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Collective SPR Release Eases Energy Crisis Fears

Numbers Report – April 08, 2022

In the latest edition of the Numbers Report, we will take a look at some of the most interesting figures put out this week in the energy and metals sectors. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. SPR Release Cools Down Historic Backwardation

- The collective release of 180 million barrels from the United States and IEA member countries has flattened oil futures’ forwards curve, easing fears of unprecedented tightness in the markets.

- The Biden Administration’s pledge to release 180 million barrels over the next six months exceeds the scope of IEA releases, however oddly enough one-third of the US SPR drawdown will be made under the aegis of the international organization.

- The prospect of a sizeable SPR volume hitting the markets also brought Middle East benchmarks Dubai, Oman and Murban some 70% down compared to their early-March peak.

- Backwardation in the Brent complex has eased to its lowest in three months, with the ICE Brent six-month spread now trending at $5 per barrel.

2. Ukraine War Exacerbates Risks of LNG Tightness

- Russia’s invasion of Ukraine will render gas market volatility much worse than it used to be, making gas shortages a much more immediate and realistic scenario, absent any demand shocks such as coronavirus lockdowns.

- Endowed with…

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