Gas markets unnerved by uncertainty surrounding launch of Nord Stream 2

Gas markets unnerved by uncertainty surrounding launch of Nord Stream 2
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Updated 25 August 2021

Gas markets unnerved by uncertainty surrounding launch of Nord Stream 2

Gas markets unnerved by uncertainty surrounding launch of Nord Stream 2
  • The uncertainty surrounding the project is lingering and has become even more tense

MOSCOW: At a time when prices in global gas markets have risen to extremely high levels over the past few months, the uncertainty surrounding the launch of Nord Stream 2 is lingering and has become even more tense. 

On Aug. 18, rumors began circulating in the market, which were not later confirmed though, that Nord Stream 2 had allegedly been already launched and natural gas had started flowing through the pipeline into Germany’s territory. 

On these rumors, the gas price in the European gas market plunged swiftly only to recover shortly thereafter. In addition, the next day (Aug. 19) Interfax said, citing Gazprom, that “up to 5.6 billion cubic meters of gas may be pumped through Nord Stream by the end of 2021.” 

This implies the pipeline will be largely commissioned mid-November, should the construction works and certification proceed as planned, analysts of Moscow-based Alfa Bank said in a note issued Aug. 20.

On the other hand, the US imposed new sanctions on a Russian vessel involved in the Nord Stream 2 gas pipeline on Aug. 20, Reuters said citing a statement by US Secretary of State Antony Blinken. 

Moreover, Ukrainian President Volodymyr Zelensky reiterated his country’s opposition to the commissioning of Nord Stream 2 after his meeting with Chancellor Angela Merkel last Sunday.

An unusually low level of gas inventories in Europe which fell to 16 billion cubic meters or 20 percent below the five-year average as of Aug. 16 was an additional factor driving gas prices up both in Europe and Asia recently. 

In a note issued earlier this month analysts of Bank of America Securities speculated “Russia has declined to export additional volumes to Europe as it hopes to push Nord Stream 2 over the finish line.”

Anyway, it seems gas prices have reached their peak already and given the renewed concerns about the lingering pandemic the gas market is looking for some excuse to get a relief, like the proposed launch of Nord Stream 2, and will eagerly welcome more supply and lower prices.


Gold holds above $1,800 mark on inflation worries

Gold holds above $1,800 mark on inflation worries
Updated 7 sec ago

Gold holds above $1,800 mark on inflation worries

Gold holds above $1,800 mark on inflation worries

BENGALURU: Gold prices reclaimed the $1,800 mark on Monday, supported by persisting worries over inflation, as investors looked ahead to the next Federal Reserve meeting for its outlook on monetary policy.

Spot gold rose 0.5% to $1,801.22 per ounce by 1203 GMT. US gold futures rose 0.4 percent to $1,802.50.

While there is a perception inflation will be transitory, there is a persistent element of pressure, said Michael Hewson, chief market analyst at CMC Markets UK.

Federal Reserve Chair Jerome Powell on Friday reiterated his view that high inflation will likely abate next year, which led gold prices to ease from their September highs in the previous session.

He also said the US central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but not yet touch the interest rate dial.

“Powell’s recent comments may have amplified concerns of inflation sticking around for longer, which is apparently further eroding support for team ‘transitory’ and fueling a stronger bid for gold as an inflation hedge,” said Han Tan, chief market analyst at Exinity.

“And with Powell seeing a longer runway before the Fed starts hiking rates, such a view is encouraging gold bulls to reclaim the $1,800 handle at the onset of the week,” Tan said.

The next FOMC meeting is due on Nov. 2-3.

Investors will also be watching for the meetings of the Bank of Japan and European Central Bank due on Thursday.

The markets are pricing higher inflation and many participants clearly believe that the current high level of inflation is no longer merely temporary, Commerzbank analyst Daniel Briesemann said in a note.

“Gold should profit from this in its role as a store of value," he added.

Meanwhile, yields on the benchmark 10-year notes and the U.S. dollar ticked higher, dimming the appeal of the precious metal.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for non-yielding bullion.

Spot silver rose 0.4 percent to $24.40 per ounce.

Platinum inched 0.1 percent higher to $1,041.06, and palladium gained 0.9 percent to $2,039.87.


New Abu Dhabi fund exceeds target of $50m in latest close

New Abu Dhabi fund exceeds target of $50m in latest close
Updated 7 min 51 sec ago

New Abu Dhabi fund exceeds target of $50m in latest close

New Abu Dhabi fund exceeds target of $50m in latest close

DUBAI: An Abu Dhabi-based global fund has surpassed its target of $50 million in its second raise, as it aims to deploy investments to a dozen companies in Series A and pre-IPO stages. 

The Chimera Global Fund, managed by Chimera Capital, said it has a “robust pipeline of opportunities” in a number of sectors including financial technology, educational technology, and health technology.

“The fund aims to deploy tickets of up to $5 million in 12-15 companies that span from Series A to pre-IPO stages,” its chief investment officer, Karim Radwan, said, following the recent fundraising round. 

“We will focus on growth stage opportunities and plan to hold

investments for a period varying from two to five years,” he added. 

The fund has got some strong names in its portfolio, with marquee investments in online learning platform Coursera, Egyptian transport startup SWVL, and cloud kitchen Kitopi. 

It will continue looking for opportunities in the US, Southeast Asia, and the Middle East, said Chimera Capital Chairman Syed Basar Shueb. 


