Rates as of 0500 GMT

Market Recap

In Europe, Russia reduced the supply of gas to the Nord Stream 1 pipeline to only 20 of capacity from 40 due to turbine maintenance. This led to about a 10 rise in European natural gas prices and helped to push Brent up as well, which supported CAD.

Theres a difference of opinion on why the flow is being restricted Russia says its because it needed to halt the operation of a Siemens gas turbine at a compressor station on instructions from an industry watchdog, but Germany said it saw no technical reason for the reduction. The Russian position is what some analysts are calling strategic ambiguity, that is, not explicitly saying that theyre going to cut off gas supplies as a tactical weapon but acting as if they will. Putins press secretary, Dmitry Peskov, said that the turbine will be installed after all the technological formalities have been completed and that Russia is not interested in cutting off gas supplies but that If Europe continues its course of absolutely recklessly imposing sanctions and restrictions that hit itself, the situation may change.

Theres a big difference between the pipeline operating at 40 of capacity and 20. At 40 capacity Germany could make it through the winter with just light rationing, but at 20 Germanys storage tanks would be empty by March. There would have to be either considerable rationing or a reduction in reexports to the rest of Europe, which of course would cause rationing in those countries…