Weather, Putin and Covid19

Key takeaways:

1. The weather is one of the main drivers of gas prices. For instance, Europe’s mild winter till this point in time reduced the demand for gas and, thus, exhibited a downward pressure on prices on the continent.
2. Additionally, most European countries entered the winter season with ample gas storage, reaching full capacity in some countries, as they have been thoroughly preparing for the cold season assisted by an increase in LNG imports.
3. The direction of the Russian response towards EU sanctions and cap on its crude oil is still unclear. Although the government made a formal announcement, it shied away from the specifics leaving room for potential flexibility and more lenient stance.
4. To date, the effect of sanctions on Russian oil trade has been limited, thereby refuting previous fears that around 2-3 million barrels per day (Mb/d) of Russian oil could be removed from the oil markets. However, the sanctions on its oil products might have a more notable impact.
5. Oil markets will also be affected by the macro-outlook in major economies, and particularly China, the world’s second biggest economy as it currently battles a rapid spread of Covid19 infections.