Energy Week

Goldman Sachs expects ‘all time high' oil demand to spur large deficits, boosting priceshttps://www.cnbc.com/2023/07/24/goldman-sachs-expects-all-time-high-oil-demand-will-boost-prices.html- expect demand to rise by 2 million bpd from India and China- Is this coming from OPEC via China?- IEA says global demand will increase by 2.4 million bpd- Will Saudi Arabia increase production as a result?Oil markets are still volatile, U.S. energy chief says, calling for further supplieshttps://www.cnbc.com/2023/07/22/-we-want-oil-prices-to-come-down-says-us-energy-secretary-general-.html- Prices area actually surprising stable right now- Granholm says Biden wants prices to come down because people "can't afford the premium."Anticipation of Rate Cuts Could Lead Oil Prices Higherhttps://etfdb.com/leveraged-inverse-channel/rate-cut-anticipation-could-lead-oil-prices-higher/- If interest rates fall, companies will borrow more and expand causing demand to rise- If interest rates fall, oil companies might be able to borrow money and expand drilling IF banks are willing to lend to them- Can't depend on the Fed to start cutting interest rates while inflation is above 2%Oil prices rise as tight supply counters expected rate hikeshttps://www.reuters.com/markets/commodities/oil-rally-takes-breather-ahead-fed-ecb-rate-hikes-2023-07-24/Russia Defies Sanctions by Selling Oil Above Price Caphttps://www.wsj.com/articles/russia-defies-sanctions-by-selling-oil-above-price-cap-bae1c271- Brent is at $82/barrel. Spread gets too large for people to ignore going to Russia.- Does this mean that the system for selling and transporting Russia oil without touching western entities is well developed enough that the price cap can be totally evaded and it is meaningless? Or does it mean that the penalties for violating the price cap aren't being enforced or aren't strong enough?- Sanctions enforcement isn't immediate - it can take 3+ years to get evidence and apply fines- “The West has true pricing power,” he said, adding that the cap could be lowered to between $20 and $30 a barrel.- But if price cap is set too low, Russia will call the bluff and price oil at what the market is pricing its oil at, and buyers can take it or leave it.Global Hunt for Crude Sends Offshore Oil Stocks Soaringhttps://www.wsj.com/articles/global-hunt-for-crude-sends-offshore-oil-stocks-soaring-8e4f77a9- Exxon, Chevron stocks not doing well, but stocks of offshore exploration and service companies are booming. Noble, Transocean, etc. are booming with lots of offshore exploration. - Can take awhile to find what you need, but good for future, 2026, 2027, 2028Oil and Gas Companies to Face Stricter Regulations and Higher Royalty Rates for Drilling on Public Landshttps://www.energyportal.eu/news/new-rules-for-oil-and-gas-leasing-raise-rates-energy-companies-pay-to-drill-on-public-lands-8/84743/- The increased royalty rate is expected to remain in place until August 2032, with an estimated cost increase of $1.8 billion for oil and gas companies during that period.- The proposed rule, which raises royalty rates to 16.67% from the previous rate of 12.5%Link to Energy Infrastructure Webinar:https://zoom.us/webinar/register/WN_oyqmDS1aRRaqoUG0-gfVag#/registration This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil slides more than 1% as Chinese GDP dents demand hopeshttps://www.reuters.com/business/energy/oil-slips-after-libya-resumes-output-china-data-eyed-2023-07-17- GDP grew 6.3% year-on-year in the 2nd quarter, compared with analyst forecasts of 7.3%- what analysts were forecasting such high growth?- slow correction where expectations come back down to realityChina's June industrial output rises 4.4%, retail sales up 3.1%https://finance.yahoo.com/news/chinas-june-industrial-output-rises-020809002.html- China's industrial output grew 4.4% in June from a year earlier, unexpectedly accelerating from 3.5% seen in May- Retail sales grew 3.1% in June, slowing from a 12.7% jump in May. Analysts had expected growth of 3.2%.- Are the kind of okay numbers from China signals that the Chinese economy is actually much worse?Chinese Oil Demand Doesn't Make Sensehttps://www.wsj.com/articles/chinese-oil-demand-doesnt-make-sense-cbc02a44- "Either China's economy will accelerate rapidly in the second half—a prospect that currently looks unlikely—or oil demand will revert to more regular patterns, dragging global consumption and, potentially, prices down with it." *** Really???***- Could there be a mismatch between petroleum imports quotas and what they actually need.- "China doesn't regularly publish petroleum inventory data as the U.S. does, so it is difficult to say for sure how much diesel might be sitting in storage somewhere."Oil Bulls are Getting it All Wrong, Wall Street Veteran Warnshttps://finance.yahoo.com/news/oil-bulls-getting-wrong-wall-101242402.html- “The bulls got it all wrong,” said Ed Morse, the bank's veteran head of commodities research. “The world is still waiting for a real Chinese recovery, Europe is in recession and we still don't know if the US will have a hard landing.”- Citi's call for oil's summer average was $83/barrel. More realistic that the $97/barrel calls. But it's still off from $78...Japan to Propose Global Natural Gas Reserve to Avoid Shortageshttps://finance.yahoo.com/news/japan-propose-global-natural-gas-040004888.html- Can see why indiv countries would want to do this, but will global natural gas supplies be helpful the same way global oil reserves are when natural gas isn't traded like oil is?- Also, higher nat gas prices make Permian wells more valuable- Regional natural gas storage frameworks make much more senseDirty and Sludgy Oil Runs Hot in Asia as Saudis Cut Supply Backhttps://finance.yahoo.com/news/dirty-sludgy-oil-runs-hot-051227587.html- Less light oil on the market from Saudi Arabia and UAE has made buyers look for heavy, sour crudes- Urals price is now up close to price cap price- Was this intentional by Saudis? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Biofuels are displacing petroleum-based distillate fuel oil consumption on the West Coasthttps://www.eia.gov/todayinenergy/detail.php?id=57040- renewable diesel = diesel made from - biodiesel used as well- petroleum distillate consumption down on west coast in 2022 but biodiesel consumption up- unique to west coastNATIONAL AVERAGE SEES LITTLE CHANGE, GASOLINE DEMAND PLUMMETS AFTER SURGING FOR JULY 4- Gasoline demand soared on July 4 but declined since then- Gasoline prices went down going into July 4 but have basically remained stable since then- "Implied gasoline demand, a proxy for retail demand, unsurprisingly jumped to 9.6 million barrels as motorists hit the road for July 4."- "gasoline inventories fell 2.5 million barrels" Oil dips on Chinese and U.S. data, but OPEC+ cuts limit fallhttps://www.reuters.com/markets/commodities/oil-eases-ahead-china-us-data-opec-cuts-support-market-2023-07-10/- Lots of Chinese data coming out later this week- Will the market tighten in H2 2023? China's economy will turn around at some point, but will it be this year? - China's trade with US and Europe is down but is Russia really a replacement? Depends who you ask.Iran Seizes Commercial Tanker in Persian Gulfhttps://www.voanews.com/a/iran-seizes-commercial-tanker-in-persian-gulf-/7170938.html- Military incident in Persian Gulf including US Navy firing on Iranian vessels did not cause oil market to jump at all- Do people not care about tanker security in the Persian Gulf anymore?Special Guest Kunal Patel from the Dallas FedQ2 Energy Surveyhttps://www.dallasfed.org/research/surveys/des/2023/2302- price forecasts of producers are different from other industries. Think price will be in $80s by end of year- credit conditions: 24% of small E&Ps said credit conditions are having a major impact. Large E&Ps have more sources of credit.- costs in the oilfield: the larger the firm you are, the more pricing power you have, both with services and materials- larger firms can take advantage to get lower costs but smaller E&Ps are still facing higher costs- potential decreases in cost in H2- Contracts with rigs and suppliers are the issue - if firms locked in contracts in 2022 then prices are higher even if prices are going down now. When the contracts were signed is driving the costs- Oil producers in the US think that global oil consumption has slightly underperformed this year what they expected at the start of the year. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil falls amid China growth uncertaintieshttps://www.reuters.com/business/energy/oil-prices-come-off-earlier-gains-banks-cut-china-growth-forecasts-2023-06-19/- the issue is headwinds, but is China's economy really that bad- the real issue is that expectations for China's great economic reopening haven't materialized. - China's demand growth was baked in and now that it's coming in below expectations- at the same time...China's refineries processed second most oil in May on recordColumn: China stored massive volume of crude oil in May, giving it optionshttps://www.reuters.com/markets/commodities/china-stored-massive-volume-crude-oil-may-giving-it-options-russell-2023-06-19/- China added to crude oil stockpiles at the fastest rate in nearly three years in May, as robust imports outweighed near-record refinery processing.Toyota unveils sweeping plans for new battery tech, EV innovationhttps://www.reuters.com/business/autos-transportation/toyota-market-next-gen-battery-evs-2026-built-by-new-ev-unit-2023-06-13/- Solid-state batteries can hold more energy than current liquid electrolyte batteries- Toyota said it aims to launch next-generation lithium-ion batteries from 2026 offering longer ranges and quicker charging.- This could be much better for the modern model of driving.- While the range would be longer and the charging time faster and more palatable, but the weight might still be an issueNew Land Grab by Oil Giants Is Deep Undergroundhttps://www.wsj.com/articles/new-land-grab-by-oil-giants-is-deep-underground-34cd5e97Welcome Back Dr. Dean Foreman, Chief Economist for Texas Oil and Gas Association! www.txoga.org- Are we heading towards 13 million barrels per day of oil production from the US? It's not getting there.- Many states don't have the same activity levels as they did pre-pandemic- Texas is more important than ever for oil production - natural decline rates in Texas are less than in other places- Market is structurally tight, esp when you look at inventory levels- Why is OPEC cutting? Each time, Fed Reserve contemplates a rate hike, economic uncertainty results.-  Going back to the OPEC cuts last year was to offset monetary policy from Fed.- The China factor? China's economy is coming back but slowly over the course of the year.- Natural gas production is at all time highs- How much is flowing into global markets? Storage levels of natural gas are high in Europe and the U.S.- Seasonal and regional markets for natural gas remain.- Permian Basin most of the natural gas is associated- How to incentivize natural gas drilling when prices are so low- Appalachian region is constrained by pipelines- Record level of natural gas exports, but really strong production and really strong consumption. Productivity levels have held this up. - US is sitting at under $3 per mbtu, Europe is $9/$10 per mbtu- Hot summer could pressure the LNG situation. But also a comeback in China's economy could pressure the LNG situation. China gave up many cargoes of LNG that it had contracted for to Europe because they were willing to pay super high prices This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Commodities Slide as Investors Bet on Economic Slowdownhttps://www.wsj.com/articles/commodities-slide-as-investors-bet-on-economic-slowdown-233a6d3- if prices trend down to the $60s or $50s by October then Shale producers might curb production plansSaudi Arabia Springs 1 Million b/d Cut in Opec Megadealhttps://www.energyintel.com/00000188-857f-d6e7-a9ba-efffca560000- will Aramco take oil from storage if customers want more oil than they have available from production?Saudi Arabia Cuts Oil Output After OPEC Members Clash Over Quotashttps://www.wsj.com/articles/saudi-arabia-some-opec-members-clash-over-oil-production-quotas-87f43f0c- Angola vs. Saudi Arabia over a reduction in baseline quotas- 2024 new baseline quotas that more accurately reflect capacityWhat oil production cuts were agreed at OPEC+ meeting?https://www.reuters.com/business/energy/how-opec-deal-cuts-oil-supply-until-end-2024-2023-06-05/#:~:text=The%20OPEC%2B%20alliance%20on%20Sunday,a%20combined%2040.46%20million%20bpd- Does OPEC know something about China's demand that the rest of the market doesn't?China is drilling a 10,000-meter-deep hole into the Earthhttps://www.mining.com/web/china-is-drilling-a-10000-meter-deep-hole-into-the-earth/- "The project will provide data on the Earth's internal structure, while also testing deep underground drilling technologies, according to China National Petroleum Corp., which is spearheading the project."- Is this REALLY just a scientific and technical venture? Or is it cover for something military?- How much oil and gas would they have to get out of 457 days of drilling?- could it be for rare earths like lithium?An Inflexible EPA Rule Will Hamper Goals to Reduce Methane Emissionshttps://themessenger.com/opinion/an-inflexible-epa-rule-will-hamper-goals-to-reduce-methane-emissions This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Ford to charge up EV drive with flurry of battery dealshttps://www.reuters.com/business/autos-transportation/ford-announce-new-battery-material-deals-investor-event-2023-05-22/- doubts about Ford's ability to actually hit their EV production targets- But do people even WANT to buy F-150?- Ford says its electric vehicle unit is on track to lose $3 billion this year.NATIONAL AVERAGE PRICE OF GASOLINE HITS PAUSE AS MEMORIAL DAY LOOMS- gasoline price are not as high as people thought they were- is this a silver lining on the inflation talk?- Distillate stocks are 1% higher than this week last year- "Implied gasoline demand, a proxy for retail gasoline consumption, fell 395,000bpd to 8.91 million barrels."- Work from home, even just a few days a week, has permanently removed demand- will we see depressed gasoline consumption over the summer driving season despite lower gasoline pricesCourt rejects challenges to FERC approval of Alaska Gasline planhttps://www.ogj.com/general-interest/government/article/14293993/court-rejects-challenges-to-ferc-approval-of-alaska-gasline-plan- FERC approved the plan in 2020- 800 mile natural gas pipeline to bring gas from North Slope, liquefy it and ship it to Asian customers- The environmental groups objected, among other things, to FERC's failure to calculate greenhouse gas emissions that would occur when customers burned the natural gas.European Gas Prices Drop as Goldman Sees Fuel-Switching Floorhttps://financialpost.com/pmn/business-pmn/european-gas-prices-drop-as-goldman-sees-fuel-switching-floor- "Mild weather and a steady flow of liquefied natural gas have contributed to the decline as Europe recovers from its energy crisis amid severely curtailed pipeline flows from Russia. Stockpiles on the continent are now almost 66% full, well above the seasonal average"- But Goldman could be wrong. Hydropower is still down from last year's drought. Chevron Doubles Down on Shale With $6.3 Billion Dealhttps://www.wsj.com/articles/chevron-to-buy-pdc-energy-in-6-3-billion-stock-swap-d8835eee- Chevron getting acreage in Colorado but perhaps it can more effectively navigate regulations than smaller PDC This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Big Oil Has $150 Billion in Cash and Investors Want a Sharehttps://www.wsj.com/articles/big-oil-has-150-billion-in-cash-and-investors-want-a-share-b5cdea35- oil companies sitting on cash now, but they may need that cash for when prices are lower- should they return all this cash to shareholders now or keep it to pay out in dividends throughout the next cycle?- what about needing cash to account for uncertainty in regulations?Oil's sharp slide has surprised markets. But some traders now see a bottom for priceshttps://www.cnbc.com/2023/05/08/oils-sharp-slide-has-surprised-markets-but-some-traders-now-see-a-bottom-for-prices.html- analysts have "feelings" that oil prices have seen their bottom- what are the signs? expectation that US gasoline demand will be strong this summer? strong jet fuel demand? inventories? industry? Diesel demand? Chinese manufacturing data? Fed is done raising interest rates?- OPEC is a big uncertainty. Will OPEC take action to cut production at its June meeting or keep production stable?- Will OPEC members adhere to their voluntary cuts?- Diesel numbers aren't good for demand- Could hit summer driving season and demand goes up but then OPEC would need to hold production steady- If Russia doesn't actually cut then oil prices could go lower when evidence hits marketOil climbs almost 3% as recession fears begin to fadehttps://www.reuters.com/markets/commodities/oil-prices-inch-up-recession-fears-begin-fade-2023-05-08/- The fears aren't fading, they just aren't as bad as they seemed before.- Was the price slide in oil really overdone?- OPEC to release monthly oil report on Thursday?No more gas stoves? New York is first state to ban gas in new buildingshttps://www.csmonitor.com/Environment/2023/0505/No-more-gas-stoves-New-York-is-first-state-to-ban-gas-in-new-buildings- "It's part of a larger state plan to reach net-zero energy emissions by 2050" but the power plants will probably still be permitted to use natural gas- "By 2026, most new buildings under seven stories will have to use electric heat pumps for controlling air temperatures and for hot water. Larger buildings will have to comply by 2029. Some businesses that require extreme high heat to operate are exempt."- Heat pumps don't work that well. What will cities like Buffalo do?- "The state's energy cushion could narrow beginning in 2025 as some generators are deactivated and demand grows" according to New York's grid operator. Probably will not take older generators out of commission in order to continue to provide electricity.Special Guest Kunal Patel from Dallas Fed - Q1 Surveyhttps://www.dallasfed.org/research/surveys/des/2023/2301- 200 firms in 11th district registered- data collected March 15-23- Data suggest expansion in upstream over the last 2 years is stalling- supply chain delays eased- employment growth continuing but not as fast as before- executives are not optimistic- expect crude oil to end year at $80/barrel- WTI at $73/barrel but breakeven is around $62/barrel: range of averages from $56 to $66. But that includes different regions, Eagle Ford, Permian, etc. - most firms can profitably drill at current prices but last year breakeven was lower ($56/barrel). Large firms (10,000bpd or more) need $55/ barrel while smaller firms need less).- Generally if executives think the price is currently in a good range they predict that oil will end the year at the same price. Last year they thought prices would come down. Now they think prices will go up.- Question: What West Texas Intermediate (WTI) oil price does your firm need to cover operating expenses for existing wells? AVerage across sample is up by 10% from last year. Suggests increase in cost just to manage existing wells. - Price to complete a DUC has to be between operating expenses and price to put well into production. Completion cost is generally 2/3 of the cost of the well.- $70 oil but $2 gas -- is this an issue? Natural gas and natural gas liquids are seen mostly as an additional uplift. Cost of natural gas mostly impacts the just natural gas drillers.- Push to reduce emissions by moving to electric power is impacting the area. Using electric powered turbines in fracing, for example. More wells mean more electricity needed but often they are away from civilization and its hard to get electricity.- Anger towards BLM - especially regarding permitting rules. Even renewables are having trouble getting permits from BLM. Length of time to get permits is increasing.- Costs continued to rise, but supply chain issues easing. Why? Activity was flat, so maybe supply chain caught up? no, equipment that was ordered a long time ago was finally delivered. Could costs be in labor?Next report coming out June 22!Check out energy indicators and energy slide show! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

