Ellen Wald and Ryan Ray discuss the week's events in energy, and what it all means to you.
US shale producers face spending hikeshttps://www.argusmedia.com/en/news/2284916-us-shale-producers-face-spending-hikes- some mixed messaging in terms of costs of production. some are saying that improvements in efficiency offset increasing costs- DUCs being finished means that costs are going up, also salaries and cost of material- public companies only reinvested 46% last Q, but private companies spent much much more. Private sector firms account for 2/3 drillingEurope's rollercoaster energy market is now at the mercy of weatherhttps://www.afr.com/companies/energy/europe-s-rollercoaster-energy-market-is-now-at-the-mercy-of-weather-20211220-p59j3d- How will energy crisis in Europe and potential shut down of industrial plants impact Europe's GDP?- Can it be seperated from Covid policies?Russian gas exports to Europe via Yamal pipeline fall againhttps://www.reuters.com/markets/europe/russian-gas-exports-europe-via-yamal-up-after-saturday-drop-2021-12-19/EU leaders agree on new sanctions with U.S. if Russia invades Ukrainehttps://www.reuters.com/business/aerospace-defense/eu-leaders-consider-new-sanctions-against-russian-surprises-2021-12-16/- Would cutting Russia off from the SWIFT network make it impossible for Europeans to pay for Russian natural gas, etc.- biggest geopolitical energy issue through the end of 2021 and into 2021China's largest LNG importer to buy supplies from US developer Venture Globalhttps://www.spglobal.com/platts/en/market-insights/latest-news/lng/122121-chinas-largest-lng-importer-to-buy-supplies-from-us-developer-venture-global- Chinese companies signed nearly half of the supply deals - 45% - thisyear- China top buyer of US LNG in 2021China's energy transition: Walking a thin line between decarbonization and disruptionhttps://www.spglobal.com/platts/en/market-insights/blogs/energy-transition/121721-china-energy-transition-decarbonization- closing coal mines was actually due to safety, not environmentElectric vehicle stocks tumble after Manchin rejects Biden's climate and social planhttps://www.cnbc.com/2021/12/20/electric-vehicle-stocks-tumble-as-bidens-climate-and-social-plan-flops.htmlBattery Storage Soars on U.S. Electric Gridhttps://www.wsj.com/articles/battery-storage-soars-on-u-s-electric-grid-11640082783-1 gigawatt is roughly enough to power 350,000 homes for a handful of hours. US is on pace to add six gigawatts this year and another nine gigawatts in 2022.- California is driving much of the U.S. battery market's expansion. It is racing to secure power to make up for the impending closure of several gas-fired power plants as well as a nuclear facility that provides nearly 10% of the electricity generated in the state.
NJ Ayuk's Book:https://amzn.to/3dUujVqUS urges domestic oil producers to raise outputhttps://www.argusmedia.com/en/news/2283072-us-urges-domestic-oil-producers-to-raise-output- Jennifer Granholm tells members of the National Petroleum Council to please drill and hire people- Also says Biden won't return to a crude oil export banCHINA DATA: Independent refiners lift run rates to 5-month high as margins holdhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/121421-china-data-independent-refiners-lift-run-rates-to-5-month-high-as-margins-hold- China indep refineries increasing run rates to enjoy attractive margins- Is this a good sign for the Chinese economy or not?Europe facing record low gas storage by winter's endhttps://www.reuters.com/markets/commodities/europe-facing-record-low-gas-storage-by-winters-end-2021-12-14/- Russia hasn't fulfilled its promise to fill up Gazprom's oil stocks- Russia shouldn't be counted on to keep its promisesThe Federal Reserve Faces a Troubling 1965 Parallelhttps://www.bloomberg.com/opinion/articles/2021-12-14/the-federal-reserve-faces-a-troubling-1965-inflation-parallel- Argues that the fed needs to aggressively raise interest rates to get inflation down to 2% but the current Fed doesn't seem willing to do this because it would the stock marketEuropean Union stands united on Russia sanctions, top diplomat sayshttps://www.reuters.com/world/eu-says-studying-russia-sanctions-with-britain-us-2021-12-13/- Is the threat of sanctions real?- If you sanction Russian energy it will hurt Europe- Will Russia actually invade Ukraine? Many think this is unlikely, especially in the winter?Dr. Foreman and the Monthly Statistical Review- Surprising things from 2021: strength of demand and lack of investment and political shift that has occured this year- Trucking and distillate demand strong in November: retail model in America has shifted towards online. gasoline is slightly down compared to 2019 but diesel is up, jet fuel down and materials up. Trucking has buoyed distillate demand.- shipping helped double double residual fuel demand- Inflation: fuel prices are contributing to inflation but even if you take food and energy out, inflation is still going up. energy price is elevated and impacts 20-30% of food costs (fertilizer, transportation, etc.) Inflation is making things $350 more expensive for average US household, which most households don't have. GRound up data says this is a pressure point for households.- Reading the energy data for the future starts with the economy - despite all of the concerns, consensus estimates are showing 4.2% global growth in 2022 and 3.2% global growth in 2023. Economic growth is depending on oil and gas availability and need more to fuel economic growth. Inflation could take the wind out of the global economy, but not sure yet.- Correlation between spending growth and consumer sentiment. - Economic indicators are showing economic strength but there are a number of pressure points that could take us off track.- Oil and gas projects in funnel - anything past point of no return we've seen followed through, other things canceled. LNG projects canceled, petrochemical projects completed not canceled, refining projects canceled?- majority of global energy investment is in upstream (drilling). If looking at drilling activity as corresponding with investment, we are still down 30% from where we were in 2019.- International gas markets are a microcosm of what happens with a complete disconnect between supply and demand. Spot prices in Netherlands are showing never before seen prices.- Monthly average prices in excess of $35 per million BTUs in Europe and Asia- In US we've pulled back prices to under $4 per million BTU. Gas markets are regionally disconnected and little equalization seen- Why is there a dearth of investment? Supply chain, Covid, etc. How to remedy that? Lack of skilled labor to replace people when they go out with Covid. Problems getting pipes etc. through Port of Louisiana and trucked to where it is needed. Banks closing off credit lines, multilateral lines don't want to lend internationally to emerging economies. Immense debt taken on by companies is catching up with them. Policy issues - industry could use some help to get back up from recession and policy headwinds are against them, making drilling more expensive. Hard to make long-lived investments in industry when policy is against it even though market shows how much US NEEDS oil and gas drilling.- Why are prices up? drilling down, imports up, inventories low- U.S. exports: products exports down, crude oil imports dropped, crude oil exports increased this week. Average net petroleum imports for last 4 weeks is about 1 million bpd for U.S.- Could potentially see nearly doubling of petroleum imports!- If the economy is going to contract, recession then maybe we don't need more investment in oil and gas- If interest rates, what is the implication? US stands out in a negative way in terms of debt - expected to careen out whereas others are expected to remain flat. US has no trouble facing debt now but second only to Japan in relying on short term financing to place 45% of its debt. - If suddenly take 3 million bpd of US oil exports off the market, could put world into recession. Would be like Abqaiq attack. Have a short term impact to US prices but then would even out. Instantly East and West coasts would see higher prices.- Exports shouldn't be blamed for higher prices.
