contract expiration “is likely the main item to note, as options expire today (Monday), and the October contract rolls of the board tomorrow (Tuesday),” Bespoke said. “Regardless of any actual data, we have tended to see abundant buying into contract expirations. As such, it is difficult to tell how high we could run here, but we do see risks of a sizable pullback once the smoke of expiration has cleared.”

Yes, there are risks to the downside and this rally could blow up easily over the short-run because it is occurring much too early in the season to last. Bespoke supported this notion on Monday saying, the end-of-season storage trajectory has been “shifting higher” to potentially over 3.6 Tcf, and forecasts continue to show “awful” weather-driven demand levels for natural gas, according to the firm.

“This will begin to increasingly matter over the next few weeks, to be sure,” Bespoke said.

Daily Forecast

Prepare for heightened volatility on Tuesday with the expiration of the October futures contract taking center stage. The current semi-irrational spike to the upside is likely to end with a thud so traders should prepare for a possible wicked reversal to the downside.

Our daily chart work suggests the market is doomed to pullback into at least the old top at $5.790. If this level fails as support then the selling will likely extend into $5.652 to $5.469.

The best support area is $5.185 to $4.892.

We suspect the spike to the upside was fueled mostly by short-covering and by some overzealous speculators. Professionals rarely buy strength at the start of injection season, they short, so we could be looking at a major selling opportunity. This will lead to weak speculators holding the bag at unfavorable price levels.

For a look at all of today’s economic events, check out our economic calendar.

[Tom Nolan + 2,443]

European Gas Prices Hit Escape Velocity After Russian Gas Supplies Plunge By 57% Overnight

by Tyler Durden

Tuesday, Sep 28, 2021 - 10:30 AM

https://www.zerohedge.com/markets/european-gas-prices-hit-escape-velocity-after-russian-gas-supplies-plunge-57

... and while all the dynamics we listed yesterday are all still applicable, we can add one more: a sudden drop off in Russian nat gas deliveries via the Yamal-Europe pipeline that runs across Belarus and Poland to Mallnow, Germany...

... which shrank lumped by 57% to the lowest level since Sept 6, just as a panicking Europe is scrambling for every BCF.

In an email seen by Bloomberg, Gazprom said that it continues to fully meet obligations under its supply contracts, adding that the current drop in Russian gas supplies via Mallnow is due to a request from a client and is temporary... although if it is anything as "temporary" as the current hyperinflation across the globe, then Europe is about to have a very unpleasant winter, at least until the Ukraine-bypassing Nord Stream 2 is activated - just as Putin wants.

Meanwhile, in an ominous development, US nat gas futures are starting to move in lockstep with Europe, and overnight Henry Hub topped $6/mmbtu for the first time since 2014.

 

 

[Tom Nolan + 2,443]

Illinois becomes 1st Midwestern state to pass a law to phase out fossil fuels

https://www.yahoo.com/news/illinois-becomes-first-midwestern-state-to-plan-fossil-fuel-phaseout-190947145.html

At a time when the Midwest is being battered by more severe storms due to climate change, Illinois Gov. J.B. Pritzker signed a landmark law this month that will transition the state to 100 percent clean energy by 2045, with benchmarks along the way.

While the effort has largely escaped national media attention, it is especially noteworthy for three reasons: Illinois is the first state in the coal-heavy Midwest to commit to eliminating carbon emissions; the plan received some Republican support; and it includes programs to ensure economic and racial equity.

“What we’ve now done is made it clear that [fossil fuels] are not in Illinois’s future,” Jack Darin, director of the Illinois chapter of the Sierra Club, told Yahoo News....

[Tom Nolan + 2,443]

12 minutes ago, Tom Nolan said:

European Gas Prices Hit Escape Velocity After Russian Gas Supplies Plunge By 57% Overnight

by Tyler Durden

Tuesday, Sep 28, 2021 - 10:30 AM

https://www.zerohedge.com/markets/european-gas-prices-hit-escape-velocity-after-russian-gas-supplies-plunge-57

... and while all the dynamics we listed yesterday are all still applicable, we can add one more: a sudden drop off in Russian nat gas deliveries via the Yamal-Europe pipeline that runs across Belarus and Poland to Mallnow, Germany...

... which shrank lumped by 57% to the lowest level since Sept 6, just as a panicking Europe is scrambling for every BCF.

In an email seen by Bloomberg, Gazprom said that it continues to fully meet obligations under its supply contracts, adding that the current drop in Russian gas supplies via Mallnow is due to a request from a client and is temporary... although if it is anything as "temporary" as the current hyperinflation across the globe, then Europe is about to have a very unpleasant winter, at least until the Ukraine-bypassing Nord Stream 2 is activated - just as Putin wants.

Meanwhile, in an ominous development, US nat gas futures are starting to move in lockstep with Europe, and overnight Henry Hub topped $6/mmbtu for the first time since 2014.

 

 

Russia & Belarus Issue Joint "Red Line" Warning Alleging NATO Base Expansion Into Ukraine

https://www.zerohedge.com/geopolitical/russia-belarus-issue-joint-red-line-warning-alleging-nato-base-expansion-ukraine

 

[Tom Nolan + 2,443]

https://oilprice.com/Alternative-Energy/Renewable-Energy/IEA-Chief-Dont-Blame-Renewables-For-Europes-Energy-Crunch.html

IEA Chief: Don’t Blame Renewables For Europe’s Energy Crunch

By Irina Slav - Sep 28, 2021, 11:00 AM CDT

• IEA Chief: The energy squeeze in Europe has nothing to do with the continent's energy transition plans
• European utilities are stocking up on coal in anticipation of lower renewable energy output volumes during the winter
• Spain has warned the European Union that its energy transition plans may not survive the test of sky-high electricity prices

The energy squeeze in Europe has nothing to do with the continent's energy transition plans, the head of the International Energy Agency Fatih Birol told the European Parliament's energy and environment committees.