China's mixed economic data fuels concerns about recoveryhttps://www.japantimes.co.jp/news/2023/05/01/business/china-economic-recovery-concerns/#- Is this something that China can deal with domestically? Or is it the fault of the global economy which isn't ordering as much stuff from China?- China's consumer demand is doing ok, but the industrial side of China is patchy.- Is this just pent up consumer demand and the consumer economy will drop off to match the poor industrial recovery?- "The manufacturing PMI index fell to 49.2 from 51.9 in March — the first time since December it was below the 50 mark, which signals a contraction. Sub-indexes for new orders, new export orders and manufacturing employment were all below 50." - Will the consumer numbers decline once the post-Covid bump is over? If so...oil prices are heading lower.GasBuddy: Decline in retail gasoline prices gaining momentumhttps://www.upi.com/Top_News/US/2023/05/01/gasoline-dehaan-aaa-gasbuddy-oil/5411682948788/- gasoline prices are going down and will go down even more.- result of oil prices declining and wholesale gasoline prices declining and retailers are passing on the savings to consumers.- diesel prices also declining. Is this due to slowing economy, or is it just coming back down after being so high due to Ukraine/Russia issues? Seems like the issue is the economy.First shipment of Russian oil to Pakistan brokered by China scheduled for Mayhttps://economictimes.indiatimes.com/news/international/business/first-shipment-of-russian-oil-to-pakistan-brokered-by-china-scheduled-for-may/articleshow/99879550.cms?from=mdr- "The USA may also have given tacit support to this deal as crisis-hit Pakistan remains a key arms supplier to Kiev, ET has further learnt."- Sanctions, etc. give US a way to control who gets what oil based on foreign policy goals.How trading oil in another currency besides the dollar might play outhttps://www.thenationalnews.com/business/comment/2023/05/01/how-trading-oil-in-another-currency-besides-the-dollar-might-play-out/- Saudi Arabia's currency is pegged to the dollar and they can't de-peg it because there would be huge inflation. Can't sell too much oil in currency in non-dollars because yuan, etc. can be devalued.- "Any diminution of the dollar's global role in favour of the yuan or another currency will be gradual, and will lead, not follow, the oil market."- Saudi Arabia may be willing to accept yuan for oil, but they will likely insist on a set yuan to dollar rate.Biden administration could delay electric vehicles biofuel program decisionhttps://www.reuters.com/world/us/biden-administration-could-delay-electric-vehicles-biofuel-program-decision-2023-05-01/- If EV manufactures use renewable "fuels" (energy?) they might get awarded RINs they can sell to gasoline refineries that can't use enough Ethanol? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Biden admin preparing major crackdown on power plants that fuel nation's gridhttps://www.foxnews.com/politics/biden-admin-preparing-major-crackdown-power-plants-fuel-nations-grid- EPA planning to issue regulation that would limit emissions from fossil fuel power plants. Basically would require plants to shut down or install costly carbon capture facilities.- Would drive up prices- Is this being done in order to run on it in the next election?China's EV Love Affair Spells Doom for Gasolinehttps://www.bloomberg.com/news/newsletters/2023-04-21/china-s-ev-shift-spells-doom-for-oil- Can China's "leek futuristic roadsters with hologram wheels" EVs and SUVs that promise "a range of 1,000 kilometers (620 miles) on a single charge" spell the end of gasoline?- Can China maintain baseload energy for all these EVs? Does it want to control people's ability to charge their vehicle?- Just because someone saw lots of sleek EVs at the Shanghai auto show doesn't mean that everyone is buying and using an EV and that the combustion engine is dead in China.- Would think the same about America's auto industry if you watched the commercials from the Super Bowl, where every vehicle advertised was an EV.Column: Oil buying slows amid renewed concerns about economyhttps://www.reuters.com/markets/commodities/oil-buying-slows-amid-renewed-concerns-about-economy-2023-04-24/- OPEC has been wrong before, but they aren't ALWAYS wrong.- "But they remain more cautious on refined products owing to continued uncertainty about the outlook for the global economy and petroleum consumption."- Will there be a global economic slowdown? Still could be.- OPEC shocked the market with a cut last month but oil prices are only in the low $80s.Exxon Mobil Eyes Potential Megadeal With Shale Driller Pioneerhttps://www.wsj.com/articles/exxon-mobil-eyes-potential-mega-deal-with-shale-driller-pioneer-c48a4747- "held preliminary talks with Pioneer Natural Resources Co. about a possible acquisition of the U.S. fracking giant, as the oil major hunts for a blockbuster deal in the shale patch, according to people familiar with the matter."- Pioneer really understands the permian- XOM might be better at managing oil to gas ratio that has caused problems for Pioneer- "Pioneer has some of the best assets in the Permian, according to analysts"-"Pioneer, which only has operations in the Permian, produced an average of about 650,000 barrels of oil equivalent a day there in 2022"Exxon Mobil Corporation (NYSE:XOM) insiders sold US$3.0m worth of stock suggesting impending weakness.https://finance.yahoo.com/news/exxon-mobil-corporation-nyse-xom-130046709.html This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russia forecasts stable oil output to 2025, to set up stockpileshttps://www.reuters.com/business/energy/russia-forecasts-stable-oil-output-2025-set-up-stockpiles-2023-04-17/- Russia wants to build their stockpiles. Are they taking 500,000bpd off the market and putting it in storage or are they going to cut production in order to keep that oil in the ground and that's storage?- Russia could be planning to not actually cut production but keep those sales on the down lowOpec Chief Pushes Back on IEA's Criticism of Cutshttps://www.energyintel.com/00000187-8e37-dc4f-a7e7-9fb7a32e0000- "First of all, this is not the first time the IEA has criticized Opec and Opec-plus. Unfortunately, it has become like a broken record, yet time and time again, market fundamentals prevail, and Opec's more accurate forecasts and decisions prove to be the correct ones."- IEA pushes energy transition and then expresses frustration when OPEC cuts oil production- What does the west really WANT from OPEC?- Key differences between IEA and OPEC April Monthly Oil Market Forecasts: "Opec revised its forecast [for China's oil demand growth] upward this month by about 50,000 b/d reaching 760,000 b/d, while the IEA revised it upward by almost 200,000 b/d reaching 1.2 million b/d."OPEC doesn't think China's oil demand growth will be nearly as high as the IEA thinks.Russia's oil exports are back to pre-war levelshttps://www.cnn.com/2023/04/14/energy/russia-oil-exports-iea-report/index.html- according to IEA, "Moscow's exports of crude oil and oil products rose in March to their highest level since April 2020, jumping by 600,000 barrels a day"- Russia's overall income plunged nearly 21% compared with the same period in 2022 according to Reuters.Stopping America's LNG exports would hurt producers and send Beijing to Russia's doorstephttps://thehill.com/opinion/energy-environment/3933453-stopping-americas-lng-exports-would-hurt-producers-and-send-beijing-to-russias-doorstep/- we should encourage economic relations with China because it has improved diplomacy.- Can't be a free-market and say you want to ban exports to certain placesEurope's Largest Nuclear Reactor Launches as Continent Splits Over Atomic Energyhttps://www.wsj.com/articles/europes-largest-nuclear-reactor-launches-as-continent-splits-over-atomic-energy-373d6bd4- Divide between European countries that want more nuclear and those that are shutting it down in their countries.- "public support for nuclear power has grown in Finland, with roughly 60% of Finns in favor"- “Finland has a very strong culture of trust in authorities and experts,” said Mr. Tulkki, the nuclear scientist. Public confidence that nuclear waste can be disposed of safely “has enabled people to accept nuclear power,” he said.Check out new column on water futures trading: https://www.investing.com/analysis/saudi-arabia-takes-aim-at-oil-bears-what-traders-should-know-200636964 This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

