Not all quiet on the Russian front!

While markets are trying to down play the Russian invasion of Crimea now it is being reported that Crimea is going to hold a vote on joining the Russian Federation. In the latest development in Russia’s desperate attempt to keep its monopoly on European energy supply. Once again it is all about energy and energy is power.

Russia is pushing a vote to try to justify the unjustifiable. Russia is desperate and fears the potential of the Crimea regions potential natural gas supply as well as it’s off shore oil production capability. Chevron and Royal Dutch Shell that were interested in developing Ukrainian shale and the Ukraine thought that that could make them independent of Russia. The government said there may be enough natural gas in shale reserve areas to meet the country's needs without imports. In fact it is possible that could make the Ukraine a net natural gas exporter.

Russia wants Russian gas running through Ukrainian pipelines not Ukrainian gas running through Ukrainian pipelines.  The Russian Natural Resources Ministry said just last January that it was not concerned about the potential boom in natural gas supply but it was concerned hydraulic fracturing in neighboring Ukraine could pollute regional water supplies. I wonder if they will have the same concerns when they are in charge of Crimea.  At the same time Russia want to get its hands on the offshore production potential. 

As the Russian economy suffers due to the lack of imagination of its system in the Russian Federation looks to its dark past to try to secure its future. While the US is fast track economic sanctions the rest of the world seems to send signals to Putin that he can do whatever he wants. In the meantime Russia’s future is being squandered by an egomaniacal leader that has no vision other than power. The U.S. Republicans are calling for fast tracking U.S. natural gas exports to help Europe. The Obama Administration has approved six of 21 applications to build port facilities to export liquefied natural gas. President Obama, who has been slow to grasp the economic and political advantages to U.S. oil and gas production, should hopefully start to get the message. Instead of fighting the Keystone Pipeline you should take a cue from President Carter that energy security is the moral equivalent of war. We are seeing that Russia is willing to risk war to try to control energy in Europe.

Seems to be more worried about demand. Weak data and weak demand numbers are making U.S. supply look more ample. Traders look to Europe not only for word of sanctions on Russia as well as their interest decisions. Both the UK and the EU will release their decisions. It will be all about the statements and not the policy.

In the meantime platinum(NYMEX:PLJ14) and palladium(NYMEX:PAM14) are also worried that Russia could impact supply as well as strikes in South Africa. Bloomberg News report striking platinum miners are marching on South African government offices in Pretoria after talks to end a dispute over pay collapsed without any prospect that a deadlock at the biggest producers will be resolved soon.

The Association of Mine workers and Construction Union, which has been on strike for six weeks, has said it will gather 40,000 workers and supporters for the protest ending at the Union Buildings. It was due to start at 9:30 a.m. local time. 

The union and Anglo Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI), which together account for more than two-thirds of all the platinum mined globally, remain far apart in negotiations over pay demands, the state mediator said yesterday.  More than 70,000 members of the union walked off the job in support of wage increases that include more than doubling pay for entry-level miners. The producers say they have lost a combined $660 million in revenue and that employees have forfeited $290 million since the strike started on Jan. 23.

 

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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