"It is inaccurate and unfair to explain these high energy prices as a result of clean energy transition policies. This is wrong," Birol said, as quoted by Reuters. Further, he added that EU governments needed to keep their eyes on reducing global warming, even when times are volatile, referring to the sky-high gas prices in Europe.

The official did not miss the chance to take a stab at Russia, either, saying, "Some major suppliers are reluctant to send additional gas in these difficult days to Europe and elsewhere, even though in my view it was an opportunity to underscore that they are a reliable supplier," echoing his own earlier remarks that urged Russia to send additional gas volumes to Europe.

Gazprom has insisted that it has fulfilled its contractual obligations to European clients, and no one in Europe is disputing that. However, questions are being asked about Gazprom supplying less gas on the spot market and into its own storage facilities across Europe, which the state giant has explained with the prioritization of filling up its domestic storage.

Meanwhile, European utilities are stocking up on coal in anticipation of lower renewable energy output volumes during the winter, Bloomberg reported, citing Citigroup commodity analysts.

"A tight gas market should continue to pull EUA [EU carbon emission permits] prices higher," Citigroup analysts led by Edward Morse said. "Furthermore, coal use in Europe is expected to increase through winter, on lower renewables power generation and planned closures of some nuclear power generation capacity."

What's more, Spain has warned the European Union that its energy transition plans may not survive the test of sky-high electricity prices. In a letter, Spain said the EU's efforts to keep emissions in check "may not stand a sustained period of abusive electricity prices."

By Irina Slav for Oilprice.com 

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[Tom Nolan + 2,443]

The natural gas markets have rallied significantly during trading on Tuesday, as we have now formed a massive shooting star to pierce the $6.00 level.  

Christopher Lewis

21 hours ago (Sep 28, 2021  https://www.fxempire.com/forecasts/article/natural-gas-price-forecast-natural-gas-continues-parabolic-move-781483

 

 

[Tom Nolan + 2,443]

Technical Analysis

Natural gas prices surged higher but close well off the session highs. Prices hit a 7-year high above 6 per MMbtu. Target resistance is the 2014 highs at 6.50. Support is seen near the former September highs at 5.65. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs when the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

 

LNG Exports Rose

U.S. LNG exports increase week over week. Twenty-one LNG vessels with a combined LNG-carrying capacity of 76 Bcf departed the United States between September 16 and September 22, 2021, according to shipping data provided by the EIA. Additional LNG exports could be hampered by the storm activity in the Atlantic.

https://www.fxempire.com/forecasts/article/natural-gas-price-prediction-prices-whipsaw-and-end-higher-as-demand-continues-to-climb-781529

[Tom Nolan + 2,443]

James Hyerczyk

22 minutes ago (Sep 29, 2021

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-looking-for-minimum-pullback-into-5-652-5-469-781923

Natural Gas Price Fundamental Daily Forecast – Looking for Minimum Pullback into $5.652 – $5.469

We’re likely to see a pullback into a value area before new buyers drive the market higher.

Natural gas futures are inching lower on Wednesday after fading into the close in the previous session following a test of a multi-year high. Some traders are saying the rally at the start of the week was fueled by heightened volatility ahead of the October futures contract expiration. Others are blaming worries about global energy supplies for the spike to the upside.

I think it was fueled by a little of both, but I don’t think professionals were buying. The move was likely triggered by short-covering and aggressive speculators chasing the rally. Those are weak reasons to be going long as multi-year price levels so I think we’re going to see a pullback into a value area before new buyers drive the market higher.

The first support area is $5.652 to $5.469. The second support zone is $5.185 to $4.892.

At 12:32 GMT, December natural gas futures are trading $5.869, down $0.116 or -1.94%.

Short-Term Weather Outlook

According to NatGasWeather for September 29 to October 5, “A messy pattern continues as numerous weather systems impact the U.S. One system is over the Northwest, a second over the Rockies, a third over Texas and the South, and finally a fourth over the Northeast. Temperatures with these systems are in the 50s to 70s besides a warmer one over Texas and the South with highs of 80s.

The rest of the U.S. is nice to very warm with highs 70s and 80s besides locally hotter 90s in the Southwest deserts and into West Texas.

Overall, national demand will be low to very low into the foreseeable future.”

Liquefied Natural Gas Feed Gas Volumes Holding Near Record Levels

U.S. LNG feed gas volumes have held near record levels around 11 Bcf most of this year, interrupted only by storms and maintenance work, Natural Gas Intelligence (NGI) reported.

The energy crunch abroad began with robust draws from storage during large stretches of freezing conditions in Europe and northern Asia last winter. This was followed by a hot summer, unplanned supply disruptions and a pullback in production amid coronavirus outbreaks.

Combined, Rystad Energy analysts say, these factors could threaten economic recoveries from the depths of the pandemic if consumers and businesses cannot afford gas to power homes and businesses.

Daily Forecast

Traders are eyeing the surge in natural gas prices in Europe, but seem to be shrugging off the news as they prepare for the U.S. fall injection season.

Looking ahead to Thursday’s U.S. Energy Information Administration (EIA) storage report, preliminary results of a Bloomberg survey ranged from injections of 84 Bcf to 89 Bcf, with a median of 86 Bcf. NGI modeled a build of 89 Bcf for the week ended September 24.