OPEC+ announces surprise oil output cutshttps://www.reuters.com/business/energy/sarabia-other-opec-producers-announce-voluntary-oil-output-cuts-2023-04-02/- Does OPEC think that China's oil demand isn't coming back strong?- Russia retaliating against price cap from West- Want to defend $80 or higher oil- Could it be about speculation? Speculators LOVE big price jumps.- Reaction to lack of price support from demand side (US SPR buys that didn't happen when WTI went beflow $70)https://www.woodmac.com/horizons/china-reopening-means-for-global-energy-markets/- global implications if China's economy getting red hot and sucking up all the oil- Could Saudi Arabia and OPEC be trying to cool off the Chinese economy by raising prices?- LNG imports in China fell by 22% in 2022, only expected to recover 9% in 2023Goldman Sachs raises Brent oil price forecasts after OPEC+ output cutshttps://www.reuters.com/business/energy/goldman-sachs-raises-brent-oil-price-forecasts-after-opecs-surprise-output-cuts-2023-04-02/Special Guest - James Hill MCF Energyhttps://www.mcfenergy.com/corporate- publicly traded company on Canadian exchange exploring for oil and gas in Europe- Europe sees natural gas as transition fuel- Europe has been drunk on Russian gas for decades now, allowed themselves to ignore resources within their own borders.- Russian gas was cheap so they didn't have to drill- Drilled well within 6 months in Austria. Regulatory environment is still strict but permitting process has been much streamlined- Pipeline infrastructure is actually very close to wells that are drilling now or considering drilling.- Not fracking wells, proven wells. Ability to flow without much stimulation.- engaging with the local community to engage concerns, haven't found much negative  sentiment from local communities. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Saudi Arabia and U.A.E. Clash Over Oil, Yemen as Rift Growshttps://www.wsj.com/articles/saudi-arabia-and-u-a-e-clash-over-oil-yemen-as-rift-grows-ff286ff9- "Once close friends, the two biggest Arab economies are increasingly competing for money and power"- Will the UAE leave OPEC? - Doubtful because UAE benefits more by staying in OPEC- They like people to think that they are talking about leaving- UAE has spare capacityForget Peak Oil Demand: A Thirst for Barrels Puts $100 in Viewhttps://finance.yahoo.com/news/forget-peak-oil-demand-thirst-110000334.html- Will China's demand push oil to $100?- Amin Nasser of Aramco says demand will outstrip supply soon-ish (maybe H2)?- Recession in the West and not in the East?- Is a recession really coming? Mixed indicators.- It isn't in OPEC's interest to have a recession or runaway oil prices. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russia to cut oil output by 500,000 bpd in Marchhttps://www.reuters.com/business/energy/russia-cut-oil-output-by-500000-bpd-march-2023-02-10/-"As of today, we are fully selling the entire volume of oil produced, however, as stated earlier, we will not sell oil to those who directly or indirectly adhere to the principles of the 'price cap'," Novak said- Are they cutting to see who will pay above $60 and who will adhere to price cap?- Oil isn't up that much- Could be also to push customers to use all Russian servicesOil prices rise over 2% on Russian plan to cut outputhttps://finance.yahoo.com/news/oil-dips-heads-weekly-gain-015302054.html- Goldman cut its oil forecast by $6/barrel- Waiting for Chinese demand to surge in order for crude oil to "break out"- What about rising tensions with China? Shouldn't that increase oil prices?Natural Gas: Fasten Your Seat Beltshttps://www.wsj.com/articles/natural-gas-fasten-your-seat-belts-5c0fcdf4- volatility is much more extreme in 2022 than in any other year- How much of that is due to Russia and the fact that we are WAY more dependent on natural gas than ever before?- We should be concerned about 2023/2024 winterSpecial Guest Ademiju Allen from Rystad to discuss the North American natural gas production and infrastructure.- Gas markets analysts on North American gas team with Rystad- Gas constraints in North AMerica. Appalachia largest resource in America, maybe in world? But not enough takeaway capacity. Atlantic Coast Pipeline cancellation was supposed to help but it was cancelled. Mountain Valley Pipeline also a problem- If gas can't get to where it needs to go, you will have a problem if temperatures are lower than average- Fortunately for weather in Northeast, seasonally mild winter and haven't seen structural impacts to gas consumption in region - Production has remained flat- Is next winter a concern? Storage is seasonally high, comparatively. Broken down regionally it's higher in south-central.- Lack of production wasn't just lack of takeaway but also supply chain issues.- May through September is the period we have to go through and see how much gas is going into storage to see how prices will react to milder or aggressive temperatures. Really hard to say what will happen next winter.- Natural gas prices on a basis. Situation in California is the opposite - they were elevated this winter for different reasons than northeast. - Cold snap over Christmas: utilities/independent system operators always SAY they are well prepared but every storm/event is different. PGM experienced issues with how freezing temps impacted equipment.- The Permian has two things going for it that Appalachia doesn't: proximity to export facilities and that it is mostly associated gas.- Minimal growth coming out of Appalachia year on year basis. Permian and Haynesville has potential for huge growth.- Permian will grow at pace that oil production economics and takeaway capacity allows them to grow.- Permian is producing record levels of gas, but takeaway for gas needs to be able to keep up and right now it's tight.- Is lack of takeaway capacity for gas impacting oil production growth due to regulations that prevent flaring? No evidence for that. Flaring mandates are being following by public operators but not private operators.- Private operators just pay the penalty on flaring.For more visit https://www.rystadenergy.com/North America Natural Gas SolutionGlobal Gas & LNG Solution This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

No OPEC ministerial meeting, but the Saudi oil minister gets his 2-cents inSaudi energy minister cautious on oil production, warns on investment outlook and geopoliticshttps://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/020423-saudi-energy-minister-cautious-on-oil-production-warns-on-investment-outlook-and-geopolitics- ABS says: "With all due respect, forecasters are good forecasters. They do their best but not necessarily what they forecast happens as a reality. So, if people can adapt it to my other mode, which is, 'I will believe it when I see it, and then take action' -- it's a much more profound, self-assuring, cautious approach,"- OPEC no longer meeting monthly- According to AbS, the market should trust the OPEC+ alliance's stewardship of the market- AbS: "All of these so-called sanctions, embargoes, lack of investments…will all convolute into one thing and one thing only -- lack of energy supplies of all kinds when it is most needed. That is my worry, and that is something I don't want to be responsible for." - He may not want to be blamed for it, but you can be sure that he will be.Saudi Arabia unexpectedly raises oil prices for Marchhttps://financialpost.com/commodities/energy/oil-gas/saudi-arabia-raises-oil-prices-marchRough start to the week for global oil suppliesNorway's Sverdrup oil production suffers outagehttps://www.reuters.com/business/energy/norways-sverdrup-oil-production-suffers-outage-2023-02-06- The outage is expected to last for 2-3 days, with a preliminary restart set for mid-day on Feb. 8Turkey halts oil exports after earthquakes: https://www.argusmedia.com/en/news/2416752-turkey-halts-oil-exports-after-earthquakes-update- about 1 million bpd is exported from Ceyhan port which is now offline.- don't know how long it will take to come back online. Will Northern Iraqi oil go south or will they hold off?Special Guest Prof. James Coleman @EnergyLawProfPresentation here:https://www.energylawprof.com/wp-content/uploads/2022/09/StrategicEnergyReserve.pdf- For the first time in 50 years our SPR is half empty. We are less prepared for an oil disruption than any time in the past- Basically we are trying to move our entire economy and civilization to dependence on source of energy were we have NO strategic reserve whatsoever.- We basically have 30 minutes of electricity storage- Argument: if we want to move to more dependence on these sources we need to ramp up our ability to provide strategic reserves of it. e.g. reserves of natural gas to make sure that our power plants can always have a source of electricity. - much easier to store natgas- bulk of our storage is hydro- can do gravity storage basically by pushing rocks up a mountain.- companies won't be incentivized to put in storage and transportation for natural gas stores needed because financially it doesn't make sense for them to invest in decades of infrastructure for a return that will only come when/if there's a big storm maybe every 5 years. - heat pumps work to save electricity when temperatures are moderate but when temps drop below 40F its not effective and you end up getting getting heat that uses twice as much energy to produce- in some places it's easier to have the hydro storageNote: Ellen will be speaking at the Atlantic Council event "Improving  sanctions enforcement against Russia: The challenge of 2023"Register here: https://www.atlanticcouncil.org/event/improving-sanctions-enforcement-against-russia/ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Worst London air pollution in six years as home fires burnhttps://www.theguardian.com/environment/2023/jan/27/worst-london-air-pollution-in-six-years-as-home-fires-burn- wood is a really dirty burning fuel- its expensive to pay for heating, people turning to fires, but this is actually a really high emission fuelNatural Gas Shortages Hit China as Temperatures Plungehttps://www.nytimes.com/2023/01/25/business/china-natural-gas-shortages.html- gas shortages mean that people only get a few hours of heat a day because the utilities just turn it off- this happens in the US too! People don't realize that don't have a guarantee of service despite paying their bills- propane tank/generators can be a backupWhy gas prices are surging this monthhttps://www.cnn.com/2023/01/27/business/gas-prices-increase-inflation/index.html-  "Colorado's sole refinery, the Suncor refinery outside of Denver, was disrupted by freezing temperatures. When the refinery tried to restart, it suffered a fire and equipment got damaged."- Only having 1 refirey is a problem- no longer receiving massive injections of emergency oil from the Strategic Petroleum Reserve.- inventories for winter are low- EU doesn't have good inventories and this will hurt Northeast because they usually get a lot of products from Europe.- $4 gasoline could come by March instead of May.- Will consumers continue to spend or will they pull back with gasoline prices high?- but how much would demand actually be impacted by recession?New York Gasoline Shortage Brews on Fallout From EU's Russia Banhttps://www.bnnbloomberg.ca/new-york-gasoline-shortage-brews-on-fallout-from-eu-s-russia-ban-1.1876743German industry to pay 40% more for energy than pre-crisis - study sayshttps://www.reuters.com/business/energy/german-industry-pay-40-more-energy-than-pre-crisis-study-says-2023-01-30/- "German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia's invasion of Ukraine, a study by Allianz Trade"- The price increases will hit corporate profits across Europe by 1-1.5% and lead to lower investment- who is suffering more due to the Russia/Ukraine war - average consumer-wise. Are consumers in Russia or in the US suffering more inflationary impacts from the war?Analysis: India's rapid take-up of electric vehicles prompts rethink about long-term fuel needshttps://www.reuters.com/world/india/indias-ev-dawn-fans-expectations-fuel-demand-may-peak-early-2023-01-27/- question whether a rapid uptake in EVs initially is going to persist and going to translate to lower petroleum demand- also, the petroleum products tax - where will India get that revenue is everyone converts to EVs? will they transition it to power? how will they satisfy the demand for electricity. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russian oil trade remains in ship-shape as the EU price cap has failed to stem Moscow's freight and insurance income, analyst sayshttps://markets.businessinsider.com/news/commodities/russian-oil-india-china-not-cheap-shipping-fees-kpler-analyst-2023-1- "Debunking number one, no one really knows the price of Russian oil"- Urals blend may be priced at $38/barrel (less than half price of Brent) but now Russia is selling all these other services to go along with it like insurance, shipping, etc. so they could be making $60+/barrel with all the other services rolled in.Yellen says setting price caps on Russian refined oil products 'complicated'https://www.reuters.com/business/energy/yellen-says-setting-price-caps-russian-refined-oil-products-complicated-2023-01-21/- "Western countries are working to structure price caps on Russian refined petroleum products to ensure continued flow of Russian diesel, but the markets are complicated and there is a chance things do not go to plan" - Multiple different products make it harder to implement a price cap, apparently- European Union diesel ban comes into effect Feb 5- Yellen thinks crude oil price cap is successful so far because price for Russian crude oil dropped and Russia says its revenue is down -- but is it really?- There are so many ways to get around the price cap.U.S. energy head warns Republicans oil bill would lift pump priceshttps://www.reuters.com/world/us/us-energy-chief-warns-republicans-that-oil-bill-would-raise-pump-prices-2023-01-18/- Is this bill even a threat? This is posturing. Biden will just veto the bill and Republicans don't have veto-proof majority to override it.- Doesn't make sense to put SPR releases under purview of Congress. Congress would be a terrible body to have approval authority over SPR releases.- President should have authority to make these decisionsWhite House Aims to Reflect the Environment in Economic Datahttps://www.nytimes.com/2023/01/20/business/economy/economic-statistics-climate-nature.html- Idea put forth at the WEF by John Kerry, so it's unlikely to go anywhereDr. Dean Foreman from API: Monthly Statistical Report AND Quarterly Industry Report- US consumed 25 million bpd of petroleum- Part going into materials and petrochemicals was up- EIA growth estimate up to 1 million bpd but IEA now estimating 1.9 million bpd of demand growth: different expectations for China's growth. Europeans anticipating shortage of natural gas and expectation they will replace this with diesel- EIA estimates growth from US primarily. But API says growth flatlining. No tailwind coming from DUCs. How will we get 1million bpd growth? ANd where is growth from other non-OPEC countries? Less clear when this oil will come online.- Less international drilling, more investment but costs are up. Despite weaker economic forecasts, oil demand is still strong- API data focused on why production has been held back. Comparison with natural gas. Nat gas production is at all time high, exceeding pre-pandemic levels. Why? Gas has been led by Louisnana and Texas, which are conducive to gas drilling. Oil has more headwinds. Colorado stifling, New Mexico, Wyoming, North Dakota - drilling is all weak compared to pre-pandemic. Federal moratorium is a big issue for NM, WY, ND. Inability to build intrastate pipelines is hitting oil production.- Appalachia should be the largest source of natgas in US but can't get Mountain Valley pipeline online even though it's mostly built! Finishing the pipeline would totally.- Marcellus area natgas is prices nearly a dollar less than Henry Hub for next year. Why? This is big discount and is impacting the economics of natgas development.- DUC issue is indicative of workforce limitations. limited completion crews so people making decision to keep completion crews on rigs that are operating because they might lose it?- DUCs are theoretically the cheapest way to get product to market. News from Permian - changing how they are drilling, reshuffling. Is it economic?- Distillate stocks increased for 3rd straight month. Are we in the clear? Concerns aren't totally alleviated but we are 33 days of supply as a nation (was 25 in October). Real question is how to get distillate to Northeast. Relatively warm winter has helped because more time to get diesel by rain and truck from midwest to northeast. Especially since imports from Europe are down.- US net exports (crude oil and refined products) record for December - EIA projections for exports think that US will have surplus in Q1 2023 despite huge exports every month in 2022. How does this work?- Fundamentally, the market is tight. US products are in demand, let's make sure we are supporting US production in ways that are consistent with the promises we've made to our allies.https://www.api.org/ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