Biden Official Heckled by Oil Group After Urging Shale Boosthttps://www.bloomberg.com/news/articles/2021-12-06/biden-official-heckled-after-urging-shale-to-boost-oil-supplies- was it really a heckle? or just a little pushback?European Power Prices Climbs in Freezing Cold Weather This Weekhttps://www.bnnbloomberg.ca/european-power-prices-climbs-in-freezing-cold-weather-this-week-1.1691679- US temps are up which is has brought natural gas prices down in the US- But in Europe, price increase of 69%Saudis Raise Oil Prices for Asia, U.S. Despite Omicron's Spreadhttps://finance.yahoo.com/news/saudi-arabia-raises-oil-prices-122146298.html- Aramco prices January Arab Light to Asia at $3.30 above benchmark- Amin Nasser says omicron not a threat to demand and market has over-reacted- OPEC+ message to the market that it believes the global economy will continue to be strongJP Morgan sees oil prices hitting $125 in 2022, $150/bbl in 2023https://www.reuters.com/business/energy/jp-morgan-sees-oil-prices-hitting-125-2022-150bbl-2023-2021-12-02/- Why? JP Morgan thinks that OPEC+ will slow down production increases because the prices won't be high enough- This seems to be a ridiculous assumption to me. - The bank forecast global oil demand to reach 99.8-101.5 million barrels per day in 2022-23. China Seeks First Military Base on Africa's Atlantic Coast, U.S. Intelligence Findshttps://www.wsj.com/articles/china-seeks-first-military-base-on-africas-atlantic-coast-u-s-intelligence-finds-11638726327- Is China's military prowess really as significant as say, Nazi Germany?- Ryan's read - trying to do whatever they can to keep the top down economy afloat. Investment in Africa is also to create jobs for Chinese- Is China heading out of Africa? - Will China invest in African oil and gas production? Especially when western countries are not as interested in investing in oil and gas production in developing countries.- protecting mineral rights?OPEC's power was waning. Soon it may have more sway than everhttps://www.cnn.com/2021/12/02/energy/opec-market-power/index.html- "The only producers that have put in the investment that's needed [to sustain long-term production] are Saudi Aramco and Adnoc," said Ellen Wald, author of the book "Saudi, Inc.," referring to state oil firms in Saudi Arabia and the United Arab Emirates. "That shifts the balance over to OPEC."- If shale producers don't return to exponential growth they may never be able to challenge OPEC in the same way again?Global oil CEOs stress need for fossil fuels despite push for cleaner energyhttps://www.reuters.com/markets/commodities/houston-oil-conference-speakers-pull-out-over-omicron-worries-2021-12-06/- Will oil and gas make its case for why fossil fuels are still necessary?
Oil Price Slumps on Fears of New Covid-19 Restrictionshttps://www.wsj.com/articles/oil-price-slumps-on-fears-of-new-covid-19-restrictions-11637953717Interesting Black Friday for markets - oil plummeting, stock markets plummetingStocks, oil regain some composure after Omicron batteringhttps://www.reuters.com/markets/europe/global-markets-wrapup-1-pix-2021-11-28/Germany says working with U.S. on Nord Stream 2 dealhttps://www.reuters.com/markets/commodities/germany-says-working-with-us-nord-stream-2-deal-2021-11-28/- Germany claims it will make "strong public messages" against Russia if it tries to invade Ukraine- Can Nordstream 2 get online in time to help with European energy crisis or is it mired in bureaucratic messSaudi oil minister not worried about new Covid varianthttps://www.argusmedia.com/en/news/2278117-saudi-oil-minister-not-worried-about-new-covid-variant- If not worried about Omicron what are they worried about? stockbuilds and SPR releases- If OPEC pauses its increases, will that be seen as a win for Biden?Europe's Energy Crisis Is About To Get Worse As Winter Arriveshttps://gcaptain.com/europes-energy-crisis-is-about-to-get-worse-as-winter-arrives/Special Guest Rory Johnston- Toronto-based commodities analysts, formerly for Scotia Bank- Currently at Price Street and Commodity Context - - Sign up for his substack at: https://commoditycontext.substack.com- Data driven, chart-driven to discuss what analysts look at for the common-man- Where is the oil market right now? oversupplied? under-supplied? - slightly under supplied in a longer-term basis. tremendous amount of inventory flowing out of commercial storage around the world. Competing with new production. The financial is dragging the physical along.- The financial markets are leading the physical markets which can cause big swings- We are already in a speculative-liquidation cycle- Cyclical peak hit back in October- Financial markets think we are tight, for whatever reason, manifesting with tight markets. But we also have slow clearance on physical. Physical signals have been flashing weak from $40 up to $85.- Saudi Arabia's primary concern is long-term demand, long-term prices, price dove within OPEC. Oversupplied markets in 2022 is counting on at least 1 million bpd more coming from US shale patch.- In the past, when prices hit $80, we got over 2 million bpd of production growth. Now we aren't. Not happening yet.- OPEC thinks we need higher prices to test sensitivity of shale. If we don't get 1 million bpd + of production from shale, then it's a deeply undersupplied market.- OPEC+ is like trying to turn an aircraft carrier as opposed to a speed boat- Thinks OPEC will likely stick with the plan, although Black Friday changed the calculus- JP Morgan doesn't think OPEC+ has capacity to increase production by 400,000 bpd more. Can probably increase for another couple of months but some producers will not be able to reach their baselines. Some will. West African producers may have difficulty.- Divergence with natural gas prices in US and Europe.- US natural gas prices went up because big change in US LNG exports - they have grown a lot. Initially LNG exports were a mildly flexible source of demand. good for North American energy security on a long-term basis. But if there was an exceptionally cold winter they could be redirected to domestic use. BUT that won't happen now because LNG export prices are 6 times Henry Hub prices! - LNG market is still pricey, but North American demand looks a little weaker now based on temperature forecasts.- European natural gas inventories are already at a low point and the start of cold weather is hitting them. It would take a lot to see that in North America.