Look for heightened volatility today, which could result in a choppy two-sided trade. Watch for new buyers on a test of $5.652 to $5.469. But if this area fails as support then look for the selling to possibly extend into the next support zone at $5.185 to $4.892.

For a look at all of today’s economic events, check out our economic calendar.

[Tom Nolan + 2,443]

Europe’s Natural Gas Prices Surge 10% To Fresh Record Highs

By Tsvetana Paraskova - Sep 28, 2021, 12:00 PM CDT

https://oilprice.com/Energy/Natural-Gas/Europes-Natural-Gas-Prices-Surge-10-To-Fresh-Record-Highs.html

• The front-month Dutch TTF Gas Futures, the benchmark for European gas, have jumped to €85/MWh
• Falling temperatures in the UK and in parts of the rest of Europe, as well as falling supply from Russia via the Yamal-Europe, pushed gas prices higher on Tuesday

The benchmark natural gas prices in the UK and Europe jumped by another 10 percent to fresh record highs on Tuesday as energy commodities rally amid multi-year-low European gas inventories ahead of the winter season.

The front-month Dutch TTF Gas Futures, the benchmark for European gas, have jumped to €85/MWh, up from €76.875/MWh on Monday afternoon, pushed higher in part by the contract rolling off this week.

Price at the UK National Balancing Point (NBP) virtual trading point reached another record high.

The Q4 UK price rose by 16.30 pence to 213.00 pence per therm, its highest level on record, according to Reuters estimates.

Falling temperatures in the UK and in parts of the rest of Europe, as well as falling supply from Russia via the Yamal-Europe, pushed gas prices higher on Tuesday.

Grid operator Gascade said that natural gas supply through the pipeline more than halved on Tuesday from Monday, but Russian giant Gazprom told Reuters that the supply drop was “a temporary situation, related to (gas supply) requests by a client. Requests are fully meet.”

The EU carbon contract also hit a record high on Tuesday at 65.30 euros ($76.30) per ton.

“To put the current elevated prices in Europe into perspective, the price of Dutch TTF first month gas has risen to near €85/MWh or $29/MMBtu or more than five times higher than the average seen during the previous five years,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a note on Tuesday.

The tight gas market has resulted in increased coal use for power generation, pushing up the price of coal delivered at Rotterdam to a multi-year high at $155/ton, or two times the average, Hansen added. The energy crunch is also raising the price of the carbon allowances in EU’s Emissions Trading System to four times the average price of the past five years, he said.

“Without a response from producers, the only other option is for prices to reach levels that triggers demand destruction. A development that may come at a heavy price given the risk to global growth, inflation and stock price valuations,” Hansen noted.  

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

EXCERPTS

Natural gas mega rally

Let's now delve into the biggest highlight of this energy bull: The natural gas mega rally.

Natural gas prices have hit their highest levels since 2014, outpacing oil and many other commodities. On Tuesday, natural gas futures were trading up 5.2% to $6.13 per million British thermal units (BTUs), their highest settlement price since January 2014. Natural gas prices are up 125% in the year-to-date, while the biggest nat. gas benchmark, the United States Natural Gas ETF, LP (NYSEARCA:UNG) is up 121% over the timeframe. The sticker shock is even greater in other key natural gas markets around the globe, with East Asian benchmark futures and European natural gas spot prices have climbed 4-5 times year-ago levels to $19 per MMBtu.

Natural Gas (Henry Hub) USD/MMBTU

Source: Business Insider

Yet, some experts are saying that this rally is far from over.

Stan Brownell, an analyst at Argus Media, and Luke Jackson, an analyst at S&P Global Platts, figure that Henry Hub prices would have to jump to $10 or more to provide an incentive to fulfill domestic natural gas demand. 

That would mean nearly doubling of natural gas prices from current levels to levels last seen in 2008 when the U.S. produced about 40% less natural gas.

International natural gas demand is booming.

An unusually cold winter in Europe as well as a global rebound from Covid-19 have triggered strong demand and depleted natural gas inventories. Meanwhile, Hurricane Ida has knocked out a considerable amount of gas production, with 77% of oil and gas production still offline in the Gulf of Mexico. According to U.S. government statistics, natural gas inventories are currently 17% lower compared to a year ago and 7.4% below the five-year average.

To catch up to the five-year average storage level by early winter, U.S. natural gas producers need to inject roughly 90.4 billion cubic feet each week from now, about 40% higher than the five-year average weekly buildup clip. The latest data by the Energy Information Administration shows that nat. Gas inventories climbed 52 bcf last week, way below what is required to build enough stockpiles for the winter.

Interestingly, the analysts note that U.S. consumption isn't really the driving force behind the strong price action. Indeed, according to data from the U.S. Energy Information Administration, domestic natural-gas consumption through June was in line with 2020 levels. 

The real culprit here is robust international demand for natural gas as well as a fast-growing U.S. LNG sector.

In the first half of the year, the U.S. exported roughly 10% of its natural gas, or 41% more than a year ago. Normally, excess natural gas produced during the summer would go into underground storage. But that domestic stockpiling has been lower than normal, with producers exporting much of it as LNG.

Asia and Europe still need to stock up more to prepare for the winter, and much of their supplies will have to come from the U.S. because non-U.S. LNG exporters have mostly been down with maintenance-related snags. For instance, Russia, Europe's most important natural-gas provider, has been slowing its deliveries. Natural gas inventories in Europe are currently a whopping 16% below the five-year average and at a record low for September. Meanwhile, continuous unplanned outages at LNG export facilities in several countries, including Australia, Malaysia, Nigeria, Algeria, Norway, and Trinidad and Tobago, have contributed to increased demand for U.S. LNG.