China's corn-based ethanol fuel threatens food security while crowding the market, state commentary warnshttps://www.scmp.com/economy/china-economy/article/3207013/chinas-corn-based-ethanol-fuel-threatens-food-security-while-crowding-market-state-commentary-warns#Echobox=1673879264- China can't feed its own people, and they are using corn for fuel- The US puts ethanol in gasoline to replace MBTE (found to cause cancer) but now puts more in its gasoline to replace petroleum - policy started during Bush Admin- What is going on in China? Why don't they just reduce the amount of ethanol in their gasoline?On gas stoves:- see for a good explanation - for a quick run down: Biden agenda, lithium mine, tribes, greens collide in Nevadahttps://www.nbc4i.com/news/politics/ap-politics/ap-bidens-agenda-lithium-mine-tribes-greens-collide-in-reno/- What's really green or not?- $700 million loan guarantee offered by Biden admin for this mine even though permits are being challenged in judicial systemSpecial Guest Kunal Patel from the Dallas Fed on the Q4 2022 Energy SurveyEllen's Investing.com Columnhttps://www.dallasfed.org/research/surveys/des/2022/2204#tab-report~ 200 oil and gas firms in 11th district (152 responses to survey)Main takeaways: - expansion of activity solid- costs continued to increase but some moderation in increases- supply chain delays continue to persist- employment demand in the field- uncertainty up amongst executives- Most executives think price of oil at end of 2023 will be in the $80 range (average $84/barrel)Capital expenditures: 2022 vs. 2023- firms are looking to increase capital expenditures- BUT there's also cost inflation, so much of the capital expenditure increases could just be due to cost inflation- expect small increase in activity, nothing too significant, but spending will go up.https://www.dallasfed.org/research/surveys/des/2022/2204#tab-questions- Will cost inflation be higher than last year? thinking is that is won't be as much of an increase.- How does this fit with the EIA forecast? Activity will increase. More firms are saying they are increasing production not declining but the increase is declining. Slower growth is the key word here.- EIA says 12.6 million bpd by end of 2023. Can the Permian hit that? On an annual basis we will produce more, but on a month to month basis we won't hit as high production levels (13 million bpd in 2019).- "Slowing growth" is the word for 2023?- But maybe slower growth isn't a bad thing? Activity will be higher in 2023 than in 2022. How long will our resources last? - Cost inflation makes it hard for firms to know how much they are going to spend this year. Supply chain disruptions are still having a major impact. Even if firms wanted to increase activity they couldn't because they don't have the parts.- Maturing asset base is listed as number 2 reason why growth isn't happening as fast. Are US assets closer to end of life cycle?- price volatility mentioned in comments "The volatility in commodity prices is creating bid–ask spreads to blow out on transactions. Fewer deals are to be had in this style of environment."- regulatory environment listed less this quarter- could there be a recession? this came up a lot- CEOs prediction for the price of oil at the end of the year is most impacted by what the price of oil was at the time they were asked for the prediction.- What price are you using for your budget question gets a much more conservative answer though CEOs are moving up the underlying price for their budgets.- "Leasing has increased and new drilling has increased."Q1 2023 Survey will be out at the end of March! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil rises on demand optimism as China borders reopenhttps://www.reuters.com/business/energy/oil-nudges-higher-after-china-opens-borders-lifts-fuel-demand-outlook-2023-01-09/- we are seeing back and forth with whether CHina's demand is going to surge or not- Saudi Arabia cuts its OSP to Asia - indicates they think that demand in China is soft- China issued a second batch of 2023 crude import quotas, Reuters says this makes the total for this year by 20% from the same time last year.- Likely to see a slow climb upwards in demandSaudi Arabia cuts oil prices for main market as demand slowshttps://gulfbusiness.com/saudi-arabia-cuts-oil-prices-for-main-market-as-demand-slows/Taliban and China firm agree Afghanistan oil extraction dealhttps://www.bbc.com/news/business-64183083- Amu Darya basin apparently has 87 million barrels. CHinese company will invest $150 million a year to extract it- Could be a tit for tat situation in which China develops oil for Taliban and then Taliban lets Chinese companies mine their rare earths which are actually more valuableEOG eyes flat Permian activity, tighter global oil supply in 2023https://www.reuters.com/business/energy/eog-resources-eyes-flat-permian-activity-2023-tighter-global-oil-supply-2023-01-06/- EOG CEO says that global oil supply will likely tighten this year- flat production, prices difficult to predict- Sheffield says that Saudi won't let Brent stay at $75 and they will cut to get prices higher. Oil prices: Predictions for 2023https://finance.yahoo.com/news/oil-prices-predictions-for-2023-164454199.htmlCiti: Brent $80, WTI $75JPMorgan: Brent $90OPIS: Brent $95-96, WTI $90Infrastructure Capital Advisors: $80-$100/barrelPioneer NR (Sheffiel) - base around $90 for Brent with highs up to $150Natural Gas Prices Are Coming Down. What to Expect for Energy Stocks. https://www.barrons.com/articles/natural-gas-prices-energy-stocks-51673027117- “The warmer-than-expected winter pulled forward the expected decline in natural gas price. Stocks could fall an additional 20% to 30% until they find a bottom,” Matt Portillo, head of research at Tudor, Pickering, Holt, told Barron'sUsing Up America's Oil Reserve Was Easy. Refilling It Won't Be.https://www.wsj.com/articles/using-up-americas-oil-reserve-was-easy-refilling-it-wont-be-11673220972- DOE wants to wait until WTI is below $70/barrel on a "consistent basis"- "A good buying window might be approaching if the administration wants to take it: WTI crude is trading around $74 a barrel today. Waiting around to sign future delivery contracts at the $70-a-barrel range could prove trickier."-"A DOE spokeswoman confirmed that the agency won't be buying for the February delivery window."- "The idea is to use the fixed-price contracts as a carrot for U.S. oil producers to invest in production." -- is this incentive for any producer?- If a CEO agreed to this now, Ellen thinks it would be grounds to remove them.Tune in next week for Special Guest Kunal Patel from the Dallas Fed to discuss the latest Energy Survey This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to the newsletter WTI higher or lower than $73, Brent higher or lower than $77?Ellen-HigherRyan-says Lower (but really thinks higher)Biden adviser calls investor refusal to ramp up shale drilling ‘un-American'https://thehill.com/policy/energy-environment/3771025-biden-adviser-calls-investor-refusal-to-ramp-up-shale-drilling-un-american/“I think that the idea that financiers would tell companies in the United States not to increase production and to buy back shares and increase dividends when the profits are at all-time highs is outrageous,” Hochstein told the British newspaper.“It is not only un-American, it is so unfair to the American public,” he added. “You want to pay dividends, pay dividends. You want to pay shareholders, pay shareholders. You want to get bonuses, do that, too. You could do all of that and still invest more. We are asking you to increase production and seize the moment.” Real issues shale drillers face are higher costs for materials, products, labor, etc. unavailability of necessary things like steel parts. Is inflation un-American?Biden admin beating up on Exxon, Trump admin also beat up on oil companies. Depend on public ignorance. Saudi energy minister sees no clear results yet from Russia price caphttps://www.reuters.com/business/energy/saudi-energy-min-all-opec-members-participate-decision-making-2022-12-11/- curious timing between Russian oil sanctions and end of Zero-Covid policies in China. Is there a correlation between more Russian oil becoming available and demand rising in China- is is a national security issue for China to buy too much Russian oil? Probably not. National security is protecting CCP- Saudi oil minister is looking with caution at global economy following implementation of sanctions and price cap policy.- Also, "The impact on China's economy from easing Covid restrictions still "needs time",Federal data: Kansas oil spill biggest in Keystone historyhttps://apnews.com/article/oil-spills-business-texas-kansas-us-environmental-protection-agency-eda391fc0924b34a08ff840615a7bc58Rush to electric vehicles may be an expensive mistake, say climate strategistshttps://www.cbc.ca/news/business/ev-transition-column-don-pittis-1.6667698Special Guest Patrick DeHaan, aka @GasBuddyGuy, Head of Petroleum Analysis at GasBuddyWhat's going on with diesel prices? - Has been the laggard this year. - Myriad of challenges this year combined with Russia/Ukraine challenges have made it problematic- Diesel prices soared in October when inventories were low, finally under $5/gallon now.- Diesel prices have eclipsed drop in gasoline prices per gallon- Both on the supply side and the demand side- Refineries had extensive turnaround this autumn. Mid-Sept through Mid-Nov when refineries do maintenance.- Coincided with Europe trying to build diesel storage, made for a tight situation though not as bad as the media played it.- Refinery utilization has been very high - unseasonably high numbers.- 25 days of distillate has jumped to 31 days meaning now we have $4.89/gallon- Cold spell coming up in US. CPC predicting colder than normal weather - pressure on heating oil. As a result of anticipated cold weather, wholesale price of diesel is going up. That will justify refiners keeping utilization high. Will help keep gasoline production up.- Refineries will continue to have above normal utilization but only in low 90s, probably- Europe has lost 6% of its refining capacity due to Covid. US only lost 5%. Market for U.S. products in Europe is good. - "The door is wide open for US refiners to fill that void."- Northeast has a population 10 times that of the Rockies but has the same refining capacity as the Rockies.- This why US needs more refining capacity. There is a huge need for refining capacity. - Closure of Philadelphia refinery was huge. It produced 1/3 of a million barrels a day. - Governments trying to incentivize bio-diesel. Tremendous incentives from government to convert but capacity is lower than traditional petroleum products. Conversions are happening at a bad time. Refining hasn't been lucrative until this year.Check out https://open.substack.com/pub/gasbuddyguy/p/gas-price-decline-hits-five-weeks? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to the newsletterOil prices rose as much as 2% on hopes of China's reopening and as OPEC+ maintains output cut targetshttps://www.cnbc.com/2022/12/05/oil-prices-rise-as-much-as-2percent-on-signs-of-china-covid-easing.html- OPEC decided production quotas from Oct 5 continued through end of 2023, next meeting June 4, 2023- Meetings of JMMC only 2 months- OPEC might feel like oil market is more stable? Or that it will take at least 2 months for market to figure out how its going to work post-Russia oil sanctions- Does Saudi Arabia have an idea of what's to come in China for next several months, Covid-wise? Perhaps they have a band of oil consumption that they are relying on with upper and lower limits.- https://www.opec.org/opec_web/en/press_room/7060.htmChina set to ease COVID curbs further as markets cheer change of tackhttps://www.reuters.com/world/china/covid-confusion-china-authorities-row-back-curbs-2022-12-05/- The West isn't used to be able to protests in China. They are actually far more frequent than we realize. It's really more like a negotiation between local labor "union" and CCP. This happens a lot and the protests we see might not really be about Covid lockdowns and this could be a front.- according to some sources, "a new set of nationwide rules is due to be announced soon."- how will this impact oil demand? OPEC doesn't seem think so, or its happy to just let Russia fill that demand?India to continue buying Russian oil, ministry source sayshttps://www.reuters.com/business/energy/india-continue-buying-russian-oil-ministry-source-says-2022-12-02/- "There is a lot of opacity in term of what the rules of the game are... There are always options to buy Russian oil,"- India used to not buy ANY Russian oil. Now it is a huge customer. India loves the discounts.Ghana paying for oil in Gold because then its not impacted by exchange rateshttps://www.reuters.com/markets/commodities/ghana-working-plan-buy-oil-with-gold-rather-than-usd-vp-2022-11-24/G7 price cap on Russian oil kicks in, Russia will only sell at market pricehttps://www.reuters.com/business/energy/g7-price-cap-russian-oil-kicks-russia-will-only-sell-market-price-2022-12-05/- sales to Europe going down, but that oil will go elsewhere- Russian might not make as money but it will Russia's European Crude Sales Collapse Ahead of Sanctionshttps://www.bnnbloomberg.ca/russia-s-european-crude-sales-collapse-ahead-of-sanctions-1.1855011Venezuela and Chevron sign oil contract in Caracashttps://www.cnn.com/2022/12/02/americas/venezuela-chevron-oil-intl-latam/index.html- 6 month lease for Chevron to export Venezuelan oil to the US to recoup its profits- this signing was just an official allowing of Chevron to come back to Venezuela - doesn't signify more investmentCheck out this podcast about Washington Ivy Advisors - new energy advocacy firm. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to the newsletterBiden gives Chevron permit to restart Venezuelan oil saleshttps://www.politico.com/news/2022/11/26/biden-chevron-permit-venezuelan-oil-sales-00070836Chevron can resume key role in Venezuela's oil output, exportshttps://www.reuters.com/business/energy/us-issues-expanded-license-allow-chevron-import-venezuelan-petroleum-2022-11-26/- this might add barrels to the market, but if might not because it might just shift oil from the black market to the legal market and not actually add barrels- Chevron isn't likely to restart production in a significant way because the license only goes for 6 months and significant investment and infrastructure repair is needed.- Might help Chevron recoup some lossesRussian Oil Is Already Trading Far Below Europe's Proposed Cap https://finance.yahoo.com/news/price-russian-oil-now-try-113456772.html- Urals trading at $51.76/barrel on Monday Mov 28- Is there any way to do a price cap and keep Russian oil on the market?- Poland wants $30/barrel but Greece, Malta, Cypress want a higher cap because they make a lot of money shipping Russian oil or want compensation- What's more important to Europeans - shipping jobs or hurting Putin?Oil prices erase 2022 gains as China's protests spark demand worries https://www.reuters.com/markets/commodities/oil-drops-more-than-1-chinas-covid-protests-fuel-demand-worries-2022-11-28/- Protests in China: unlike Tiananmen Sq, where Chinese people don't know what happened, now there is WeChat and people can see before the gov quashes it.- Technology does change things but is it enough to get ahead of the government? The government can just cut the internet.-  Will the protests mean more oil demand or less oil demand? China could come out with a jobs program which would be good for demand. Could also beat the war drums about Taiwan to crush dissent. Column: U.S. diesel shortage starts to easehttps://www.reuters.com/business/energy/us-diesel-shortage-starts-ease-kemp-2022-11-24/- "The increase was small but runs against the normal trend for a drawdown at this time of year and indicates high prices and a slowing economy are starting to rebuild inventories"- Runs against what Dr. Foreman said last week about the US economy and that distillate indicators show the economy is strong- If oil prices keep going down, will distillate follow?Energy Companies Expect More Friends in Washington as Republicans Take Over Househttps://www.wsj.com/articles/energy-companies-expect-more-friends-in-washington-as-republicans-take-over-house-11669517278- is there anything they can do for oil? ensure no windfall tax- the issue is the regulatory state not legal issues This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Frackers Say Oil Production Slowing in the Shale Patchhttps://www.wsj.com/articles/frackers-say-oil-production-slowing-in-the-shale-patch-11667743226- problem is that frackers are drilling in gassier areas- will likely get more production in 2023 because of rejiggering where they drill, etc.- WSJ very different interpretation of info from what Ryan sees in Permian based on research - article will be out from Hart Energy soon- Lots of evidence that there's plenty of profitable drilling - lots of wells break even at $40/barrel.Beijing's biggest district urges residents to stay home as COVID cases risehttps://www.reuters.com/world/china/china-covid-cases-steady-many-beijing-businesses-schools-shut-2022-11-20/- Is China moving away from zero-Covid or not?- Why is Xi pushing forward? Likelihood of mass death is low, so what's going on?- Is zero-Covid an employment scam? How do you transition people who work these jobs to elsewhere?- Impact on the oil market about news about Covid from China. Could have moved the market.- China has probably signaled to Aramco what it's going to do, so they already know and aren't trading on headlines. Aramco probably knows about China's zero-covid policy more than others.Saudi Arabia Eyes OPEC+ Output Increase Ahead of Restrictions on Russian Oilhttps://www.wsj.com/articles/saudi-arabia-eyes-opec-production-increase-ahead-of-embargo-price-cap-on-russian-oil-11669040336- WSJ reported that Saudi wants an increase of 500,000 bpd at Dec 4 meeting- Saudi denies this- Best indication of China's zero covid policy is what OPEC is doingMonthly Statistical Review - Interview with chief economist from API, Dr. Dean ForemanAPI | MSR: U.S. Petroleum Markets Buoyant in October, But Have Entered a Winter of Uncertainties- stories of different parts of the economy and uneven recovery. Interest rates hurt some businesses but not others. - U.S. is plowing itself towards recession with rate increases.- Consumer economy is hurting with rate increases- Projections from EIA, fuel switching, and other data shows no recession because close to record oil demand.- Employment picture has been strong in nation. Despite stress points and unevenness, its not a bad picture.- Growth in industrial side of the economy.- Is the Permian in trouble? - G7 price cap could be a disruption in the making. Could take 1 million bpd of crude off the market and 500,000 bpd of products off market.- East coast is more exposed and dependent on trade with Europe because of lack of refining capacity and depends on trade with other regions and the transportation of it.- Market logistics are more of the same of what we saw in March and April as things get rerouted. Russian crude has to go by water because it's not going to Europe. Additional market penetration to India, China, etc. Is there any market left there? With refined products - also logistical. Typically products are shipped out of refineries in Baltic and spend 3 days going to Rotterdam. But now they have to spend more time going to Asia. Shipping and insurance issues are also a logistical issue. Short term disruption during change without any political hardball being played by Putin.- "Total U.S. exports of crude oil and refined products eclipsed a record 10.0 mb/d for a second straight month, and U.S. petroleum net exports rose to 2.1 mb/d, which was the highest for any month on record since 1947." Do you foresee this changing when the SPR releases stop? --> some of the SPR has been exported but not a lot of it. A lot of it is still getting placed domestically through pipelines and barges.- Two months ago 10.4 million bpd of total gross exports was a record. Double digit million bpd export numbers are stunning.- As imports have gone down, we have net exports going up.- Hunkering down and building business to continue to supply oil domestically.- EIA projects a backslide in exports but by year end next year it comes back.- The US has become a stronger domestic provider of its own oil within our own value chain.- But need more infrastructure in oil in order to have low prices at home and lots of exports This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to newsletterFossil fuel producers flex their muscle at UN climate summithttps://www.ft.com/content/a29c1204-70cf-46c1-b266-780788bfa048- Fossil fuel companies invited to COP27 for the first time- Are they hijacking the conference with their money?- Definitely seem to be hijacking the headlines- Does it mean that the climate camp is admitting that fossil fuels are still necessary and they are just trying to get them to pollute less? EPA to strengthen proposed rule on methane emissions from oil, gashttps://www.ogj.com/general-interest/government/article/14285643/epa-to-strengthen-proposed-rule-on-methane-emissions-from-oil-gas- the rules are written for big oil (Exxon) not little oil. Then big oil absorbs little oil- zero emissions on pneumatic pumps, more stringent regulations on flaring but won't say what those regulations are- use remote sensing to detect methane leaksSaudi Arabia says US ties are solid as it defends oil policyhttps://www.straitstimes.com/world/middle-east/saudi-arabia-says-us-ties-are-solid-as-it-defends-oil-policy- “We have had a disagreement with regard to the oil market,” Mr Adel Al-Jubeir- “Saudi Arabia and China have a huge interest at stake,” he said. “China is our largest trading partner. We have large investments in China and Chinese companies have large investments in Saudi Arabia.” - Saudis are making clear that US-Saudi relations might be "solid" but China is Saudis biggest trading partner.Opec cuts oil demand growth forecast againhttps://www.argusmedia.com/en/news/2390758-opec-cuts-oil-demand-growth-forecast-again- OPEC wants to defend $80/barrel oil- But with inflation is that really more like $65/barrelChina refiners slow down Russian oil purchases as sanctions nearhttps://www.reuters.com/business/energy/china-refiners-slow-down-russian-oil-purchases-sanctions-near-trade-2022-11-14/- "There are, of course, many concerns and much confusion regarding to the upcoming price cap, but people think the December-arriving cargoes should be safe (to buy)," a China-based trader said.- Is the slowdown really related to the sanctions or not needing as much oil?- China can't afford $120 barrel oilhttps://www.enverus.com/newsroom/enverus-unearths-full-north-america-inventory-in-basin-by-basin-deep-dive/Link to Dallas Fed Energy Conference: https://www.dallasfed.org/research/events/2022/22energy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Never miss an episode by subscribing to the newsletterChina's Xi Jinping to Visit Saudi Arabia Amid Global Reshufflinghttps://www.wsj.com/articles/chinas-xi-jinping-to-visit-saudi-arabia-amid-global-reshuffling-11667818979Chinese-Saudi relationship is developing beyond oil. Not sure exactly where that will come. Perhaps tourism? It's not an attempt to push out the US from its position with Saudi Arabia. but China definitely won't criticize Saudi Arabia. Energy Sticker Shock Grabs Spotlight Before Midtermshttps://www.wsj.com/articles/energy-sticker-shock-grabs-spotlight-before-midterms-11667817002More than 50% of Americans said their number 1 concern is the price of gas and consumer foods. 25% said the cost of housing and rent is their biggest concern. Shows that Americans are REALLY concerned about the cost of the living. Will this translate into a win for Republicans in midterms? Or will Biden try to push the windfall tax on oil companies?GAS PRICE DECLINE HALTS AS GREAT LAKES SOARSPrice of gasoline finally starting to decline, though diesel supplies remain tight in the North and Northeast.China Weighs Zero-Covid Exit But Proceeds With Caution and Without Timeline https://www.wsj.com/articles/china-weighs-zero-covid-exit-but-proceeds-with-caution-and-without-timeline-11667826209 Is this a result of poor economic results? What would this do to China's oil consumption?--> also read: "I spent 10 days in a secret Chinese Covid detention centre" https://www.ft.com/content/77622627-9433-445a-a763-a547b77b58edUAE will remain oil and gas supplier as long as there is need https://www.reuters.com/world/middle-east/uae-will-remain-oil-gas-supplier-long-there-is-need-president-2022-11-07/Never Too Early to Prepare for Next Winterhttps://www.iea.org/reports/never-too-early-to-prepare-for-next-winterIEA recommends "more rapid deployment of energy efficiency measures, renewables and heat pumps is needed to reduce the risk of a worsening energy and gas crisis." These are not policies that will help. Could suggest building more LNG regasification terminals.Ryan's Latest:The Permian Basin Has a People Problem: https://www.yahoo.com/video/permian-basin-people-problem-043000319.html This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