Oil prices are finally falling. Thank China and Joe Bidenhttps://www.cnn.com/2021/11/18/investing/premarket-stocks-trading/index.html- Is it really China and Biden? Or was it news of lockdowns in Europe?- Who knows more? the big banks or OPEC/IEA- Monthly OPEC meetings a plus?U.S. asks Japan, China, others to consider tapping oil reserveshttps://www.reuters.com/business/energy/exclusive-us-asks-big-countries-coordinate-releases-oil-reserves-sources-2021-11-17/- Will an SPR release have enough of an impact to help Biden's political ratings?‘Climate Funds': Who's Driving the Increased Demandhttps://www.wsj.com/articles/climate-funds-whos-driving-growing-demand-11637165424- who invests in these funds? Mostly women, millennials and high-net worth investors- are the funds actually helping the climate? the jury is still out.Dr. Jeff Colgan - New book, "Partial Hegemony: Oil Politics and International Order"- Is OPEC really a cartel? - is it a group of producers that can actually control market to a certain degree or enough to move prices?- Argues that OPEC is not actually a cartel - HQ in Vienna, meetings all the time but can't really change what its members do- Saudi Arabia has market power but it doesn't need OPEC to do that. - Are the members of OPEC actually greater than the sum of their parts?- OPEC isn't amplifying their power in any way.- How do we know this? OPEC members cheat on their quotas 96% of the time (since 1982)- Has this changed with addition of Russia and creation of OPEC+? But that's a producer to producer relationship. There are 3 really big producers in the world (Saudi Arabia, Russia and US). It matters when they fight, but that will happen without OPEC+ existing at all.- OPEC used to be a collective bargaining unit and acted as such through its founding until 1973.- OPEC's announcements and monthly meetings matter because they shape perceptions. But don't impact fundamentals over a period of 3-6 months. Media tends to overreact to OPEC.- OPEC is constantly being sued in Europe and US for being a cartel. Antitrust suites all the time. OPEC general council doesn't want OPEC to call itself a cartel to avoid legal repercussions. - Politicians in US also love to have OPEC to blame when prices go up and down as well.- Information sharing within OPEC is a very valuable part of what OPEC does, especially for poor countries that don't have the money to shell out for data. Though joining OPEC does cost several million dollars a year- Biden is trying to walk a difficult line with oil - green agenda vs. more oil from OPEC?- BIden memo to FTC is political theater as well.- Coordinated SPR release to change market fundamentals and/or perceptions but India and China aren't members of the IEA.- Original purpose of SPRs were for emergency situations, not just because gasoline is a little more expensive. Bad habit to use it this way. Most of the time these kinds of releases don't move prices much at all - other than after a natural disaster or state of emergency.- Find him on twitter @JeffDColganhttps://www.amazon.com/Partial-Hegemony-Politics-International-Order/dp/0197546382/
New podcast sponsor: https://energyweekpodcast.phonesites.comSaudi Aramco Raises Oil Prices After OPEC+ Defies Bidenhttps://finance.yahoo.com/news/saudi-aramco-raises-oil-prices-184252526.html- Large jump in Aramco price of Arab light to Asia- Messaging from OPEC+ is that they managing the oil market effectively and going a good job at it- Angry protestors burning the OPEC flag?Biden noncommittal on a potential Strategic Petroleum Reserve releasehttps://www.cnn.com/2021/11/06/politics/biden-strategic-petroleum-reserve/index.htmlBiden could announce action on oil this week -U.S. Energy secretaryhttps://www.reuters.com/article/usa-oil-biden-idAFL1N2RZ0VD- What could Biden do?- SPR release? Would be transitory- Cut federal gasoline taxBiden admin considering shutting down another pipeline, drawing criticism and dire warnings as winter nearshttps://www.foxnews.com/politics/biden-admin-considering-shutting-down-michigan-pipeline- turns out Biden admin is considering ALL options not just shutting down the pipelienRussia Keeps Grip on Europe's Gas Market Despite Putin's Pledgehttps://www.bloombergquint.com/onweb/russia-keeps-grip-on-europe-s-gas-market-despite-putin-s-pledge- not surprising that Putin didn't keep his promiseU.S. Energy Prices Are Breaking a Historic Pattern. The Results Could Be Severe.https://www.barrons.com/articles/u-s-energy-prices-breaking-historic-pattern-51635879750- higher prices in the summer vs. lower prices in the winter- dislocation of historic patterns could mean problems with electricity prices regardless of how cold it isBiden Energy Sec Granholm says cost of heating homes this winter will 'be more expensive' than last yearhttps://www.foxnews.com/politics/biden-energy-sec-granholm-cost-of-heating-homes-more-expensiveCold wave sweeps 90 percent of regions across Chinahttps://www.globaltimes.cn/page/202111/1238366.shtmlChina's daily coal output hits annual high, easing power supply shortagehttps://www.globaltimes.cn/page/202111/1238258.shtml- China has early cold snap AND coal supplies reach highest levels in years, expected to reach 12 million tonnes soon.- Have enough for 20 days of use - landmark because means supplies no longer short- How much of this announcement is propaganda to convince EPA unveils plan on controls of greenhouse gases and VOCs from oil and gas upstreamhttps://www.ogj.com/general-interest/government/article/14213378/epa-unveils-plan-on-controls-of-greenhouse-gases-and-vocs-from-oil-and-gas-upstream- 577 page proposal- kicking the little companies while they are trying to expand drilling
- Goldman Sachs says global oil demand is nearing 100 million bpd and set to exceed this number in early 2022 with jet fuel demand growing.US energy secretary blames Opec ‘cartel' for high petrol priceshttps://www.ft.com/content/cecf912d-705e-47b0-9ceb-911e7c517fd8- Is OPEC just an all purpose villain here? - energy prices are starting to impact consumer spendingOil Rises on Speculation OPEC May Spurn Biden's Appeal on Outputhttps://finance.yahoo.com/news/oil-drops-start-key-week-231313201.html- SPR release vs. Drop sanctions on Iran? - If US released 100m barrels of oil, that's only 1 days worth of global oil consumption so it wouldn't have much of an impact on pricesBiden says he worries that cutting oil production too fast will hurt working peoplehttps://www.npr.org/2021/10/31/1050958992/biden-says-he-worries-that-cutting-oil-production-too-fast-will-hurt-working-peoPrince Charles calls for 'warlike footing' in climate fight as world leaders gatherhttps://www.nbcnews.com/news/world/cop26-prince-charles-warn-world-act-climate-change-rcna4217- Is Prince Charles encouraging using the military to force the end of fossil fuels?Special Guest GTherm- integrating water flooding, Co2 flooding and water pulsing to impact well- generating electricity from wells to run oil field and using that electricity for other purposes- CO2 is valuable and can be captured and injected back into the reservoir for CO2 flooding without having to pay for CO2. Can also inject it into a vertical greenhouse to increase agricultural output.- electricity produced won't go into the grid, but can be used to feed data centers, for high energy processes like cement. - Bitcoin mining centers are huge in amount of electricity they consume - more than traditional data centers. Pilot program to provide power to bitcoin mining center in Texas. Clean operating data centers too.- This system is used for depleted fields. Optimized existing processes and combined them into a fully integrated system.- Better than carbon capture? Profitability is key.
