Morning Update

Morning Update

Energy Markets:

WTI crude futures saw considerable appreciation during last Friday?rising from below $104dpb to close to over $109dpb during the course of the session as investors weighed on fears of supply disruptions from Norway (over industrial action) in addition to production outages in Libya. Despite the rally, oil prices went into their third consecutive weekly decline as the prospect of lower demand through dampening growth and recessions concerned the markets.

Bloomberg are citing JP Morgan Analysts who are warning that a 3m bpd cut in oil supplies could lead to Brent rising to $190dpb. 3m bpd is the level that most commentaries forecast would be cut from global supplies given sanctions on Russia. Nevertheless, some of the inflationary wind was taken out of the sales because covid related lockdowns in China (the world’s largest crude oil importer) significantly reduced demand to the tune of around 2m bpd.?

In the UK, protestors have targeted motorways in Wales and the West Country over high fuel prices and are creating convoys of slow-moving traffic. Data from Experian released last Thursday suggests that the average price of petrol hit 191.4p in UK forecourts with prices expected to continue to rise. Earlier in the year, government announced a five pence reduction in fuel duty, however recently the Competition and Markets Authority (CMA) stated that it found sufficient evidence that this cut had not been passed on to consumers.??

Trading today could be a little more muted than other days given the public bank holiday in the US for the 4th?July celebrations.??

Conflict in Ukraine

Ukrainian armed forces have confirmed their withdrawal from the eastern city of Nyschens – the last major urban area in Luhansk. This means that Russian forces now have full operational control over the separatist Oblast while controlling around half of the Donetsk Oblast. As such, the Kremlin’s forces now hold around three quarters of the territory in Donbas. While the Russians have more recently focused their military campaign in the Donbas, this puts them within striking distance of the city of Sloviansk where six locals recently lost their lives in a Russian bombardment.?

Over the weekend, a local governor blamed Ukraine for the bombardment of the Russian city of Belgorod where three people are said to have been killed in addition to the destruction of an oil depo and property. The Independent are writing that “The reports could not be independently verified [and that] Ukraine has also not yet officially reacted to the incident.”

Pubs Numbers at Lowest Levels Since Records Began

The number of Pubs in the UK has hit its lowest levels since records began. Atlus Group are indicating that the number of pubs has fallen by 7,000 since 2012 – with current numbers just under 40,000. Industry groups are stating that the government should do more alleviate price pressures in pubs by administering further tax cuts. According to the British Institute of Innkeeping and UK Hospitality, just 37% of hospitality businesses were currently turning a profit. Moreover, as real wages continue to fall and disposable income reduces, there are fears that the number of pub closures in the UK could continue to rise.