US backs Opec calls for more oil, gas investment https://www.argusmedia.com/en/news/2385879-us-backs-opec-calls-for-more-oil-gas-investment- The US' top energy envoy Amos Hochstein today supported calls for investment in oil and gas to increase globally alongside spending on the transition to a lower-carbon energy system.- Say one thing in one environment (Adipec is a safe space to call for more oil and gas investment) and then another when they are speaking ot voters- Hochstein says we need more investment in oil and gas AND clean energy because they are on "different timelines"Oil is all that Putin has left, U.S. presidential advisor Amos Hochstein sayshttps://www.cnbc.com/2022/10/31/oil-is-all-that-putin-has-left-presidential-advisor-amos-hochstein-says.html- “Oil is the only thing they have left in that economy … Putin has destroyed the rest of the economy,” - Why don't they do everything they can to lower the price of oil because that would actually hurt Russia's economy.Natural-Gas Prices Have Plunged Into Autumnhttps://www.wsj.com/articles/natural-gas-prices-have-plunged-into-autumn-11667084564- Analysts warn that unusually cold weather could send prices soaring anew this winter, especially in the Northeast where maxed out pipelines have effectively capped output from Appalachia's prolific producers.- Europe having an unseasonably warm autumn but that doesn't mean it won't be cold later.Biden admin has discussed slow-rolling military aid to Saudis, including Patriot missiles, as payback for oil production cuthttps://www.nbcnews.com/politics/joe-biden/biden-admin-discussed-slow-rolling-saudi-military-aid-payback-oil-prod-rcna54505- this is a can the politicians say they did everything they could to bring down oil prices? or is this something that would actually happen.Special Guest John Belizaire from Soluna Computinghttps://www.solunacomputing.com/video/soluna-partners-with-texas-wind-farm-to-build-flagship-data-center-in-the-state/- want to make renewable energy a global superpower- up to 30-40% of the power generated by renewable power plants is never used because the grid can't handle it. - Solana uses that energy for computing. Find power plants that have wasted power and build specialized data centers on site to use for computing power.- Focus on computing that is resilient to loss of energy but needs a lot of energy. Focusing on blockchain and crypto-mining. Monetize quickly. They use it.- Data centers are NOT 24-7 - they want to run computing models that aren't time dependent.  - do bitcoin mining for 3 years and then convert to other uses. crypto great "bootstrapping industry"- Need distributed computing network - lift and shifting jobs to other facilities if lacking energy.- facility isn't fixed source of energy consumption. can be bigger or smaller depending on needs of grid. like lego blocks.- "green electrons power their computing" looks good on ESG reports. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Congress eyes cutting off foreign markets from US strategic reserve oilhttps://www.washingtonexaminer.com/restoring-america/courage-strength-optimism/congress-eyes-cut-off-foreign-markets-us-strategic-reserve- this could be problematic because US refineries can't handle all the light, sweet oil in the SPR so there would be a lot of oil unpurchased if it couldn't be exported and Biden keeps releasing huge amounts of SPR.China Oil Demand in Limbo as Virus Saps Travel Before Party Congresshttps://www.bnnbloomberg.ca/china-oil-demand-in-limbo-as-virus-saps-travel-before-party-congress-1.1832275- Will China's demand rebound or will it remain depressed to June 2023? This could impact global demand forecasts- China not actually getting more capitalistic, business is happening through the Party- China sees North Korea as ideal country- Chinese economic collapse?Biden Pitches Plan to Refill Oil Reserves, but Producers Are Skepticalhttps://www.wsj.com/articles/biden-aims-to-spur-drilling-with-plan-to-refill-oil-reserves-but-producers-are-skeptical-11666467900- Is the Biden admin betting on global recession dropping oil prices to $50 so then $67 looks good and oil producers will have hedged?- $12 price cut is basically break even- Producers seem to think high prices will continue, so who is going to take that deal?Russian Military Boosts Jet Fuel Offtake for Ukraine Warhttps://www.energyintel.com/00000183-f6ac-dae6-a5b7-ffbe4fbb0000- boosting Russian refineriesDr. Dean Foreman from APIhttps://www.api.org/news-policy-and-issues/blog/2022/10/21/msr-petroleum-demand-reflects-economic-growth-in-september- US is hitting records despite global chaos- 20 million bpd of oil demand despite doom and gloom talk - good from economic and industry perspective- remarkable recovery on natural gas side- injection rate has caught up for storage- extraction of NGLs has been record breaking for September- 10.4 million bpd of gross exports of crude and refined products. Never higher for a month going back to 1947- domestic prices aren't exorbitant- don't have the kind of response on the oil drilling side the same way we had on the gas side- Oil and gas production are affected equally by supply chain and labor concerns. Gas supplies are looking good but oil production is down except in Texas- Why are prices still soft relative to where they probably should be, with inflation? Market is confused. Interest rate increases scaring off liquidity. Downdraft for oil prices along with ongoing SPR releases.- International natural picture is still very short, even though US picture is solid. SPR releases have covered up structural shortage. IEA, OPEC, Saudi Arabia all saying investment and drilling activity not enough to meet demand next year. OPEC cut forces hand of OECD SPR releases - will they continue SPR releases? Maybe SPR releases a little greedy in advance of midterms- Basically at price of right before Russia invasion of Ukraine. OPEC says it will defend this price.- Roughly balanced market with SPR releases and OPEC cuts. What will happen with Dec 5.- Distillate: the one area where the gov might ban exports to make sure we have enough. Stocks are really low on east coast - normally it imports some and gets from PADDS 2, 3 but it isn't. Symbiotic trade with Europe is disrupted. Historically low diesel reserves. Can substitute some fuels (residual heating oil, low sulfur fuel oil).- Distillate is a hot product internationally now- Trucking markets were really hot at the beginning of the year. Q1 was well above historical ranges. But now that prices are up, economy slowing, seeing a lot of slack capacity in trucking. DAT trend lines that track spot loads vs. trucks available. Seeing more trucks, fewer loads. Freight rates should be coming down.- Jet travel picking up does impact this because clawing back of market share from trucking- Soft distillate demand isn't all doom and gloom because there is some fuel switching BUT there are reasons to be concerned.- DEI indicates that economic growth is slower and steadier not dropping off. Economy probably isn't tanking but it is moving sideways- But when will Fed stop and take stock of how the rate increases are impacting the economy?- Demand side looks pretty good now. - Could a crash in the housing market have an impact on any fuel demand? - inventories are so low that if we get an Abqaiq like event, markets will see that we don't have the cushion to deal with it and futures markets will react in a more extreme way.- Banning exports is not the answer. We need targeted solutions to address regional problems. Targeted Jones Act waiver. Wild corner solutions aren't helpful.Ellen's New York Times Opinion Piece: https://www.nytimes.com/2022/10/24/opinion/international-world/saudi-arabia-opec-oil-cut.html This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