Wall Street projects a “higher for longer” era for oil pricesttps://www.worldoil.com/news/2021/10/22/wall-street-projects-a-higher-for-longer-era-for-oil-prices- An era has to be long enough to change how the industry functions- Citigroup Inc. said in a report this month that crude below $30 and above $60 looks unsustainable in the long-term. - Ed Morse thinks prolonged over $50 will bring 7 million bpd on the marketNearly half of American companies say they are short on skilled workershttps://www.cnn.com/2021/10/25/economy/business-conditions-worker-shortage/index.html- will "labor shortage" (companies' inability to hire workers) create permanently elevated business costs?Solar and Wind Force Poverty on Africahttps://www.wsj.com/articles/solar-wind-force-poverty-on-africa-climate-change-uganda-11635092219- Africa can't sacrifice its future prosperity for Western climate goals- Neo-imperialism to impose a narrative that Africa can't access fossil fuels and must be consigned to solar/wind which isn't nearly as effective at providing electricity.- OPEC is sympathetic to this message. Will Africa save OPEC? Can OPEC save Africa?Tesla shares rise after Hertz says it will buy 100,000 electric vehicleshttps://www.cnbc.com/2021/10/25/tesla-shares-up-on-news-hertz-will-purchase-100000-electric-vehicles.html- Good idea for Hertz because Teslas will be a big draw for people who want to drive Teslas on vacation.Ahead of COP26, Saudi Arabia Resists Calls to Cut Oil Investmenthttps://www.wsj.com/articles/ahead-of-cop26-saudi-arabia-resists-calls-to-cut-oil-investment-11634911150Special Guest Rhett Bennett of Black Mountain Co.https://www.blackmountainoilandgas.com- Drilling situation in the US: real issues from labor situation. Labor is always a bit of an issue in Permian, but also in Eagle Ford. On the drilling side as well. Supply chain issues, also exacerbated for oil industry because of severity of downturn.- metals aren't available to implement transition in the way needed for transition- Sees oil over $100, higher natural gas prices this winter- Price increases will drive activity higher. Private companies are drilling a lot, public companies more constrained.- "If you are private, it's a beautiful scenario." Inputs on the cost side of the ledger haven't risen nearly as much as the returns side of the ledger.- Haynesville wells pay for themselves in 90 days - but they are quite dry, Permian wells are more heavily oil weighted.- 2022 budgets: lots of E&Ps will want to increase drilling activity 20-30% and will want budget increases of similar amount. But will also have inflationary pressures that will hit production targets and so many will fall short.- E&Ps did better consolidating during downturn that service companies so there's still a lot of competition in service sector- Consequences of capital starvation. Shale is a treadmill. If you hop off, looking at 50-60% decline rate.- Underground carbon sequestration (CCUS) - will it be economical without legislation on carbon tax in the US? CCUS in Australia - lots of capacity for sequestration in Australia.- Lots of countries don't have the right geology to inject and store carbon. Potential for this to become an import/export industry.- Sees battery tech as competitive with ICE engines. Problem is materials and minerals.- Metals and mining has had capital starvation for decades now. Average mine takes 7 years to go from discovery to production.
Ellen R. Wald, Ph.D.2:21 PM (0 minutes ago)to me, EllenCrazy' Bets on $200 Oil Invade the Options Markethttps://www.wsj.com/articles/crazy-bets-on-200-oil-invade-the-options-market-11634463002- Will WTI go over $100 per barrel- Options don't mean that traders actually think that oil will go to that high but the best indicate directional movesEnergy Crisis Prompts Asia to Turn to USA for Oilhttps://www.rigzone.com/news/wire/energy_crisis_prompts_asia_to_turn_to_usa_for_oil-18-oct-2021-166745-article- Asian buyers are buying more US sour crude cargoes for delivery in November and December- Mostly because WTI is trading at a $3 discount to BrentWill $80 Oil Open Shale's Spigots?https://www.energyintel.com/0000017c-85a2-d141-a17c-a5fad5170000- What if US rig count suddenly increases? Will that change OPEC's calculus?- If Permian increases, U.S. natural gas production will increase too.Coast guard: California oil pipeline may have been dragged by cargo shiphttps://news.yahoo.com/coast-guard-california-oil-pipeline-191111477.html- Is there anything that can't be blamed on container ships and the global supply chain?https://thehill.com/opinion/energy-environment/576600-how-utilities-could-offset-the-coming-winters-record-high-energy?rl=1Dr. Dean Foreman from API Energy- highest gasoline prices since 2014!- highest natural gas prices since 2008!- domestic markets are relatively well supplied but Europe and Asian markets are short- D-E-I indicator: tracks roughly with the year on year change in industrial production. Still positive, signalling that the broader economy in US should continue to grow though there were some manufacturing indicators in U.S. that indicate industry beginning to slow.- Will energy prices start to weigh on economic growth? Not seeing this in the D-E-I indicator but there are some concerns over this, especially with Fed policy.- Oil prices have risen but there's no shortage. With gas, there is a shortage in Europe and Asia. Spot cargoes going for many times the average.- Some drilling response in U.S. Adding 7-10 rigs/week. Drilling picking up in lag. Is that enough to meet EIA predictions? According to EIA, US needs to add 1.8 million bpd to hit $60-$70 per barrel. - Cost escalation in oil industry is significant. That is going to make break-even prices increase a lot. Supply chain issues, tariffs on steel and other materials, labor shortages.- Hard to catch up to lack of investment. In Q2 only saw about $37 billion in investment. Compare to $68 billion at same point in 2019. Only half of what we saw during Great Recession adjusted for inflation. Capital projects down $110 billion year on year.- If you pile on policy from Biden admin saying that they want half of all US electricity to come from solar by 2030 how do you get funding for a multibillion dollar natural gas drilling project in Pennsylvania approved?- Highest for the month of September of NGL production! Economic decision to take NGLs out of natural gas. - Illinois has the second lowest stores on record as of last EIA report. - US has pretty much maximized output of LNG for the terminals we have. - 20.6 million bpd of petroleum demand in US - record high for September.- Refined products exports lowest since May 2020: why? Some issues due to Hurricane Ida but also US trending to become net petroleum importer as opposed to exporter. Broader trend over last 6-7 months is that US is back to net importer.
Oil Price Jumps Above $80 and Natural Gas Races Higher, Turbocharged by Supply Shortageshttps://www.wsj.com/articles/oil-price-jumps-above-80-and-natural-gas-races-higher-turbocharged-by-supply-shortages-11633943832- all of the oil companies are saying they aren't going to drill, prices go up, they can also make a killing trading.Why Energy Stocks Could Get Hurt by Rising Priceshttps://www.barrons.com/articles/energy-oil-natural-gas-prices-51633742601- argument that energy prices too high could hurt the economy by derailing economic growth- this in turn could derail energy companies themselvesIndia is on the brink of an energy crisis, as coal reserves hit critical lowshttps://fortune.com/2021/10/08/india-is-on-the-brink-of-an-energy-crisis-as-coal-reserves-hit-critical-lows/- Central Electric Authority says they have 3 or fewer days of coal supplyIndia says it has ample coal stocks for power sectorhttps://www.reuters.com/business/energy/india-says-it-has-ample-coal-stocks-power-sector-2021-10-10/- Coal Authority says there is ample coal - meaning 4 days supplyA Scary Energy Winter Is Coming. Don't Blame the Greens.https://www.nytimes.com/2021/10/05/opinion/energy-climate-iran-nuclear.html- at the very least the EU carbon credit policy is pushing up energy prices in Europe and exacerbating the situation.- But so is the idea that need to stop investing in fossil fuel development.Vessel's Odyssey Reflects Iran's Oil Sale Woeshttps://www.energyintel.com/0000017c-59b9-dee7-a97c-5bfdcfa60000Southwest Airlines shares tumble after mass flight cancellations, carrier weighs more cutshttps://www.cnbc.com/2021/10/11/southwest-airlines-shares-tumble-after-mass-flight-cancellations-.html- could jet fuel demand be impacted by cancelled flights?