Hertz orders 100,000 Tesla cars: Bloomberg News

Hertz orders 100,000 Tesla cars: Bloomberg News
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Updated 44 min 41 sec ago

Hertz orders 100,000 Tesla cars: Bloomberg News

Hertz orders 100,000 Tesla cars: Bloomberg News
  • Hertz filed for bankruptcy protection in May last year after travel demand sank during the height of the pandemic

Car rental firm Hertz has ordered 100,000 Tesla Inc cars, Bloomberg News reported on Monday, citing people with knowledge of the matter.


This marks the single-largest purchase ever for electric vehicles and represents about $4.2 billion of revenue for Tesla, according to the report.


Hertz and Tesla did not immediately respond to Reuters requests for comment.


Hertz filed for bankruptcy protection in May last year after travel demand sank during the height of the pandemic and talks with creditors failed to provide relief.


In May, Hertz said a group of investors including Knighthead Capital Management, Certares Opportunities and Apollo Capital Management would fund the company's exit from Chapter 11 bankruptcy.


LNG demand to rise 25-50% by 2030, fastest growing hydrocarbon: Morgan Stanley

LNG demand to rise 25-50% by 2030, fastest growing hydrocarbon: Morgan Stanley
Liquefied natural gas (LNG) tanks stand at a terminal in Takaishi City, Osaka, Japan. Getty Images
Updated 25 October 2021

LNG demand to rise 25-50% by 2030, fastest growing hydrocarbon: Morgan Stanley

LNG demand to rise 25-50% by 2030, fastest growing hydrocarbon: Morgan Stanley
  • While higher gas prices are likely to underpin further investment in LNG, supply will be slower to respond than in previous cycles

Demand for liquefied natural gas (LNG) is expected to rise by 25 to 50 percent by 2030, making it the fastest growing hydrocarbon over the next decade, analysts from Morgan Stanley Research said in a note on Monday.


Morgan Stanley has raised its long-term LNG price outlook to $10 per million British thermal units (mmBtu), expecting spot prices of the super-chilled fuel to average 40% higher over the next decade, versus the past five years.


Asian spot LNG prices hit a record above $56 mmBtu earlier this month as surging demand ahead of the northern hemisphere winter spurred by an economic rebound from the pandemic outstripped supply.


Morgan Stanley said at least 73 million tonnes per annum (mtpa) of new projects are needed to meet LNG demand by 2030. This will require an additional $65 billion of new projects, on top of the $200 billion of projects already under construction which were sanctioned since 2019.


"Contrary to investor expectations, the world is going to need more LNG in the initial phase of the energy transition," the analysts said.


"Competing technologies for natural gas are not being developed fast enough, and there are significant benefits in reducing coal consumption while greener fuels are commercialised."


Projects with lower emission intensity will be more sought after and are more likely to progress, they said.


While higher gas prices are likely to underpin further investment in LNG, supply will be slower to respond than in previous cycles, the analysts said.


"This will be driven by uncertainty over medium-term demand along with more capital discipline from the industry, including diversification into greener energies," they said.


"We think investor sentiment towards LNG-focused companies is likely to increase given better prices and returns expectations."


LNG demand will outpace growth in other hydrocarbons over the next 10 to 15 years, they said, adding that oil demand is expected to grow in line with recent averages while coal demand is expected to be flat.


Asia, where coal makes up a high proportion of the energy mix, will be the key driver for LNG demand growth led by China and India as well as Taiwan, Thailand, Bangladesh, Indonesia and Malaysia, they added.


Volvo Cars gives itself $18bn price tag as cuts IPO size

Volvo Cars gives itself $18bn price tag as cuts IPO size
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Updated 25 October 2021

Volvo Cars gives itself $18bn price tag as cuts IPO size

Volvo Cars gives itself $18bn price tag as cuts IPO size
  • "Now we'll have a smaller share listed, which is somewhat unfortunate"

Volvo Cars shrank its initial public offering on Monday, pricing it at the bottom of a previously announced range and valuing the Geely-owned business at just over $18 billion.


European and U.S. IPO markets have been hit by cancellations as inflation and global supply chain crunches have increased stock market volatility, while many more companies are reported to have pushed back plans rather than risk U-turns.


Volvo Cars, which had previously said its IPO would be priced within a range of 53 crowns ($6.2) to 68 crowns per share, said it was now opting for 53 crowns.


Carmakers have been hurt by production disruptions due to a semiconductor shortage, with several cutting production targets and shutting factories on concerns it will run well into 2022.


At the current price, Volvo Cars would be valued at just over $18 billion, well below the $23 billion it had expected at the top of the IPO pricing range.


Volvo Cars said it plans to raise around 20 billion Swedish crowns ($2.3 billion), down a fifth from its previous target.


CEO Hakan Samuelsson said he was "totally convinced" this would be enough, while the price should not be seen as negative.


"We have been listening to the market, humbly," he told news agency TT.


Political tension between Beijing and Stockholm persist after Sweden banned Huawei from its 5G networks and Swedish companies like Ericsson have lost business in China.


Geely, which paid Ford $1.8 billion for Volvo Cars in 2010, would not exercise an over-allotment option, while the amended offering would result in a free float of 16 percent to 17.9 percent.


Handelsbanken analyst Hampus Engellau said Volvo Cars had been careful to get secure all institutional Swedish investors.


"I would rather have seen a bigger share of the company listed to get a larger owner base and a liquid share... now we'll have a smaller share listed, which is somewhat unfortunate," he said.


Volvo Cars said the first day of trading on Nasdaq Stockholm was expected on Oct. 29, a day later than previously announced.