OPEC+ to Weigh Production Cut to Bolster Oil Priceshttps://www.wsj.com/articles/opec-to-weigh-production-cut-to-bolster-oil-prices-11664734482- oil prices are inflated due to inflation so $80/barrel oil is perhaps more like $70/barrerl oil or even $60/barrel oil.- could this cut put prices back up to $90 or $100/barrel- How much more can prices go up after the jump in prices as news of these talks jhave gotten out?- What about the demand forecasts that show increased demand in 2023? Is this just a short term cut for the rest of 2022- What if prices get too high for China?This 100% solar community endured Hurricane Ian with no loss of power and minimal damagehttps://www.cnn.com/2022/10/02/us/solar-babcock-ranch-florida-hurricane-ian-climate/index.html- This community's survival isn't about its eco-consious solar powered design but that all of its transmission lines are underground, well built homes & an inland locationEnergy crisis: Europeans 'must lower thermostats to prepare for Russia turning off gas supplies' https://www.euronews.com/my-europe/2022/10/03/energy-crisis-europeans-must-lower-thermostats-to-prepare-for-russia-turning-off-gas-suppl- leaks were also found on the Nord Stream 2 pipeline, which was due to come on stream this year but never did after Germany refused to certify it.Special Guest Kunal Patel from Dallas Fed Energy Surveyhttps://www.dallasfed.org/research/surveys/des/2022/2203.aspx#tab-report- 200 Oil and Gas Firms in 11th District (Texas, Louisiana, New Mexico)- 173 responded (mostly E&P firms, also oil services firms)- Overall goal to better understand opportunities and challenges upstream is facing- 3rd Quarter Survey shows strong expansion in upstream. Strong pace for business activity but supply chain is worsening and costs remain very high.- Outlooks improve, but uncertainty jumped!- Real price of gasoline compared to 2011/2014 - price is still lower- Age of cheap natgas in US coming to an end? 69% think that it will come to an end by 2025. That is very soon and a very high percentage of respondants. Though 16% said that prices will return back to lower. Shows what kind trend we are in.- It's hard to predict the price of oil and natural gas- Naming specific agencies as sources of difficulty and uncertainty. - Very few comments on OPEC, much more on finding labor, finding equipment especially tubular steel and government regulatory uncertainty/interference.

Private Oil Drillers Are Hitting Their Limitshttps://www.wsj.com/articles/private-drillers-are-hitting-their-limits-11663579982- "they tapped many of their best drilling spots, and will have to ease their rapid pace of drilling as their inventory shrinks"- US oil production could decrease by "hundreds of thousands of barrels per day" - that's not very specific. Is going from 11.8 million bpd to 11.7 million bpd- Private producers hold around one-fifth of the Permian's most valuable acreage- OPEC toys with the market when they don't hit their quotaEPA reverses course, rejects permit for massive oil exporting project offshore from Corpus Christihttps://www.texastribune.org/2022/09/02/texas-oil-epa-export-terminal-corpus-christi/amp/- Supposed to rival LOOP in size- Permit to emit more VOCs than allowable was given by Trump admin but revoked by Biden admin- Mixed message sending is the biggest problemIEA Lowers 2022 Oil Demand Forecast Amid China Lockdowns, Economic Growth Fearshttps://finance.yahoo.com/news/iea-lowers-2022-oil-demand-050501715.htmlOil Traders Should Consider Global Demand Forecasts From IEA And OPEChttps://www.investing.com/analysis/oil-traders-should-consider-global-demand-forecasts-from-iea-and-opec-200629867- IEA forecast is based on Chinese demand falling and then increasing- Is this realistic?- Real estate investors can't get their money out of China, China wants to keep Chinese money in China- Xi to be elected President for life- Will China attack Taiwan after this? No real indication that China is going to attack Taiwan. Is this "American propaganda?" (Noam Chomsky's argument)- If China doesn't attack Taiwan what does that mean for oil demand?API Monthly Statistical Report and Quarterly Outlook- Rig activity in US is still down more than 1/5 - combo of energy policy, supply issues, labor issues- Private equity companies are leading oil production this year- Without completion crew we are seeing DUCs accrue in various regions- Are we running low on acreage? NOW there are plenty of sweet spot good rocks to drill. Problem is labor and supply chain constraints. Fiscal constraints are mitigated. Capital access is an issue still.- Lack of support for leasing on federal lands, steel tariffs cause problems, no real backing of oil and gas production from administration.- We are sitting with the lowest SPR since 1985 but consumption is 3 or 4 times higher than in 1985. - Problems getting high voltage lines in communities to build charging stations is a huge challenge so charging stations are putting in diesel generators in California.- Sheer enormity of oil and gas consumption is being ignored. Can't put all the resources into something that is only 10% of global energy (renewables). Neglecting what shoulders the bulk of global energy systems is ... going to have consequences.- Only reason we have oil prices that are lower is because we are papering over the shortage in supply by releasing SPR. - Dichotomy between news about "fears of recession" and the economic indicators. - All in holistic view of oil inventories - they are down. US has basically pushed intelf into a recession with the interest rate increases. Europe is now following- China has potentially got large economic growth.- Dollar is at all time high, making imports for American consumers less expensive. US exports are less price competitive abroad. In the past this creates a wider trade deficit. Erodes investment. Petrochemical margins have now turned negative. Not worth it to build another ethane cracker on the gulf coast, for example. Not just about the sheer productively of the rocks. Its about the entire chain. Global economy is close to 3% growth, which means need 1.5 million bpd more oil each year.- Huge uncertainty now, especially with Russia sanctions coming online soon.- Ultimately supply and demand will determine prices, not the speculative momentum.Rate increases and pricing in recession is causing the opposite to happen with the speculators.- The fact that the economy is expected to actually be "historically strong"- Savings rate is not at recessionary levels and delinquencies in American households is not historically high, only edged up a little. Rebound in consumer sentiment.- IEA, Kingdom of Saudi Arabia and OPEC have all said that they don't see investment patterns enough to meet oil demand. EIA forecast is 101 million bpd of global oil demand in 2023. Not enough investment to meet this.- Threat to US and global energy security

In a US first, California will pilot solar-panel canopies over canalshttps://electrek.co/2022/08/26/in-a-us-first-california-will-pilot-solar-panel-canopies-over-canals/- is this idea well thought through? WHat would the impact to the water be? chemical runoff? Algae growing? Earthquakes!!?- If all 4,000 miles of California's canals were covered with solar panels, that could produce 13 gigawatts of renewable power. A gigawatt is enough to power 750,000 homes, so that would be enough power for 9.75 million households.- This is in theory, not practice. Won't actually produce that much power.California Faces Long Road to End ICE Car Saleshttps://www.energyintel.com/00000182-db20-d868-a99b-dfb2ff8d0000- The plan was approved by the California Air Resources Board on Thursday and follows an executive order issued by Gov. Gavin Newsom in 2020.- who in the state even KNOWS who is on the California Air Resources Board? - Will this come up for referendum in California?- Big jump in EV purchases happened between 2020 and 2021- How will they power all of these? generators?Activate Nord Stream 2 ASAP, says German parliament vice presidenthttps://www.politico.eu/article/vice-president-of-the-german-parliament-calls-for-activation-of-nord-stream-2/- Activate Nord Stream 2 ASAP, says German parliament vice president- response from Ukraine: "addiction to Russian gas kills"- no sound reason not to open Nord Stream 2," because Germany is already getting gas through the older Russia-to-Germany Nord Stream pipeline. Getting "gas from Nord Stream 2 is no more immoral than from Nord Stream 1. It's just a different pipe," he said.Europe's carbon price hits new record as natural gas becomes scarcehttps://www.worldoil.com/news/2022/8/19/europe-s-carbon-price-hits-new-record-as-natural-gas-becomes-scarce/- Why doesn't Europe suspend the rule that forces power providers to buy carbon offsets?Canada says hydrogen better than LNG for German needshttps://www.reuters.com/business/energy/canada-says-hydrogen-better-than-lng-german-needs-2022-08-19/- is hydrogen a viable fuel here?- Canada wants to build LNG terminals to send natural gas from Alberta to Germany but the natural resources minister of Canada says hydrogen would be a better bet in the long run.Elon Musk Says World Needs More Oil and Gashttps://www.wsj.com/articles/elon-musk-says-world-needs-more-oil-and-gas-11661772916- "we should really keep going with nuclear plants."- Tesla needs base load capacity- Tesla as a business makes a lot of money selling carbon offsets.

Oil Sinks to Six-Month Low on China Outlook, Iran Supply Boosthttps://finance.yahoo.com/news/oil-extends-losses-traders-weigh-225340219.htmlChina's Economy Slows Unexpectedly as Covid and Property Woes Mounthttps://www.barrons.com/articles/chinas-economy-slows-covid-property-51660559065China's Covid and economic policy:- were they using covid policy to try to exert a downward pressure on prices?- No one was even considering covid as a thing at beginning of 2020. - Prices were getting soft in January 2020 - but if you go back and look at what China was doing in terms of building hospitals, shutting down cities you will see it there.- What benefit would it be for China to give up tool to shut down cities and control economy?- Unemployment for Chinese youth 20%- are they lying about the numbers? what purpose would it serve to make numbers less bad than they are, but still bad? or what purpose would it serve to say things are worse than they are?- Is oil really falling because of Chinese economic data or is it because of other things and China is a convenient excuse?Saudi Aramco profit soars on higher prices and refining marginshttps://www.reuters.com/business/energy/saudi-aramco-profit-soars-higher-prices-refining-margins-2022-08-14/- Aramco putting profits into capexDr. Dean Foreman from API about MSR for July- How do we explain falling gasoline prices? Crude oil is about 60% of input costs for gasoline. So drop in gasoline prices is due to drop in crude oil prices All commodities are slipping due to expected global economic weaknessDichotomy in MSR:- commercial stocks building but when take into account SPR releases it swaps everything that has happened with commercial reserves. Market is watching commercial inventories- Note that July has been the highest domestic crude oil production for the month of July - what does this say about whether we might be heading back to record production rates?- At the same time we've got highest petroleum export numbers (9.6 million bpd) since 1947 - what do we know about where this oil is coming from and going to? Highest import numbers as well? How do you think the SPR releases play into this?- SPR releases aren't playing a bigger role. Admin taking a victory lap for bringing down prices but really its fears of global recession, commodity weakness, demand destruction.- Dire global need for oil and natural gas. Numbers show US is playing really crucial role of provider of last resort.- What isn't normal is that we are still releasing SPR when prices are in this environment. We aren't at $135/barrel crude oil. "Interesting that reserve releases have continued."- Once the SPR releases clear up, should get clearer read on how supply and demand meshes.- What about China? Looks like it is doing well in terms of industrial exports. But interest rate cut suggest China's economy needs triage. - What happens if a hurricane hits in late August, Sept, Oct that disrupts production on Gulf coast? U.S. inventories aren't bad around US though east coast its low. Internationally theres a shortage of diesel, but a lot is being pulled from US. Heating oil inventories New England are REALLY low for this part of the year. and Diesel stocks are half of what they were. Price pressure for New England is on! Same issue for mid-Atlantic.- Industry is doing hurricane drills, plans to seek waivers, etc. Planning for weather disruptions.- How will Europe cope with a cold winter? Anecdotally, German households are stockpiling wood.- Believes that China should "muddle through" and some goods from China may become less expensive. - Despite more drilling, crude oil production actually decreased between June and July. Still 1 million bpd down from highest in 2019/2020- NLGs - lots of associated gas produced in TX, get lots of light oil. If produce dry gas like in OH/PA don't get much light oil. Light oil is what we are exporting and is in high demand for foreign buyers.- 1/3 well completions in US last year was a DUC. Latest data for July, is that its way down. Can't get completion crews. Can't grow.- More than half of growth in oil production this year coming from private equity. They locked in services.