Why California is shutting down its last nuclear planthttps://www.cnbc.com/2021/10/02/why-is-california-closing-diablo-canyon-nuclear-plant.html- why, if California is trying to increase clean energy while in a power crunch?- safety concerns, but the nuclear chief says that there are no safety concerns and Diablo Canyon could safely operate for 40 years?- consumers won't buy the nuclear powerChina's Government Secures Fuel Supplies for Winter as the Country Battles a Power Crisis Threathttps://www.natureworldnews.com/articles/47690/20211003/china-fuel-supplies-power-crisis-threat.htmChina Relaxes Coal Mine Safety Efforts on Electricity Crisishttps://finance.yahoo.com/news/china-relaxes-coal-mine-safety-004516612.htmlBoris Johnson Plans Fossil Fuel-Free U.K. Power Grid by 2035https://www.bloomberg.com/news/articles/2021-10-04/u-k-s-johnson-plans-fossil-fuel-free-power-grid-by-2035- will Britain's power grid even have power unless a lot of nuclear power plants in the next years- The U.K. will reserve a key role for nuclear power in the nation's electricity system as a backup for renewables in a plan to phase out natural gas by 2035.- Fossil fuels will no longer be used to generate power by the middle of the next decade as the U.K. tackles the double threat of climate change and an energy supply crunch that has sent prices spiraling to record highs. The government says the plan is “a landmark move to end Britain's dependency on volatile fossil fuels.”- But renewables are also quite volatileClimate change could cost the U.S. up to 10.5 percent of its GDP by 2100, study findshttps://www.washingtonpost.com/weather/2019/08/19/climate-change-could-cost-us-up-percent-its-gdp-by-study-finds/- weather disasters may be more intense, but over time more wealth is accumulated so obviously the cost of the damage will be more. Especially, wealth is concentrated in areas more prone to weather damage, like on the beach, near fault lines, areas where wildfires happen & the beach in Florida.Interview with Mark Rossano on China:- check out Mark's YouTube channel (PrimaryVisionNetwork), FracSpreadCount and Private Equity Fund- Is China really going to secure energy at all costs? Who/when said this? Said in front of shuttered coal mine (because it was unsafe). Unsafe mines were cleaned up at the beginning of the year.- Costs? political, human, price? weighted towards political and human. Need to expedite bringing mines back. Also, context of fight with Australia - if China goes out to Australia they can resolve issue and bring in their coal. - Will China choose power to residential areas or maintain factory output? China is actually allowing price fluctuation. But have also vowed that there won't be cuts to residential power. - Slashed steel production, which really cuts down on power usage.- Timing also an issue. In September China tries to run ahead of "Golden Week" - getting products ready and shipped by holiday season. But now they are on the other side of that. Typically in Oct/Nov drop in industrial throughput.- could see more "Malaysian crude" coming into China (Actually Iranian crude)- big buildup of crude sitting offshore in China, meanwhile teapots are cutting runs. 68% utilization rate (2018 levels now).- State refiners have cut runs 7%. Fuel oil is at a 6 year high and only time have had more fuel oil in storage was in 2014. Trying to preserve incase need to burn fuel oil in power plants.- China's perspective on OPEC meeting - more concerned about price than volume. Volume is there, the type of crude that Asia wants to buy has plenty. What are they waiting for? Pulling more from Iraq.- Does China need to see a $1 cut in OSPs to really make a difference and would this seem like a slap in the face to the White House if Aramco raises OSPs to the US?
Oil is closing in on $80 as supply fears stoke prices higherhttps://financialpost.com/commodities/energy/oil-gas/brent-oil-nears-80-a-barrel-amid-supply-constraints- what could stem the rising tide of oil prices? Covid lockdowns, Chinese economy?- domestic travel is up, according to airlines- will US production ever come back? perhaps more issues at play than just lack of funding - costs of materials, labor has all gone WAY up.Europe Is Pumping Less Gas as Demand Rebounds, Leaving a Gap Russia Is Fillinghttps://www.wsj.com/articles/europe-is-pumping-less-gas-as-demand-revives-leaving-a-gap-russia-is-filling-11632308400- despite Europe's rhetoric about the environment, they really want to do business with Russia- Shutting down major Dutch natural gas field next year because of earthquakes. Instead they are getting it from Russia.Citigroup sees gas at $100/MMBtu, if winter is cold enoughhttps://www.worldoil.com/news/2021/9/23/citigroup-sees-gas-at-100mmbtu-if-winter-is-cold-enough- If its too cold in China, what does China do? Let people freeze or power factories?The Climate Case for Property Destructionhttps://newrepublic.com/article/162247/andreas-malm-blow-up-pipeline-climate-direct-action- argues that climate activists should destroy energy infrastructure often enough so that it is too costly for companies to rebuilt and maintain it.- What is the end point? renewable? deindustrialization?Investors Bet Environmental Fears Will Crunch Commodity Supply, Lifting Priceshttps://www.wsj.com/articles/investors-bet-environmental-fears-will-crunch-commodity-supply-lifting-prices-11632350186- pandemic killed investing in oil AND gasChina Needs to Kick its Coal Habit at Home, Toohttps://www.wsj.com/articles/china-needs-to-kick-its-coal-habit-at-home-too-11632477842- Xi says won't finance coal plants abroad (but what about at home?)Power cuts hit homes in north-east Chinahttps://www.bbc.com/news/world-asia-china-58704221As OPEC reopens the taps, African giants losing race to pump morehttps://www.reuters.com/business/energy/opec-reopens-taps-african-giants-losing-race-pump-more-2021-09-27/- Nigeria and Angola lose a lot of oil to theft! Nigeria was in the top 5 of hot oil being tapped from pipelines. Similar to Pemex and Nigeria
Natural-Gas Prices Surge, and Winter Is Still Months Awayhttps://www.wsj.com/articles/natural-gas-prices-surge-and-winter-is-still-months-away-11631986861- historically speaking crude oil prices actually do warrant new drilling but companies aren't.- Why aren't companies drilling more? Lack of money? Why isn't the money interested?Oil falls as storm-hit U.S. supply trickles back into markethttps://www.reuters.com/business/energy/oil-steady-us-storm-hit-supply-returns-slowly-2021-09-17/- Will Europe be forced to turn to burning fuel oil this winter for electricity when natural gas and coal are too expensive and will that push oil prices up?- Change in policy could dampen sentiment for movement.Equinor to pump up gas supply for tight European markethttps://www.offshore-energy.biz/equinor-to-pump-up-gas-supply-for-tight-european-market/- Can Norway save the day for Europe? Perhaps.Trade group wants restrictions on U.S. natural gas exportshttps://www.reuters.com/business/energy/trade-group-wants-restrictions-us-natural-gas-exports-2021-09-17/- Will restricting LNG exports help curb US natural gas prices?- IECA says US natural gas prices would need to double from where they are now to spur more drilling. Chemicals, Food, Materials could become more expensive or face shortages.- Government intervention in terms of promoting natural gas drilling.Oil giant Shell sets sights on sustainable aviation fuel take-offhttps://www.reuters.com/business/sustainable-business/oil-giant-shell-sets-sights-sustainable-aviation-fuel-take-off-2021-09-19/- How big of a "thing" is this? Crops could be used to feed people - industrial agriculture is NOT sustainable.China faces a potential Lehman moment. Wall Street is unfazedhttps://www.cnn.com/2021/09/16/business/wall-street-evergrande-china/index.htmlChina's Evergrande Moment Is Looking More LTCM Than Minskyhttps://www.bloomberg.com/opinion/articles/2021-09-20/china-s-evergrande-moment-is-looking-more-ltcm-than-minskyWhat is China going to do? Ryan's Read: China will do whatever it has to. Can't seperate this story from Taiwan.Dr. Dean Foreman and API Monthly Statistical ReportGlobal natural gas issues:- For this time of year we have never had higher prices- Reflects Russian gas inventories are historically low, wind is underperforming & gas needed to prevent brownouts and LNG shipments being snapped up like crazy- Global natural gas market? Not yet because still so much less being trading internationally than oil- Rush to get cargoes available.Domestic natural gas:- Baker Hughes rig counts have actually gone down despite higher prices- Should be able to drill all day and make money- Producers in Gulf Coast have access to premium markets and should be able to export to internationally markets- Producers in PA, etc. don't have access to global value chainAre exports to blame for US prices?- actually exports motivate production. Haynesville is good example. On the margin there is some and it is creating pressure. Seek to place blame, consumer anger.- We have rolled back prices to before the shale revolution.- Should be able to drill profitably in every major basin so what's the problem? EIA modelled a healthy drilling response and we haven't seen that. Supply chain issues, risk tolerance issues, workforce issues, policy environment, debt taken on my companies- Pipeline capacity isn't really an issue. There are some isolated areas that have bottlenecks and there is flaring, but mostly not.Summer oil demand:- 23 million bpd of oil demand - higher than 2019. - Fuels may be switched around (more gasoline and distillate than jet fuel)- Other oils: intermediate oils naphtha and propylene, etc. historically have been 1/4 of demand, now it's over 30%. In August just under 28%.- Drilling responsiveness isn't there. What are the odds that we will get 1.8 million bpd of production growth in US between now and end of year? Note likely, especially with how rig counts haven't been growing.- Some price issues should recede as supply chain issues resolve but with oil and gas, it's a different issue. If the economy remains on track, we will see serious pressure on oil and gas in next year. Lack of investment, long lead time for projects outside the US.- EIA says global projected highs for oil demand are higher than 2019. IEA has a more bearish view on fossil fuels.- If supply can't keep up with economic growth then it could push prices up which will stifle demand.- Numbers economically are scorching hot - so much stimulus and it has had an impact. Even if price inflation overshoots, we will still see a lot of growth.- Global capital investment has significantly declined. Drilling activity has been muted.