Europe's natural gas spot prices have historically been lower than prices in Asia; however, this year, Europe's natural gas prices are tracking Asia's spot LNG prices more closely to attract flexible LNG supplies from around the world to refill storage inventories.   

A severe winter in the U.S. could lead to domestic markets having to compete with hungry Asian and European buyers, thus driving prices even higher.

A severe winter in the U.S. could easily lead to an even crazier surge in natural gas prices.

How To Play The Oil And Gas Bull Run

By Alex Kimani - Sep 28, 2021, 5:00 PM CDT

https://oilprice.com/Energy/Natural-Gas/How-To-Play-The-Oil-And-Gas-Bull-Run.html

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Crude-Oil/The-52-Trillion-Shadow-Banks-That-Supercharged-The-Commodity-Boom.html

The $52 Trillion Shadow Banks That Supercharged The Commodity Boom

By Alex Kimani - Sep 29, 2021, 6:00 PM CDT

• Opportunities to play in the bull market for commodities have been heavily lopsided in favor of deep-pocketed traders while the smaller fries have been left in the cold
• With a dearth in lending, trade finance is becoming an increasingly important alternative credit investment strategy where a growing variety of shadow banks and investment funds are becoming "the new banks". 
• Wall Street has been buying bonds from non-investment-grade U.S. energy companies, lending some $34 billion in fresh debt in the first half of 2021

After years in the dog house, the commodity markets are sizzling hot once again. Copper, lithium, tin, nickel, iron ore, manganese, corn, coffee, and lumber prices have all hit all-time highs. Meanwhile, those of aluminum, molybdenum, oil, natural gas, and even the world's least-liked commodity, coal, are trading at multi-year highs.

The commodity markets tend to be highly cyclical, mostly bending to the tune of the economy. The price movement of most commodities has historically been both seasonal and cyclical. However, the current commodity supercycle is mainly being driven by pandemic-driven supply bottlenecks as well as secular tailwinds such as ESG and the clean energy transition. With governments pouring billions of dollars in recovery funds into infrastructure and pollution-fighting green energy projects, this boom could last for years.

Quite naturally, commodity traders who have positioned themselves correctly have been making a killing in this market. For instance, one of the world's largest physical commodity traders, Trafigura Group, posted record profits in the first half of its financial year, generating a net profit of $2.1bn, up from $500m in 2020 on revenue of almost $100bn on the back of higher commodity prices and increased trading volumes. Meanwhile, the world's top oil trader Vitol Group has been smashing profit records in the midst of the energy crisis and high volatility in oil and gas markets.

But as is often the case in financial markets, opportunities to play in this market have been heavily lopsided in favor of deep-pocketed traders while the smaller fries have been left in the cold. 

This is the case because banks have been increasingly unwilling to lend to smaller commodity traders who, ironically, need much bigger capital outlays now due to the commodity price surge. Banks such as ABN Amro Bank NV and ING Groep NV have been downsizing their lending to commodities firms as they double down on diligence following a spate of trader blowups and also due to pressure from shareholders shunning fossil fuel investments. To get a perspective of how dire the situation has become, consider that banks extended under $49 billion in commodity-finance loans to traders and producers in the first half of 2021, good for a 45% Y/Y decline and a 40% drop from the first half of 2019 as per WSJ.

Unfortunately, smaller traders have been the ones bearing the brunt of the lending drought, whereas it has mostly been business as usual for giant trading houses such as Trafigura, Vitol, and Glencore PLC thanks to their deeper pockets and proven track records.

But, again, as often happens in financial circles, where the big investment banks have been unwilling to go, other lenders have been happily stepping in.

Welcome to the world of shadow lending.

Shadow banking

With a dearth in lending, trade finance is becoming an increasingly important alternative credit investment strategy where a growing variety of shadow banks and investment funds are becoming "the new banks". 

Shadow banks–a term the industry generally resents–consists of financial intermediaries who facilitate the creation of credit across the global financial system. The shadow banking system can also refer to unregulated activities by regulated institutions, including hedge funds, unlisted derivatives, and even credit default swaps. One big distinction between shadow banks vs. traditional lenders: Shadow bankers are mostly exempt from regulatory oversight because these institutions do not accept traditional deposits. Naturally, they also charge much higher rates than traditional lenders–sometimes twice as high. 

Related: The Energy Crisis Is Sending Oil, Gas, And Coal Prices Soaring

These companies have been seeing a surge in business during the ongoing commodity boom as banks turn their backs on smaller and higher-risk traders. A good case in point is one such fund, Scipion Capital Ltd., which has received 24 inquiries from energy and metals traders this year, compared with 15 in all of 2020, while prospective borrowers in the agricultural sector have risen to 24 from 10 as per WSJ. Their allure is such that even big traders are now turning to these alternative capital providers: Trafigura has lately been turning to nonbank lenders, recently issuing a $400 million perpetual bond and also managing to raise more than $4.5 billion through two securitization programs for its receivables accounts.

The elephant in the room is that shadow banks mostly provide lending to underqualified borrowers, sometimes using exotic investment instruments that triggered the 2008 financial crisis, thus fueling risk in the financial markets. You can think of them as the corporate equivalent of emergency loan companies for people with poor credit scores. But they have become so popular that their assets have ballooned to $52 trillion, a 75% jump from the level in 2010, the year after the crisis ended, according to bond ratings agency DBRS via CNBC.

Shadow banking appears to be even more rife in the beleaguered oil and gas sector.