Gasoline Demand Dip That Spooked Market Sparks Furor Over US Datahttps://finance.yahoo.com/news/gasoline-demand-dip-spooked-market-205412111.html- issues with the data made it look like gasoline demand was below summer 2020 levels- difference between wholesale gasoline supplied and retail demand. - check out Rory Johnston's report on this (https://www.commoditycontext.com/p/qc-us-gasoline-demand-data)Shale drillers double down on returns over outputhttps://www.argusmedia.com/en/news/2358967-shale-drillers-double-down-on-returns-over-output- Shale drillers are spending more on drilling, not to drill more or grow production but to pay more for services and goods- OXY, Pioneer aren't growing but XOM plans to grow drillingColumn: European gas oil futures anticipate recessionhttps://www.reuters.com/business/energy/european-gas-oil-futures-anticipate-recession-kemp-2022-08-08/- European Hedge fund and money managers are selling off oil futures and US ones are buying them- European economic outlook is worse than in USGoldman Sachs cuts near-term oil forecasts but remains bullishhttps://www.theedgemarkets.com/article/goldman-sachs-cuts-nearterm-oil-forecasts-remains-bullish- Forecast Q3 Brent $110 and Q4 $125 but Brent is at $97 nowSpain Limits Air-Conditioning to Save Energyhttps://www.nytimes.com/2022/08/05/world/europe/spain-air-conditioning-limits.html- public buildings air conditioning set to 81, heating set to 66- lights to be turned offBlackRock Opening South Florida ‘Snowbird' Office for Dozens of Employeeshttps://www.wsj.com/articles/blackrock-opening-south-florida-snowbird-office-for-dozens-of-employees-11659906957- ESG? climate change? do they really believe that Florida is going to be underwater if they are moving there?

Ellen's thoughts on Biden's visit to Saudi Arabia:Whether this message is understood by the Biden administration is unclear given the fact that Amos Hochstein's statement after the summit was that he was confident that "there will be a few more steps in the coming weeks from OPEC in terms of oil supplies." The only thing the market should expect from OPEC is that after it meets on August 3, it will unwind the last of its cuts from 2020. Quotas will increase, but this may only result in 200,000 or fewer barrels per day coming on the market because most countries haven't been increasing production very much and are producing well below their quotas. Saudi Arabia will be allowed to produce at 11 million bpd but likely won't. If it hits 10.8 million bpd I would be surprised.Biden fails to secure major security, oil commitments at Arab summithttps://www.reuters.com/world/middle-east/biden-hopes-more-oil-israeli-integration-arab-summit-saudi-2022-07-16/Oil market reformer says Russian price cap would fail https://www.reuters.com/business/energy/oil-market-reformer-says-russian-price-cap-would-fail-2022-07-18/- Will just make prices higher- How will they convince Russia to accept less money from India and China for their oil?California went big on rooftop solar. Now that's a problem for landfillshttps://www.latimes.com/business/story/2022-07-14/california-rooftop-solar-pv-panels-recycling-danger- “The industry is supposed to be green,” Vanderhoof said. “But in reality, it's all about the money.”- 80% of the panels are recyclable but they often don't end up being recycled.- No one talks about back end trade off with renewablesU.S. crosses the electric-car tipping point for mass adoptionhttps://driving.ca/auto-news/industry/u-s-crosses-the-electric-car-tipping-point-for-mass-adoption- How can you compare the US to the United States which is very different, much larger, etc. and say that you know this is the tipping point?Europe Must Slash Gas Demand Now Before 'Hard' Winter, IEA Warnshttps://financialpost.com/pmn/business-pmn/europe-must-slash-gas-demand-now-before-hard-winter-iea-warns/wcm/a7b11d21-07ff-4ef2-b8ad-5ef031c362bf/amp/- burn coal and oil!- Why not buy out some fracking companies and funnel them supplies, investment, etc.?

Biden's Middle East Trip Is a High-Risk Bid to Reset Saudi Relationshttps://www.wsj.com/articles/bidens-middle-east-trip-is-a-high-risk-bid-to-reset-saudi-relations-11657481150- will he ask for more oil? no indication more Saudi oil would even bring down pricesOil From U.S. Reserves Sent Overseas as Gasoline Prices Stay Highhttps://www.reuters.com/business/energy/oil-us-reserves-head-overseas-gasoline-prices-stay-high-2022-07-05/- this isn't a BAD thing but politicians who think it is could do damage by trying to curb oil exports from US.Gas Station Owners, Blamed When Prices Rose, Face Risks as Prices Fallhttps://www.wsj.com/articles/gas-station-owners-blamed-when-prices-rose-face-risks-as-prices-fall-11657540801Special Guest Kunal Patel from Dallas Federal Reserve Oil and Gas Survey https://www.dallasfed.org/research/surveys/des/2022/2202.aspx#tab-questionsWhat stood out to you in the Q2 survey results? Anything surprising?- 200 upstream firms signed up in district - 137 responded. - diffusion indices, give direction of where indicator is going. - Challenges around cost increases and supply chain issues. Pace of increases is very strong. strongest it's ever been. Firms are dealing with significant cost increases and time lags.Supply chain issues - 47% rated them as "significantly negative" and 47% rated them as "slightly negative." What supply issues rated amongst the most difficult to procure for firms? How do you see this as impacting production?- steel tubular rated as good with most significant shortage- sand also needed for completions. Firms that want to increase activity above plan don't know where they will be able to get steel, labor or sand- tariff exemption on Ukrainian steel is helpful but Ukrainian steel mills aren't able to produce. Executive said, get rid of steel tariffs from other countries- Sand could be trucked in but also shortage of truck drivers.- Will take 7-8 months to get a new well drilled and producing.A number of analysts expect U.S. crude oil production to grow by nearly 1 million barrels per day (mb/d) from December 2021 to December 2022. By how much do you expect U.S. oil production to grow?37% said they expect oil production to increase by between 800,000bpd and 1 million bpd but almost as many (34%) said they expect production to grow by less than or equal to 800,000 bpd. Are analysts being too optimistic with their growth forecasts, especially given how executives feel supply chain issues are impacting them?- hard to say whether analysts are being too optimistic.- higher prices provide incentive to grow. But cost inflation is major. Most people thought costs would increase 10%, but its likely much more than that (maybe 25%). Dallas Fed thinks it will be less than 1million bpd growthGovernment regulations are still a significant factor driving uncertainty for firms but supply chain issues, inflation and labor shortages have eclipsed that - is this a change from earlier surveys?- generally higher oil prices mean more money and less uncertainty. Now, prices increased but uncertainty also increased.- Lots of comments saying government regulation is important.- Kansas Fed asked same question and firms said that government regulations were cause of most uncertainty, not supply chain, labor, inflation etc. Different region - not the Permian. OK, CO, WY.

Pledging new sanctions, G7 to stand with Ukraine 'for as long as it takes'https://www.reuters.com/business/energy/g7-hike-sanctions-russia-close-oil-price-cap-deal-us-official-2022-06-27/- What can G7 nations do to Russia at this point?- Recession could send prices down and that might hurt Russia- How can the plan to put a price cap on Russian be implemented?Output from OPEC+ to go down in 2023 as sanctions take their toll on Russian volumeshttps://www.offshore-energy.biz/output-from-opec-to-go-down-in-2023-as-sanctions-take-their-toll-on-russian-volumes/Oil prices could slump to $75 a barrel in a recession — or jump to $150 if European sanctions slam Russian supplies, BofA sayshttps://markets.businessinsider.com/news/commodities/oil-prices-brent-crude-recession-outlook-europe-russia-sanctions-bofa-2022-6- a recession could hurt Russian revenueUS Export Ban Likely to Backfire, Market Players Sayhttps://www.energyintel.com/00000181-732e-d443-a9db-f7aee6290000Interview with Chet Thompson, CEO of AFPM- Represent US refining industry- 7 of the refiners they represent got letters from President about the price of gasoline and diesel suggesting that prices are high because they are sitting on refining capacity.- Refiners don't love where gasoline and diesel prices are today either- Had been engaging with Biden admin for weeks about how to help with supply/demand imbalances so tone and rhetoric or letter caught off guard. - Public should appreciate that refiners aren't holding back capacity.- Industry is running at 94% capacity, which is basically full out- President Biden's policies are participating to situation. Anti-fuel producer rhetoric is high- Thursday meeting was constructive, hopefully some good outcomes- Regulatory uncertainty - what keeps industry up at night? Regulatory uncertainty was the number one answer.- How is an industry supposed to prepare and comply with regulations when they are habitually late or unclear?- Tailpipe emissions standards basically mean 17% EVs- California wants to ban ICE by 2035! - Crude is to refining industry, what flour is to a baker.- Refining has much smaller margins historically - they are NOT big oil- Refining industry doesn't like crude oil prices where they are now.- Crude oil has no value without refining. - Educating public on role of refining in gasoline. Without refining there is no energy security. pressing folks to understand that for a long time.- 60% of gasoline price is crude oil. Refining is a little higher component of gasoline price than it has been. 25% range, according to EIA. The rest is marketing. - Of the 150,000 gasoline stations, 95% are independently operated, not the company that is the brand name on the station.- How to make the message stick? Historically people have taken it for granted that gasoline is less than a bottle of water and that you can take kids to school, heat houses for granted. Now people are taking notice. - Loss of refining capacity in US. Why? regulatory policies. 40% of all shutdowns, RFS contributing to shutdowns. People are more open to having these conversations now that gasoline is so expensive.- We take responsibility to provide energy very seriously- Producing and refining energy is important to our country. lifeblood of communities. we need to produce products that the world needs in a clearer, safer way and they are doing it. - Should talk about evolutions not transitions- Shouldn't transition until we are actually ready- Right now folks are talking about the margins we are making. A couple years ago we were talking about negative crude. Our guys were losing millions of dollars. Refiners and manufacturers couldn't shut down, had to go to work and produce fuels and petrochemicals that were needed to get through Covid era even when experiencing huge losses.- policies they admin CAN adopt that will bring down prices but that won't come through hostile policies. President should get out in front of a refinery and say "this industry is important" and "adopt policies to further US independence and good things will follow."