Economic Costs Accumulate as Countries Worried by Delta Variant Extend Border Closureshttps://www.wsj.com/articles/economic-costs-accumulate-as-countries-worried-by-delta-variant-extend-border-closures-11631387873Is the Delta wave over? Or has it not hit the Northeast?Can we assume that economic activity and travel isn't going to go back down?City in China restricts movement amid outbreakhttps://www.dw.com/en/coronavirus-digest-city-in-china-restricts-movement-amid-outbreak/a-59157352City closures will impact gasoline and jet fuel in ChinaOil prices in the low $70s put pressure on Chinese economyNearly 185,000 b/d of US Gulf oil production returns as Ida recovery continueshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/091021-nearly-185000-bd-of-us-gulf-oil-production-returns-as-ida-recovery-continuesStill 50% of offshore production offlineShell having particular difficulties getting things back onlineEconomic Costs Accumulate as Countries Worried by Delta Variant Extend Border Closureshttps://www.wsj.com/articles/economic-costs-accumulate-as-countries-worried-by-delta-variant-extend-border-closures-11631387873European Power SituationAnalysis: Expensive winter ahead as Europe's power prices surgehttps://www.reuters.com/business/energy/expensive-winter-ahead-europes-power-prices-surge-2021-09-10/Energy Prices in Europe Hit Records After Wind Stops Blowinghttps://www.wsj.com/articles/energy-prices-in-europe-hit-records-after-wind-stops-blowing-11631528258German Power, Carbon Rise to Record on Soaring Gas Priceshttps://finance.yahoo.com/news/german-power-carbon-rise-record-080615144.htmlRussia is pumping a lot less natural gas to Europe all of a sudden — and it is not clear whyhttps://www.cnbc.com/2021/08/24/russia-is-pumping-less-natural-gas-to-europe-as-nord-stream-2-nears-completion.htmlCharging points for electric cars will be preset to turn off for NINE HOURS a day amid fears they will cause blackouts if government hits target for phasing out petrol and dieselhttps://www.dailymail.co.uk/news/article-9982253/Charging-points-electric-cars-preset-turn-NINE-HOURS-day.html- Is Gazprom deliberately putting the squeeze on the European Union to get Nord Stream II started up?- Consumers don't have extra money to pay prices?
Connect with our guest: https://twitter.com/GasBuddyGuyOil steadies as Hurricane Ida weakens, OPEC+ in focushttps://www.reuters.com/business/energy/oil-rises-hurricane-ida-pounds-us-crude-patch-louisiana-2021-08-30/Louisiana refineries slammed by Hurricane Idahttps://www.argusmedia.com/en/news/2248918-louisiana-refineries-slammed-by-hurricane-idaColonial Pipeline expects to resume service after assessing Ida's impacthttps://www.cnbc.com/2021/08/29/colonial-pipeline-halts-gasoline-deliveries-to-the-us-east-coast-due-to-hurricane-ida.html- As far as hurricanes go, not as much damage to oil infrastructure and refining as we have seen in the past- Refining issues could persist due to power outages and lack of feedstock- Unclear when any of that can restart given the fact that Louisiana is experiencing severe power outages and many refineries may have to contend with flooding conditions which can keep them offline for quite awhile and can cause damage.- Gasoline prices are up 2% in anticipation, although the storm comes right as summer demand for gasoline is starting to wane.- Some good news from ExxonMobil's Baton Rouge refinery - reported no significant damage from the hurricane. But they are still shutting down units and flaring gas. Once they have access to necessary feedstocks and support from third-party utilities they expect to return to normal production.OPEC+ faces mixed market signals after US pressure to increase oil supplieshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/082721-opec-faces-mixed-market-signals-after-us-pressure-to-increase-oil-suppliesOPEC+ could reconsider output increase, says Kuwaiti oil ministerhttps://www.reuters.com/business/energy/opec-could-reconsider-output-increase-says-kuwaiti-oil-minister-2021-08-29/- Unlikely for OPEC to change its plans to increase oil production by 400,000 bpd - Kuwait suggested this might be possible, but unlikely given that Brent is still above $70Climate Change to Be Treated as Public-Health Issuehttps://www.wsj.com/articles/climate-change-to-be-treated-as-public-health-issue-11630315800- plan to reduce GHG emissions from the healthcare system??Interview with GasBuddyGuy Patrick DeHaan:- tremendous recovery with gasoline demand this summer- driving season remained resilient despite Delta variant- demand starting to slip as driving season coming to an end- EIA implied demand last week 9.7 million bpd, GasBuddy slightly lower 9.3 million bpd- News about Covid cases surging hasn't impacted gasoline consumption distribution- Power outages from Hurricane Ida are very extensive, refining down due to power outages and no RVP wavers given out by EPA. Would allow refiners to distribute fall gasoline early (before Sept 15).- Bottlenecks due to Ida at various levels will persist for days or longer. Refineries need power, nitrogen, oxygen, etc. We could see sizable inventory draws in PADD3- Could see crude oil inventories rising due to refineries offline.- Colonial temporarily shut down 2 lines, could squeeze PADD1 inventories- Gasoline from Great Lakes may go south or east to make up for losses there.- Even before storm well formed, inbound gasoline deliveries to PADD1 seen and will continue now that Louisiana refineries offline.- Products and blending components may be diverted to areas in the US- Expect to see abnormal numbers in EIA data for weeks, 3 or 4 weeks but contingent on how long it takes refineries to start churning out products again.- Will also depend on how long it takes for products to start flowing through pipelines
Oil jumps 4% on weaker dollar after seven days of losseshttps://www.cnbc.com/2021/08/23/oil-markets-covid-dollar.htmlCrude Oil Surges; Rebounding After Torrid Weekhttps://finance.yahoo.com/news/crude-oil-surges-rebounding-torrid-092802254.html- Can oil really hit $80 by the end of the year?- Last week's selloff was overdone, so oil is rebounding now.- Plenty of reasons to see demand suffering due to coronavirus- Sentiment is a real thing with the oil market. Perception of how coronavirus will impact demand has a real impact.California's clean grid may lean on oil, gas to avoid summer blackoutshttps://www.reuters.com/business/energy/californias-clean-grid-may-lean-oil-gas-avoid-summer-blackouts-2021-08-11/- Irony of building "temporary" natural gas plants to keep the lights on in California, which claims to have a "clean" grid- could the governor recall impactUS nears proposal of biofuel targets for 2021-22https://www.argusmedia.com/en/news/2246546-us-nears-proposal-of-biofuel-targets-for-202122- biofuel mandates could be lowered for 2021 and 2022- is the RFS really worthwhile at this point?Hydrogen lobbyist quits, slams oil companies' “false claims” about blue hydrogenhttps://arstechnica.com/tech-policy/2021/08/ex-lobbyist-slams-blue-hydrogen-says-it-would-lock-in-fossil-fuel-dependence/- Blue hydrogen is only less carbon intensive if carbon is captured at every step of the way, and that is unlikely.- just because you don't see the pollution at the end result doesn't mean its not a carbon intensive processCarbon taxes could hurt Russia more than sanctions, says oil tsarhttps://www.reuters.com/business/energy/carbon-taxes-could-hurt-russia-more-than-sanctions-says-oil-tsar-kommersant-2021-08-23/- border adjustment taxes for carbon on aluminum, iron ore, pipes, electricity, cement could have major impact on Russian exports.Nord Stream 2: Russia must not use gas pipeline as weapon, says Merkelhttps://www.bbc.com/news/world-europe-58301099- Is the concern over Russia's threat to the EU overblown? Is Europe really afraid of Russia?- Is it mostly a Ukrainian-Russian issue and western Europe isn't concerned?- If the EU is confident about doing businesses with Russia to the extent that they are willing to rely on Russia for 40% of their natural gas, then why is the US afraid of Russia?
Watch us on YouTube: https://www.youtube.com/c/WarRoomMediaListen to Inside the War Room: https://shor.by/insidethewarroomOil prices drop amid faltering demand outlook in Chinahttps://www.cnbc.com/2021/08/16/oil-markets-demand-outlook-in-china-covid.html- Is it Delta variant? Is is lockdowns? Is it crackdowns on independent refiners?- Are there larger economic forces at play in Chinese demand?- Can China put pressure on OPEC to provide what they want?OPEC+ sees no need to speed up oil cuts easing despite U.S. callshttps://www.reuters.com/business/energy/opec-sees-no-need-speed-up-oil-cuts-easing-despite-us-calls-sources-2021-08-16/- Doesn't cost Biden any political capital to call for lower oil prices- No surprise that OPEC said no- OPEC is already increasing productionChina Has Thousands of Hydropower Projects It Doesn't Wanthttps://financialpost.com/pmn/business-pmn/china-has-thousands-of-hydropower-projects-it-doesnt-want- government planning is not as great as people make it out to be- going to have to fix these dams- China can pull off a lot of amazing projects but also does a lot of really idiotic stuffModi says India will soon unveil $1.35 trln infrastructure planhttps://www.reuters.com/world/india/indias-modi-says-135-trillion-infrastructure-plan-be-unveiled-soon-2021-08-15/- infrastructure spending plan will increase oil demand- have to generate economic growth after killing medium and small businessesRosneft to chase production growthhttps://www.argusmedia.com/en/news/2244244-rosneft-to-chase-production-growth- future is still oil for Russia- Rosneft is expanding its oil production capacityDr. Dean Foreman on the Monthly Statistical Report- Demand is back, and so is the economy! Summer travel and pent up demand for travel- Comparing summer demand to November 2019 demand is still a little off, but If compare July 2021 to July 2019 only off a little bit.- Gasoline demand is strong into August- Lowest crude oil inventories since December 2019. Drawn down 16% year on year. A little under 7% of lowest point of last 5 years.- Refinery utilization is very strong (91%). ONly 2019 did we average higher. Exports are down. Still a net exporter for refined products, though more crude oil imports.- Distillate economic indicator - overheating economy and facing inflationary pressures. This is correlated with Univ Michigan consumer sentiment survey,- Petrochemicals have been the strongest area of sustained growth for US oil. Continuing need for plastics. Record demand in July. 5.6 million bpd consumed.- Creeping up of oil directed rigs this year. Have generally been range bound in production in US and only just broke out of that range for June and July - 11.3 million bpd. Good sign for where crude oil production might go, but will take awhile. Natural gas is another story. 6 month future prices are $4/million btu and would indicate more natural gas drilling activity. Why aren't we seeing this? Capital constraints and people constraints. - If you are in Appalachia and want to drill you are finding yourself constrained by a variety of factors including no way to export it and pipeline constraints bringing it to domestic markets.- There is a real cost to being a net importer again.
https://www.youtube.com/c/WarRoomMediaOil falls in biggest weekly decline in months on demand worrieshttps://www.reuters.com/business/energy/us-oil-set-biggest-weekly-loss-since-oct-delta-variant-fans-demand-worries-2021-08-06/- Is the $80 oil call under threat?- Oil company stocks are holing pretty steady, despite good earnings and falling oil- Is it Delta? What IS Delta, and why do we need to know?Oil majors tread cautiously in Permian shalehttps://www.argusmedia.com/en/news/2242395-oil-majors-tread-cautiously-in-permian-shale- pioneer not expecting to do any major acquisitions - How much is ESG, Covid, fear of OPEC, paying down debt, Biden admin fear, fear of uncertaintyUtilities Eye Mini Nuclear Reactors as Climate Concerns Growhttps://www.wsj.com/articles/utilities-eye-mini-nuclear-reactors-as-climate-concerns-grow-11627905600- 345 megawatt reactor will cost $1 billion, $50 to $60 range per megawatt-hourClimate chief warns of ‘catastrophe' and then backs oil and coal planshttps://metro.co.uk/2021/08/08/climate-chief-warns-of-catastrophe-and-then-backs-oil-and-coal-plans-15058669/Aramco posts nearly 300% leap in second-quarter profit on global demand recoveryhttps://www.cnbc.com/2021/08/08/saudi-aramco-posts-near-300percent-leap-in-q2-profit-on-global-demand-recovery.htmlMore Oil Shipped as Dakota Access Pipeline Expansion Startshttps://www.usnews.com/news/us/articles/2021-08-06/more-oil-shipped-as-dakota-access-pipeline-expansion-starts- pipeline expansion is going through, rate of oil increasingInfrastructure Bill Has Big Wins for Oil, Climate Advocates Sayhttps://www.bloomberg.com/news/articles/2021-08-06/biden-s-agenda-is-tainted-by-oil-interests-say-climate-advocates- big oil wins $10 billion for carbon capture and LNG plant in Alaska wins loan guarantees, $8 billion for hydrogen but not necessarily green and blue- $21.5 billion to create an Office of Clean Energy Demonstrations!'This is no way to make policy': Cryptocurrency advocates express frustration with bipartisan infrastructure languagehttps://www.cnn.com/2021/08/07/politics/cryptocurrency-infrastructure-bill/index.html- Provision will expand number of cryptocurrency users who would have report filings to the IRShttps://www.bloomberg.com/opinion/articles/2021-07-29/biden-trade-policy-can-advance-climate-goals-with-infrastructure
Subscribe to the YouTube Channel - https://www.youtube.com/c/WarRoomMediaOn this episode of the Energy Week Podcast, Ryan Ray and Ellen Wald talk about Chinese demand, Q2 earnings, and the cost of solar. Oil prices slide on worries over China economy and higher crude outputhttps://www.cnbc.com/2021/08/02/oil-markets-china-economy-opec.html- highest gasoline consumption- broke record for TSA screenings showing Americans are on the move- Chinese economy slowing based on higher raw material costs, flooding issues and other- Can we expect China to keep having double digit growthVitol's Muller expects China to release 25-30 mil bbls from strategic oil reserves in Q4https://www.spglobal.com/platts/en/market-insights/latest-news/oil/080121-vitols-muller-expects-china-to-release-25-30-mil-bbls-from-strategic-oil-reserves-in-q4- China's way of saying oil prices are too high for them- will it help cool off oil prices?- How long can China play the SPR game?Exxon, Chevron Beat Q2 Forecasts But Contrast On Paying Shareholders Morehttps://www.investors.com/news/exxon-stock-chevron-stock-exxon-earnings-chevron-earnings-q2-2021/- both companies beat expectations but share prices fell- when will they put money into capex?Behind the Rise of U.S. Solar Power, a Mountain of Chinese Coalhttps://www.wsj.com/articles/behind-the-rise-of-u-s-solar-power-a-mountain-of-chinese-coal-11627734770- People want to buy the cheaper solar panels even if they are produced using lots of coal fired energyU.S. Blames Iran for Drone Attack on Israeli-Linked Tankerhttps://www.wsj.com/articles/u-s-blames-iran-for-drone-attack-on-israeli-linked-tanker-11627848609Rising gasoline prices signal trouble for climate change actionhttps://www.axios.com/gas-prices-climate-change-325881b1-fa78-41c9-8cb3-1d56d0ed9328.html- higher prices mean people don't want to pay for renewables, EVs‘Greenflation' threatens to derail climate change actionhttps://www.ft.com/content/49c19d8f-c3c3-4450-b869-50c7126076ee- All of the products we need to combat climate change like copper and aluminum are getting too expensive because demand for producing them is up.https://www.bloomberg.com/opinion/articles/2021-07-29/biden-trade-policy-can-advance-climate-goals-with-infrastructure
Oil falls as coronavirus, slower China imports hit demandhttps://www.reuters.com/business/energy/oil-prices-little-changed-coronavirus-floods-threaten-demand-2021-07-26/- how much impact will floods in China actually have on demand?- and what about the teapots? their quotes are down in H2Chinese oil companies fill void in Iraqhttps://www.al-monitor.com/originals/2021/07/chinese-oil-companies-fill-void-iraq- But do Chinese companies provide the quality needed? In Iran, largely unsatisfied. Will Iraq suffer similar issues?EV Batteries: The Next Victim of High Commodity Prices?https://www.wsj.com/articles/ev-batteries-the-next-victim-of-high-commodity-prices-11626950276- China controls 40% of supply chain when it comes to components of EV battery manufacturing. Big Oil Companies Push Hydrogen as Green Alternative, but Obstacles Remainhttps://www.wsj.com/articles/big-oil-companies-push-hydrogen-as-green-alternative-but-obstacles-remain-11627297201- it's expensive and really hard to do with alternative or renewable energy.US rethinks sanctions approachhttps://www.argusmedia.com/en/news/2237748-us-rethinks-sanctions-approach- reviewing sanctions policy is probably a good idea since they haven't achieved anything, and what were they designed to achieve anyway?U.S. weighs crackdown on China's import of Iranian oilhttps://www.reuters.com/business/energy/us-weighs-crackdown-chinas-import-iranian-oil-2021-07-23/- Would this really do much to pressure Iran anyway?Opec+ issues August, September quotashttps://www.argusmedia.com/en/news/2237794-opec-issues-august-september-quotas- gasoline demand up last week, but have we reached the limit of how much gasoline demand we will see this year?
Dr. Dean Foreman and June MSRhttps://www.api.org/products-and-services/statistics/apis-economic-industry-outlook- validating what we've seen- Urban driving activity on the gasoline side + tourism- Jet fuel demand is up, June is the strongest month so far. 4th straight month of increase for jet fuel. 8% increase from May. Still 1/5 below where it was in 2019. International travel hasn't picked up yet.- petrochemicals: medical plastics and packing plastics demand continuing from last year. double digit gains from last year.- Total demand for distillates has basically peaked, but on growth on a year to year basis its showing strong economic activity and industrial growth. Strong sign of growth.- Refining picking up, inventories there, ready to be used. Crude oil inventories are edging down. Indication that supply for crude oil isn't keeping up with demand. We are importing more of what we need. We have an issue looking out over next year. When we consider demand growth with drilling activity even with strong productivity at well level, we need to see more drilling activity than we've been seeing to keep up.- Inventories are at the bottom of the 5 year band. Relatively low. But the upper end of the band was expanded with major inventory builds in 2020.- Permian doesn't have pipeline constraints but other basins have pipeline constraints so there may be hesitancy to invest in more production. But they can all be profitable at recent prices.- Pickup in crude oil exports from US in June. Pull from international demand. Exports will soon be blamed for lifting prices in the US. - Inflation: Federal reserve needs to look harder at oil and gas and inflation, especially impact on consumers. EIA has assumed that domestic drilling would be and will be stronger than it has been.- Natural gas outlook: drilling activity low, spot prices for natural gas high, futures curve, would seen like its economic to do dedicated natural gas drilling. There is some pick up in Ohio and Pennsylvania drilling but lack of associated natural gas from fracking.www.api.orgBuilding Solar Farms May Not Build the Middle Classhttps://www.nytimes.com/2021/07/16/business/economy/green-energy-jobs-economy.html- operating solar and wind plants aren't the same as oil, gas and nuclear plants and don't require the same type of skilled workers or as many so when plants shut down, workers are losing jobsEuropean aircraft movements rising: Eurocontrolhttps://www.argusmedia.com/en/news/2235622-european-aircraft-movements-rising-eurocontrol- flights are up to 23,000 compared to 36,000 on the same day in 2019.Emissions could hit new record by 2023 without more spending on clean energyhttps://financialpost.com/commodities/energy/renewables/less-than-15-of-covid-19-recovery-spending-went-to-green-energy- even with more spending on clean energy emissions will riseOil firms after slide but COVID-19 and supply concerns remainhttps://www.reuters.com/business/energy/oil-steadies-after-rout-rising-covid-19-cases-opec-supply-deal-2021-07-20/
U.S. Refineries Eye Week of Strong Gasoline Demand With Cautionhttps://financialpost.com/pmn/business-pmn/u-s-refineries-eye-week-of-strong-gasoline-demand-with-caution- summer is in full swing and so is gasoline demand- Was July 4 the height of gasoline demand? Is is downhill from here? