Volatile gas and oil markets: Strikes, closed nuclear reactors, OPEC+ and recession fear

Bloomberg reported on March 10th that benchmark gas futures settled 21% higher, which is the biggest jump since June. This comes as a result of concerns about the strike and problems with the nuclear plants. On March 7th, French unions issued a joint call for strike across France as a response to a pension reform, which includes a proposal to raise the pension age from 62 to 64 years. The same morning, there was a blockage of oil product deliveries from all six oil refineries. Corrosion problems with the nuclear reactors was also a concern provoking an increased gas demand, with 19 of 56 nuclear reactors offline on Wednesday March 15th. Last Friday, the 17th, gas dived 20% because of milder weather and healthy storage outweighing the mentioned concerns. Spain also increased their power exports to France to aid the neighboring country. 


Oil has also been subject to substantial changes this week, reaching a 15 month low Thursday morning. There is a number of reasons for this; Russian crude exports above expectations, healthy oil inventories and lower demand growth because of fears of a recession. Cracks in banking is also a central reason, with Credit Suisse Group, Silicon Valley Bank and Signature Bank experiencing trouble. The expectation of Chinese demand driving oil prices has been outweighed by a brewing liquidity crisis and financial stability worldwide. The 15 month low is thereby caused by financial institutions dumping their crude futures to limit exposure. 


Friday 17th saw a rise in oil prices after Saudi Arabia and Russia reassured investors that they’re still committed to make production cuts for the remainder of the year, referencing to the OPEC+ agreement last October. The Swiss central bank came to the rescue for Credit Suisse, the second biggest bank in Switzerland, providing USD 50bn. Some of the US’ biggest banks deposited a combined USD 30bn to contain the fallout of Silicon Valley Bank and Signature Banks collapses. 

 

French striking workers and unionists outside Esso’s oil refinery, October 11th.


 

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