Last year, shadow lenders and hedge funds with no misgivings about oil's carbon credentials scooped up hundreds of millions in oil industry debt. Many investment banks have been divesting their energy loan portfolios to alternative capital providers as they look to lower exposure to oil and gas lending. Many of these capital providers have been moving in to capitalize on oil and gas debt that may have been mispriced by the banks, as per Bloomberg. 

Luckily, Wall Street is warming up to oil and gas companies, again.

After giving the energy sector the cold shoulder during the energy crisis, Wall Street appears willing to do business with oil and gas businesses again, but on one condition–the funds are to be used to pay down debt, not for new drilling.

Wall Street has been buying bonds from non-investment-grade U.S. energy companies, lending some $34 billion in fresh debt in the first half of 2021. That's twice as much as the industry raised over the same period last year.

Still, don't expect shadow banks or their allure to disappear any time soon.

By Alex Kimani for Oilprice.com

[Tom Nolan + 2,443]

American LNG Producers Look To Fill The Gap Amid A Global Gas Crisis

https://oilprice.com/Energy/Natural-Gas/American-LNG-Producers-Look-To-Fill-The-Gap-Amid-A-Global-Gas-Crisis.html

By Irina Slav - Sep 29, 2021, 5:00 PM CDT

• Europe’s gas crisis is crushing businesses and weighing on the region’s entire economy.
• U.S. LNG producers are looking to capitalize on soaring global natural gas prices 
• According to one energy consultant who spoke to the FT, there could be five new LNG projects coming in the United States over the next two to three years

The gas crunch in Europe has hurt many businesses, but some are making big money out of it. And U.S. LNG producers want a bigger piece of the pie. 

Last year, U.S. LNG was in decline amid the oil and gas consumption slump. New liquefaction capacity was being delayed, and existing capacity was idled. Now, it's a completely different world, and energy companies are once again making ambitious plans.

Tellurian LNG, for instance, has plans for a $15-billion export terminal on the Gulf Coast, the Financial Times reported, citing the company's chief executive Charif Souki.

"Yes, it's a good thing for American LNG," Souki told the FT, referring to the soaring gas prices. "It is going to depend only on whether the infrastructure can be built in the US or not."

Indeed, it is a very good thing: Henry Hub prices are currently a lot lower than prices in Asia or Europe, at $6 per million British thermal units as of Tuesday, versus $29 per mmBtu in Europe and Asia, per a Reuters report. In this context, demand for U.S. LNG is booming.

The same report, however, notes the constraints that are motivating the new capacity ambitions. Natural gas flows to liquefaction plants in the United States slipped from 10.5 billion cu ft daily in August to 10.4 billion cu ft daily despite the fact that the fact gas prices had already started rising in Europe and Asia. The chances of these flows rising above 10.5 billion cu ft daily are nonexistent: there is no liquefaction capacity to take additional volumes in. Therefore, new capacity is the simplest solution.

According to one energy consultant who spoke to the FT, there could be five new LNG projects coming in the United States over the next two to three years, including expansions of existing facilities. This, according to analysts, could eventually turn the United States into the world's second-largest LNG exporter after Australia—unless Qatar keeps its number-one place.

No matter how the top three LNG exporters are arranged, the United States will likely remain one of them, even with the Biden administration's energy transition agenda that frowns upon all fossil fuels, including natural gas. After all, a transition is a transition, but why leave the European market to Russia when you could take a piece of it?

Right now, Europe is ripe for the taking. After years of talking about diversification of gas supplies but doing little to advance this diversification, now Europe is paying for its short-sightedness. It has no way to force Gazprom to send more gas its way because Gazprom is fulfilling its contractual obligation, and that's where things end until Nord Stream 2 is approved. Norway can only pump so much gas to its neighbors and fellow Europeans. The only thing left is LNG.

Most LNG in the world is supplied under long-term contracts, but there is a pretty lively spot market for the commodity, too. Normally, LNG producers go after long-term contracts to secure funds for the construction of their LNG facilities. These have been in short supply recently, which forced the shelving of several new U.S. projects. Now, these may get a second lease on life if European importers decide to put their money where their mouths are concerning supply diversity.

"Europe is currently importing around 70% of the gas it needs, and this share is expected to increase in the coming years," the EU and the U.S. said in a joint statement in 2019 amid a Trump administration campaign for the increase in U.S. LNG exports to the union.

"Liquefied natural gas is also an important part of the EU's diversification strategy; and as the second biggest single gas market in the world after the U.S., the EU is therefore an attractive option for the U.S.," the statement also said. Little has changed since then, it seems, despite the EU's own green push.

Of course, the LNG projects currently planned for construction will not be finished soon enough to help alleviate the current gas shortage in Europe. But the longer-term outlook remains optimistic.

"We have to have an eye on next winter and the winter after that, in order to make sure that, while we focus on the energy transition, we are addressing the needs of today," U.S. State Department energy envoy Amos Hochstein told the FT.

Of course, competition remains intense among LNG exporters. Qatar is also building its capacity to maintain its number-one spot globally, and it boasts much lower production costs than other producers. Australia has also staked a big claim in the LNG export market. If demand remains as strong as it is currently, all this additional capacity would be good news for buyers and sellers alike.

If demand drops, however, some companies could find themselves with stranded LNG assets. For now, however, the danger of this happening seems remote. The energy transition would need to advance a lot further before it threatens the LNG industry, it seems.

