The Day at a Glance | October 14 2021

The Top

*Natural gas crisis is carrying over to the oil market: IEA.

*Inflation for producers in China increases to its highest level in 26 years (10.7% annual, Sep.), boosted by coal and raw material prices.

*Germany`s growth estimates for 2021 were cut substantially due to productive chain problems: 2.4% vs. 3.7% prev.

*Los Angeles port will operate 24/7 to alleviate congestions.

*We still consider the upsurge in inflation to be temporary: Christine Lagarde, President of the ECB.

*FED points out the purchasing program`s withdrawal will start mid-November or December, at a rate of 15 billion monthly dollars.

Economic environment

IAE confirms there is unusual demand for oil. The International Energy Agency (IAE) published a report in which it assures that the natural gas crisis in Europe and Asia has started to carry over to oil markets, with an unusual increase in demand for oil and its derivatives in various regions of the world. For the IAE, this puts greater pressure on the crude oil market, which was already operating at a supply deficit. Scarcity of natural gas for electricity generation is increasing demand for alternative resources, such as fuels and distillates extracted from crude oil in order to feed power plants. The IAE expects this to result in an increase in demand of 500 thousand daily barrels of crude oil per month for the next 6 months. OPEC+ will maintain important limits on global crude oil production and has not shown any intentions of increasing volumes in light of the current circumstances. OPEC+ expects to gradually add 2.7 million daily barrels into the international supply of crude oil from September until the end of 2021. Despite this, however, the IAE estimates that there will be a supply deficit of 700 thousand daily barrels in what`s left of 2021 and will not become a surplus until 2022. The energy crisis threatens to affect energy-intensive industries, slowing growth and increasing inflation.