Drilling vs returns. U.S. oil producers' tradeoff as windfall tax threatenshttps://www.reuters.com/business/energy/drilling-vs-returns-us-oil-producers-tradeoff-windfall-tax-threatens-2022-06-13/?taid=62a72ca5802cad0001f87694- will the US pass a windfall tax?- lockdowns have helped created this situation- market responds to incentives. interference in market has gotten us to this spot. why take it out on oil and gas companies.- if we were to windfall tax these companies, is there any indication that this money will be used to anything beneficial to consumersHigh Oil and Gas Prices Test Drive a Global Carbon Taxhttps://www.wsj.com/articles/high-oil-and-gas-prices-test-drive-a-global-carbon-tax-11654956001Biden looking to address oil refinery capacity, White House adviser sayshttps://www.reuters.com/markets/commodities/biden-looking-address-oil-refinery-capacity-white-house-adviser-says-2022-06-10/- "He is looking for what he can do administratively, whether that's working with oil companies and refineries asking them, 'We recognize your back capacity challenges - what can we do to help you maintain your refining capacity and bring more oil online?'"US set to resume onshore leasing next weekhttps://www.argusmedia.com/en/news/2340345-us-set-to-resume-onshore-leasing-next-week-will there be interest in these leases? is the acreage of interest to drillers?Saudi cuts crude supply to some Chinese refiners in July, sources sayhttps://www.reuters.com/markets/commodities/saudi-cuts-crude-supply-some-asian-refiners-july-sources-2022-06-10/- where will oil that isn't going to China refineries end up? Europe?Interview with Dr. Foreman and the Monthly Statistical Report- Continuation of same from April- energy demand depends on overall level of economic activity. We are still historically above average (3% growth)- Prediction of 2 million bpd of global oil demand growth. before Russia/Ukraine demand was outstripping production- Slight increase in oil production. Is it enough to move the needle?- Refining products is at or above 5 year range. But without as much upstream production the refiners are drawing down inventories.- As a result of Russia/Ukraine sudden record pull for US oil and products out of US. 9.6 million bpd of US gross petroleum exports. Means we are critical to global supply.- Have to look at, especially on coastal areas of US, stocks are below 5 year average.- API quarterly a year ago was showing that supply gap was coming. Starts with investment and then goes to drilling. Weekly data showed that a supply gap was coming. EIA methodology relies on older data, so leads to some inaccuracies.- 3 months ago the world deficit of supply was quantified at 3 million bpd. May outlook now is 4.2 million bpd.- Big disagreement between EIA and IEA about how much oil from Russia is off the market.- Lots of uncertainty about how much supply is there -- this is impacting price setting. Russian oil production is more likely to be more resilient than expected but can they ship the oil? - Policies attacking industry are culpable.- A ban on petroleum oil exports would be ugly - coastal areas need the most trade and would be hit hardest. The reason the east coast has higher price increases than the west coast is because trade with Europe isn't functioning the way it was. Can't get products from the middle of the country because they are being exported.- heating oil stocks are critically low on the east coast. - strategic reserves that are there to back up commercial reserves but they are being drawn down because of the unprecedentedly large releases.- 40% of what is released is getting exported.- US refiners need heavy oil to run their crackers at full speed but US SPR releases have all been light oil, which explains why so much is being exported. There is heavy oil in the SPR, but its not being released.- still down more than 1 million bpd of production. If you went hard, you could grow that much, we've seen it. BUT lower rig productivity (down 20% year on year as of April), fewer DUCs - only 4% of new wells were DUCs in April now. Have almost exported in terms of production. Gap of 25% in terms of drilling activity compared to 2019.- industrial side of the economy is still growing but more slowly. consumer sentiment, preliminary reading, for June is lowest since the survey was started. Consumers are WORRIED. - Critical that we see, with sincerity, the policy proposals to incentivize US production. If none, it will be hard to dig ourselves out of the hole we are in.

U.S. to let Eni, Repsol ship Venezuela oil to Europe for debthttps://www.reuters.com/business/energy/exclusive-us-let-eni-repsol-ship-venezuela-oil-europe-debt-sources-2022-06-05/- will this even help Europe that much because VZ doesn't make that much oil?- is this a prelude to more relaxing of sanctions?Biden invokes Defense Production Act to boost solar panel manufacturinghttps://www.nbcnews.com/politics/white-house/biden-invokes-defense-production-act-boost-solar-panel-manufacturing-rcna32120- How is this going to help anyone? Is there a shortage of US solar panels?Inflation: Lululemon is raising prices as petroleum costs bitehttps://finance.yahoo.com/news/inflation-lululemon-is-jacking-up-prices-by-10-103801531.htmlCOLUMN-Oil bulls emboldened by EU sanctions and China easing lockdowns: Kemphttps://www.reuters.com/article/oil-global-kemp-idAFL1N2XT0R8- What is the reason behind China's relaxing on restrictions? economy? elections? Biden Has ‘Only Bad Options' for Bringing Down Oil Priceshttps://www.nytimes.com/2022/06/05/business/biden-oil-saudi-arabia.html

White House LNG Task Force Compared to Secretive Cheney Oil Grouphttps://financialpost.com/pmn/business-pmn/white-house-lng-task-force-compared-to-secretive-cheney-oil-group- criticized for lack of transparencyHSBC suspends banker over climate change commentshttps://www.ft.com/content/8e1a16ea-bf63-45f8-81af-dc41c0df4e06Energy crunch causing ESG to fall out of favor, warns ex-BP CEOhttps://www.worldoil.com/news/2022/5/20/energy-crunch-causing-esg-to-fall-out-of-favor-warns-ex-bp-ceo/Ukraine war creates new tensions for ESG investorshttps://www.ft.com/content/b2869451-0899-4e02-8fc8-23d6d2ba9d17- ESG: is it the first thing to go now that there's high oil prices?- Elon Musk calls out ESG because Tesla isn't in top ten from S&P but Exxon is- How can an oil and gas company be higher rated than an electric car company? Lots of reasons that have to do with biases in ESG ratings- Are ESG investors missing out of rally in oil and gas? not necessarily.- Can shale companies operate at higher interest rates?Special Guest Garret Golding from Dallas Fedhttps://www.dallasfed.org/research/economics/2022/0510- long term decline in refining capacity in US - most acute in Northeast.- delicate balance completely blown up by Russia's invasion of Ukraine. Diesel/distillate market went haywire.- Europe grabbing barrels from Gulf Coast and Northeast can't get Gulf Coast barrels due to Jones Act and backwardation.- But this is changing! Lots of distillate going to New York. Colonial distillate system is now full.- Will prices drop? Hopefully.- Regional dynamics impact retail prices- drop in oil prices is asymmetric with gasoline prices. Retail prices come down 3 times more slowly than oil prices. Much slower decline angers people but its how the market functions. Retail prices don't climb up at same wholesale levels. Store owner margins get compressed on the way up so they need to make up for it on the way down. - Diesel is actually a less expensive fuel to produce but other factors are making it more expensive- Middle distillates, lots of emphasis on producing more jet fuel and now diesel fuel. Refinery configurations aren't set up for it.- Price spike may not persist- Shortages not a real possibility for midwestern agricultural industry. price will be more a problem.- volatility and high prices are arguably as bad for producers as they are for consumers. Demand destruction/recession would be bad. E&Ps would be happy with $80/barrel and are happy with $100 NOW but don't want it to remain. Would rather have stability over years than triple digit prices.- high cost of drilling is huge issue for E&Ps and its getting worse, not better. Equipment orders are getting more backed up. Well casing, coil tubing. Big limitation on all the calls for them to produce more. Couldn't even if they wanted to. Labor is another piece. They are hiring but not adding as many as they would like. No improvement in labor bottlenecks over the last few months.- Find out more at www.dallasfed.org. Tuesdays and Thursdays publish pieces. Heavy energy focus. Survey once a quarter. Lots of data available there as well.

Oil giant Aramco reports record first quarter as oil prices soarhttps://www.cnbc.com/2022/05/15/aramco-worlds-largest-company-reports-record-first-quarter-as-oil-prices-soar.html- Aramco not doing share buybacks like other oil companies. Awarding 1 share for every 10- increasing capacity to 13 million bpd by 2026/2027 but will they ever produce that much?- the longer Saudi Arabia fails to produce up to its OPEC quota the more people will believe they can't. Damaging narrative could push oil prices up more.Domestic flight bookings fell by 17% in April as air fares continued to risehttps://www.businessinsider.com/domestic-flight-bookings-fell-17-in-april-as-fares-continue-to-rise-2022-5- can't go anywhere for less than $700?!- will this crimp the economy and demand?Can China preserve both its economy and its zero-tolerance COVID-19 policy?https://www.latimes.com/world-nation/story/2022-05-06/can-china-preserve-both-its-economy-and-its-zero-tolerance-covid-19-policy- Will China just never open up again?- Will it keep its people inside China?- Impact on Belt Road initiative. Tourism to places. What does it mean to US companies with offices in China?- How much of global oil demand is based on global travel between China and rest of world?Dr. Dean Foreman and API - highest quarter of US petroleum demand in history. but US economy contracted in Q1.- Tale of 1st 2 months and last 2 months. January and February were very high. Pulled back in March and April data shows big drop. 19.3 million bpd demand.- Biggest change is in intermediate products in petrochemicals. Consumer goods are slowing down. - Motor fuels and price repression: seeing some of that. gasoline demand has leveled off even though seasonally it should be going up. Distillate demands going down. Over $6/gallon for diesel in some states is causing fuel substitution.- Supply side: would suspect that given drilling activity increases should see more oil and did see that - increase of 100,000-200,000 bpd but NLGs went DOWN.- Demand outpacing supply, which didn't increase on whole.- Fewer DUCs, rig activity not increasing. Oil services costs are escalating.- All of this means need even more drilling activity to get back to 2019 production levels. Demand is back at 2019 levels.- Started year as net importer. But with Russia/Ukraine now having record pull for US exports. Crisis period with global refiners pulling oil and product out of US, adding to price pressure. Normally being an exporter is a good story, but when you are short on product that's bad for prices.- Trade is working great on West coast, but East coast not doing well because they generally trade products with Europe, and that's under pressure in Europe.- Historically has been very resilient system but unprecedented times and discontinuities and uncertainties about how much Russian crude is lost from market. - Likely we are seeing demand destruction. Summer driving season increase will be muted. But with airline prices up, people may drive more (fuel substitution).- lowest commercial crude oil inventories since 2014. normally through April 2022, year to date, you would be building up inventories as refiners draw on inventories to spool up for summer driving season. Average build over decade (excluding 2is 020) 40 million barrels. This year 1.8 million barrels. - SPR. DoE wants to replenish SPR soon. Signaling to market that starting in fall would like to replenish. Expect supply response. - EIA thinks less than 1 million bpd lost. But IEA saying as much as 3 million bpd lost by May.- Price reaction to uncertainty over how much Russian oil is lost to market.- If we release 180 million barrels from SPR over next several months will have lowest inventories since 1983.- Political reactions to high prices: NOPEC legislation (lift anti-trust legislation) Price controls (unlikely to get much political support), proposals to re-ban oil exports from US.- No US policies are supporting return to big production

China's Imports From Russia Hit Record on Energy Price Riseshttps://financialpost.com/pmn/business-pmn/chinas-imports-from-russia-hit-record-on-energy-price-rises- China IS importing more oil from Russia despite the Chinese lockdowns and news that a major Chinese oil company claims they don't plan to increase imports from RussiaIndia Buyers Grab Discounted Russia LNG Shunned by Rest of Worldhttps://m.economictimes.com/industry/energy/oil-gas/india-buyers-grab-discounted-russia-lng-shunned-by-rest-of-world/amp_articleshow/91438534.cms- If war ended tomorrow, how much would oil prices drop?Nigerian airlines to halt operations over rising jet fuel costshttps://www.reuters.com/article/nigeria-airlines/update-1-nigerian-airlines-to-halt-operations-over-rising-jet-fuel-costs-idUSL2N2WY2EWCalifornia AG subpoenas Exxon for details on role in global plastic pollutionhttps://www.reuters.com/legal/litigation/california-ag-subpoenas-exxon-details-role-plastic-waste-crisis-2022-04-28/

Russia is pumping nearly 10% less oil than before it invaded Ukraine, satellite imagery suggestshttps://www.businessinsider.com/russia-pumping-less-oil-since-ukraine-war-began-satellite-data-2022-4- Russian oil production- China planning to cut refinery runs significantly due to lower demand (lockdowns) - could this bring global prices down?- Will Russia have to continue to cut production if China doesn't buy and it has no more storage capacity?- could China be locking down in order to get oil prices to drop for their economy?Putin Sets Energy Goals to Reflect New Realityhttps://www.energyintel.com/00000180-4396-d58f-a7cd-ebf7eb490000Making Sense of India's Newfound Love for Russian Oilhttps://www.fairobserver.com/politics/making-sense-of-indias-newfound-love-for-russian-oil- India has always been going the "Third Way"- It has always been friendly to Russia/USSR AND the west in a bipolar world.- India can't be expected to pay a premium for fuel because of their economy, if it's available for a discount.Abu Dhabi crude to head to Europe, replace Russian oilhttps://www.reuters.com/business/energy/frances-totalenergies-ship-abu-dhabi-crude-europe-rare-move-sources-2022-04-25/- predictable but will these new patterns last and for how long?- How will american producers react? Will they try to lock in new international customers?A Persian Gulf Stock Boom Draws Foreign Investorshttps://www.wsj.com/articles/a-persian-gulf-stock-boom-draws-foreign-investors-11650884401Dean Foreman- February was the highest demand for any single month going back to August 2005- March demand was down but still relatively strong- Supply needs to step up!- Massive pull for crude oil and refined products out of the United States because international prices higher than domestic prices. - Rigs in the 500s now as opposed to pre-Covid rigs in the 800s- Production down from December - down by 100,000 bpd until March. Back up in March and in April 100,000 bpd more.- March 2022 vs. March 2019, global oil drilling down 22%, down 29% in US- productively of oil producers in US is backsliding- cost escalation- spending on drilling went up by 1/3 between quarters but doesn't necessarily contribute to higher productivity.- DUCs - 1 in 3 in US last year. This year more like 1 in 5. Industry isn't relying on DUCs to same extent as last year. Means need more production to sustain current production. Need more investment and more drilling.- Prices redetermine costs. - trucking markets MAY HAVE reached a pause- jet fuel is up- more urban commuting but motor gasoline still back to usual but not higher than 2019 levels- intermediate products demand has pulled back in March. Not a trend but could be.- Is petroleum demand normalizing as economy returns to "normal"?- SPR release: will it help with prices since we aren't seeing a supply dislocation?- Dr. Foreman says that if they'd just released heavy crude it would have had more of an impact on prices in the US than light crude releases do. 700,000 barrels of the SPr release went to exports. Not all of it, but a significant amount.- SPR inventories at their lowest point since 2002. If this continues, we will have lowest SPR reserves since 1984