By Irina Slav for Oilprice.com

[Tom Nolan + 2,443]

Live NatGas Prices CHART - https://tradingeconomics.com/commodity/natural-gas

Natural Gas Price Fundamental Daily Forecast – Strengthens Over $5.652, Weakens Under $5.469 Ahead of EIA

Today’s EIA weekly storage report for the week-ending September 24 is expected to show a build in the mid- to –upper 80s Bcf.

James Hyerczyk

1 hour ago (Sep 30, 2021 11:25 AM GMT)

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-strengthens-over-5-652-weakens-under-5-469-ahead-of-eia-782383

Natural gas futures are trading higher shortly before the New York opening on Thursday after reversing earlier losses. Just as I suspected it would, the technical chart pattern played a major role in turning the market around ahead of today’s government storage report due to be released at 14:30 GMT.

Earlier in the week, I noted that the spike to the upside rally was created by a combination of short-covering and speculators chasing the market higher in reaction to the October futures expiration. Check that off the list.

I also noted that the move had little to do with the bullish fundamentals at this time. Check that also because traders said that prices are forecast to pull back ahead of an estimated large injection into storage and milder temperatures. And that another major rally is not likely to be the cards until the first cold spell hits.

Finally, I mentioned that professional traders seldom chase markets higher, they tend to buy the dips caused by speculator liquidation. Furthermore, this kind of rally especially at this time usually attracts profession short-sellers.

It looks like our analysis hit on all cylinders with the market pulling back into a short-term technical support area earlier today before reversing to the upside. However, we have more work to do because we have identified a potential counter-trend shorting area and a new more important area for value-seeking buyers.

At 10:58 GMT, December natural gas futures are trading $5.769, up $0.174 or +3.11%. This is up from an intraday low of $5.469.

Energy Information Administration Weekly Storage Report

Looking ahead to today’s U.S. Energy Information Administration (EIA) weekly storage report for the week-ending September 24, preliminary estimates show a build in the mid- to –upper 80s.

According to Natural Gas Intelligence (NGI), a Bloomberg survey found a median of 87 Bcf, with injection estimates ranging from 79 Bcf to 92 Bcf. The median forecast in a Reuters poll landed at a build of 88 Bcf, with a low estimate of 66 Bcf and a high or 92 Bcf.

The Wall Street Journal’s weekly survey produced an 84 Bcf average increase. Estimates ranged from 66 Bcf to 89 Bcf. NGI modeled a build of 89 Bcf.

The estimates compare with a build of 74 Bcf for the same week in 2020 and the five-year average of 72 Bcf.

 

Daily December Natural Gas

Edited September 30, 2021 by Tom Nolan

[Tom Nolan + 2,443]

Natural Gas Makes Up Larger Share Of U.S. Oil Producers' Revenues

By Tsvetana Paraskova - Oct 01, 2021, 11:30 AM CDT

https://oilprice.com/Latest-Energy-News/World-News/Natural-Gas-Makes-Up-Larger-Share-Of-US-Oil-Producers-Revenues.html

Thanks to higher natural gas prices, U.S. oil producers are generating a larger share of their revenues from natural gas.

The share of natural gas in revenues jumped to 14 percent in the first quarter of 2021—the highest since at least 2018, the Energy Information Administration (EIA) says.

Excluding the integrated majors, a total of 54 listed producers primarily engaged in crude oil production have seen their revenues from natural gas at a double-digit share of total revenues so far this year, as benchmark U.S. natural gas prices jumped during the Texas Freeze and rallied at the end of the summer on the back of record U.S. liquefied natural gas (LNG) exports and flattish overall gas production in America.

As per EIA estimates, the share of natural gas in the revenues of the 54 U.S. oil producers stood at 10 percent in the second quarter of 2021.

Considering the current rally in natural gas prices around the world, including in the U.S., with Henry Hub prices at over $5 per million British thermal units (MMBtu) since mid-September, revenues from gas for the U.S. oil producers are expected to remain at high levels throughout the rest of the year, the EIA said.

The administration's analysis does not include the integrated oil majors or companies that produce natural gas as their primary business, so these trends cannot be considered as reflecting behavior in the industry as a whole, the EIA noted.

The benchmark U.S. natural gas price has doubled over the past year, and prices have rallied despite the fact that the biggest gas-producing basin, Appalachia, saw in the first half of 2021 its highest average output since natural gas production in the Marcellus and Utica shale formations started in 2008.

Overall American dry natural gas production is rising. But it's not increasing so quickly as to offset surging U.S. gas exports via pipelines and LNG cargoes, which have been setting all-time high records this year. Scorching summer heatwaves and low natural gas inventories have also driven natural gas prices higher over the past few months. 

By Tsvetana Paraskova for Oilprice.com

Edited October 2, 2021 by Tom Nolan

[Tom Nolan + 2,443]

European Gas Prices Hit Record High

By Charles Kennedy - Oct 01, 2021, 9:30 AM CDT

https://oilprice.com/Latest-Energy-News/World-News/European-Gas-Prices-Hit-Record-High.html

Benchmark natural gas prices in Europe set a new record today reaching $1,200 per 1,000 cu m, or over $100 per MWh.

TASS reports that one of the reasons for the latest jump in prices could be a new decline in flows along the Yamal-Europe gas pipeline from Russia. According to the report, the flow of gas dropped threefold this morning but later accelerated, averaging 500,000 cu m per day, even though it remained much lower than the rate gas flowed on Thursday, which was 2.2 million cu m per day.

This is the second time this week that the flow along the Yamal-Europe pipeline has declined. On Tuesday, gas flows fell by more than half, Reuters reported, citing Gazprom as saying the decline was the result of a client request and it would be temporary. The report noted that Gazprom had booked capacity of 1.5 million cu m daily via the Polish stretch of the pipeline for October.

