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Highlights, Natural Gas, Markets & Rain Days Update 9/6/22

Highlights


OPEC+ announced on Monday it will reduce, starting October first, crude oil production by 100,000 barrels per day. OPEC+ is OPEC and Russia. That news jumped crude oil $3 yesterday morning.

Natural gas is the primary input cost for nitrogen fertilizer. We reluctantly recommend you get your nitrogen priced for this fall at the very least. Russia said yesterday it will not resume natural gas flow to Europe until sanctions are lifted. Natural gas in Europe was up 25 to 30% yesterday. We do not see Russia turning on the gas until major sanction relief is granted. Since about 80% of the people in Europe reside further north than Minneapolis, the sanctions most likely will be lifted the first nasty cold weather in Europe. Sure, the warm Gulf Stream makes a huge difference, but the weather does get very cold for quite a while every winter.

If Russia does not turn on the gas this winter, nitrogen will be higher next spring. We do expect the gas to be flowing long before spring, but will the US lift sanctions on Russia also? If not, will Russia turn on the gas to Europe? Perhaps the US can ship enough liquified natural gas (LNG) to Europe, but the primary ship loading LNG loading facility is off line until sometime in October.

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