A contributing factor for the price of gas may well have been China’s government order from yesterday to power utilities to do whatever it takes to secure enough supply of gas, oil, and coal for the winter. The news immediately sent LNG prices on the spot market flying, but it is likely to have caused reverberations in the European gas market.

The gas crunch that hit Europe last month is now forcing utilities to turn to oil and even coal after years of shunning the dirtiest fossil fuel. However, these are running expensive, too. In fact, as Bloomberg reported on Thursday, some European power utilities had reached out to Russian coal suppliers for help, but the latter have signaled that any sizeable increase in coal exports was unlikely due to capacity constraints.

“If all the European utilities switch to coal, it will result in a huge spike in coal demand that Russia alone cannot provide for on such a short notice,” Natasha Tyrina, a principal research analyst at Wood Mackenzie, told Bloomberg. “That would need supply from other countries as well, from the U.S. for example, but the situation there is similar to everywhere else.”

By Charles Kennedy for Oilprice.com

[Tom Nolan + 2,443]

Surging Energy Prices Push Eurozone Inflation To Highest Since 2008

By Tsvetana Paraskova - Oct 01, 2021, 12:30 PM CDT

https://oilprice.com/Latest-Energy-News/World-News/Surging-Energy-Prices-Push-Eurozone-Inflation-To-Highest-Since-2008.html

As energy prices soared, inflation in the eurozone accelerated in September to the highest level since 2008, data from the European Union’s statistical office Eurostat showed on Friday.

The annual inflation rate in the 19 countries of the euro area—including the largest EU economies Germany, France, and Italy—hit 3.4 percent in September 2021, up from 3.0 percent in August, a flash estimate from Eurostat showed.

Energy prices surged by 17.4 percent in September, compared with a 15.4-percent annual jump in August.

Among individual countries, inflation in Germany, Europe’s biggest economy, is expected to have accelerated to 4.1 percent in September from 3.4 percent in August.

Surging natural gas and power prices are the main drivers of inflation in the eurozone, although the European Central Bank (ECB), the central bank for the euro, has said that it sees inflationary pressures as transitory.

“The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term,” ECB President Christine Lagarde said at a forum earlier this week. According to the ECB chief, “What we are seeing now is mostly a phase of temporary inflation linked to reopening.”

Meanwhile, Europe’s natural gas and power prices surged again to fresh record highs on Thursday amid concerns about low supply and forecasts of lower than normal temperatures in the UK.

Europe is low not only on natural gas supply as the heating season begins on October 1. Coal is also in short supply as some utilities are forced to switch to coal from gas due to the surging gas prices. Coal prices are also surging amid a tight global market supply with Chinese demand booming and with high EU carbon prices.

As a result, power prices in Europe are also soaring, with French and German electricity prices for next year hitting records on Thursday.

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Natural-Gas/Asia-Is-Winning-The-Bidding-War-For-Natural-Gas-Supply.html

Asia Is Winning The Bidding War For Natural Gas Supply

By Tsvetana Paraskova - Oct 02, 2021, 6:00 PM CDT

• Just as natural gas prices surged to records in Europe and Asia, commodity-hungry China secured this week a major LNG supply deal with top exporter Qatar
• Chinese authorities are reportedly ordering state energy enterprises to secure supply for the winter “at all costs.”
• The gas crisis in Europe is pushing Asian spot LNG prices up, but Asia is winning the bidding war so far.

China and Asia are winning the bidding war for natural gas supplies as the northern hemisphere goes into the winter season with woefully low inventories and recovering demand after the pandemic. 

Just as natural gas prices surged to records in Europe and Asia, commodity-hungry China secured this week a major long-term liquefied natural gas (LNG) supply deal with top exporter Qatar.   

China is looking to secure additional volumes of long-term supply of gas while it is also bidding up LNG spot cargoes, together with wider Asia, leaving Europe with fewer spot supply and further exacerbating the European gas crisis. 

Chinese authorities are reportedly ordering state energy enterprises to secure supply for the winter “at all costs,” which, analysts say, will further drive up demand for natural gas and coal this winter.  

And as soon as January, China will have more LNG volumes available under a long-term 15-year deal with Qatar Petroleum. 

This week, Qatar Petroleum and a subsidiary of China National Offshore Oil Corporation (CNOOC) reached a long-term agreement under which Qatar will supply 3.5 million tons per year of LNG over a 15-year period starting January 2022. 

Since Qatar started exporting LNG to China, the Gulf nation gas delivered 715 LNG cargoes to China, of which 270 cargoes (more than 24 million tons of LNG) were delivered to CNOOC.?

This week’s deal is the second major long-term LNG supply agreement between Qatar and a Chinese energy giant. 

In March, Qatar Petroleum signed a ten-year LNG supply deal with Chinese giant Sinopec. The Gulf country will supply China Petroleum & Chemical Corporation, or Sinopec, with 2 million tons per year of LNG, starting in January 2022.

Despite the long-term deals with Qatar, China still needs a lot of LNG this winter as its economy recovers from the pandemic, and its energy emission targets have led to more gas use at the expense of coal.

This year, very low gas inventory levels in Europe and low stockpiles in Asia after the unusually cold and long 2020/2021 winter—coupled with economies rebounding from COVID restrictions—are pushing gas demand high ahead of the heating season. Gas markets are tight all over the world, creating a ripple effect on the other energy commodities, coal, and crude oil. 

Europe’s natural gas and power prices surged again to fresh record highs on Thursday amid concerns about low supply and forecasts of lower than normal temperatures in the UK.

The gas crisis in Europe is pushing Asian spot LNG prices up, but Asia is winning the bidding war so far because buyers prefer to ship LNG to Asia where the price of gas per million British thermal units is higher than the equivalent prices in Europe. 

“They have more purchasing power now,” an LNG broker told the Financial Times, referring to LNG buyers in Asia. “Europe has pipeline supplies and China and Japan don’t have alternatives,” the broker added. 

“Significant growth in gas demand post-COVID-19 in both North Asia and Europe has created competition for LNG cargoes, particularly from the US and Qatar, pushing up gas spot prices to record levels for this time of the year,” Australia-based energy advisory firm EnergyQuest said in a note on Thursday.

Spot prices of LNG in Asia have just surpassed not only the records for this time of the year but the all-time high from last January. On Thursday, Asian spot LNG prices jumped to the highest on record, at $34.47 per million British thermal units (mmBtu), as assessed by S&P Global Platts. Thursday’s price broke the $32.50/mmBtu record from January 2021. 

According to Citigroup, LNG prices could spike to as high as $100/MMBtu if particularly frigid winter weather combines with the tight markets that have sent natural gas prices surging.

“Strong demand and a lack of supply response have sharply tightened the market. Any surprise demand surge or supply disruptions could propel price further upward,” the investment bank said in a note last week. 

Even at record spot LNG prices, China is set to buy more, as per the directive from authorities to ensure supply “at all costs” and avoid further blackouts and a looming slowdown in economic growth as factories close.  

The Chinese order for securing supply “suggests that already very elevated LNG and thermal coal prices could be further bid up by Chinese buying,” ING strategists Warren Patterson and Wenyu Yao said on Friday. 

“If we do see strong Chinese buying, it will put further pressure on the European natural gas market,” they noted.

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

New video by OILPRICE.COM

Dramatic Resurrection for US LNG

https://youtu.be/qyACwXYygHk

<iframe width="560" height="315" src="https://www.youtube.com/embed/qyACwXYygHk" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

[Tom Nolan + 2,443]

World's Largest Commodity Traders Burned By Massive Wrong Bets On Natural Gas

By ZeroHedge - Oct 04, 2021, 11:00 AM CDT

• The world's top commodity trading houses are being told by brokers and exchanges to deposit hundreds of millions of dollars in extra funds to cover their exposure to soaring gas prices.
• Glencore, Gunvor, Trafigura and Vitol are among the commodity merchants facing massive margin calls on their positions in natural gas markets across Europe and the U.S.
• Two of the sources said trading houses and other players had together accumulated $30 billion worth of short positions in the TTF market.

https://oilprice.com/Energy/Natural-Gas/Worlds-Largest-Commodity-Traders-Burned-By-Massive-Wrong-Bets-On-Natural-Gas.html

[Tom Nolan + 2,443]

Nord Stream 2 Operator Begins Filling Pipeline Amid Historic EU Energy Crisis

by Tyler Durden

Monday, Oct 04, 2021 - 02:14 PM

 

https://www.zerohedge.com/energy/nord-stream-2-operator-begins-filling-pipeline-amid-ratcheting-eu-energy-crisis

Russia and Germany are celebrating the historic moment Monday that Nord Stream 2 AG was partially brought online, for the first time filling the front section of the pipeline with gas, at a moment European Union countries have for weeks experienced shortages and soaring prices in many places, crucially which has entered crisis mode ahead of the coming winter. 

NS2 operators announced in a Monday press release that "the procedure for filling the first string of the Nord Stream 2 gas pipeline has begun" and further that "the string will now be filled with gas gradually in order to achieve the volume and pressure required for further technical testing."

The next major step before gas will actually transit from Russia into northeast Germany via the Baltic Sea from the St. Petersburg region will be the moment German regulators issue authorization to turn on the taps for the gas to start flowing - considered the final hurdle before it goes fully operational. 

The final section of construction in recent weeks and months took place in Denmark's waters, with Danish inspectors and officials giving their own greenlight as well on Monday.

Previously in the face of pushback from Washington and some allies, which charge that Europe will become too energy dependent on the Kremlin, the NS2 operator said, "Nord Stream 2 will contribute to meeting the long-term needs of the European energy market for gas imports, improving supply security and reliability, and providing gas under sensible economic conditions."

The independent Moscow Times has noted of the "controversial" pipeline that leaders in Kiev will continue to lobby hard against it:

The pipeline diverts supplies from an existing route through Ukraine and is expected to deprive Europe's ally of an estimated 1 billion euros ($1.2 billion) annually in transit fees from Russia.

Ukraine — in conflict with Russia since Moscow's 2014 annexation of Crimea — has warned Europe that Nord Stream 2 could be used by Moscow as a geopolitical pressure vice.

Last month Ukraine said it will pursue all revenues of action against NS2 "even after the gas is turned on" - yet it's been met with little more than a shrug in Europe, also amid recent US sanctions targeting companies involved in the construction. 

Meanwhile NATO's Atlantic Council is marking the occasion with the following blistering critique...
DEEP STATE PROPAGANDA FOLLOWS...

“#Ukraine’s network sits empty while Europe cannot get enough gas…Weaponization of Nord Stream 2 is no longer a hypothetical scenario; it is an ongoing process.”

https://www.atlanticcouncil.org/blogs/ukrainealert/europe-is-under-attack-from-putins-energy-weapon/

Europe is under attack from Putin’s energy weapon

WRITTEN BY Sergiy Makogon is CEO of Ukraine’s transmission system operator GTSOU.

 

.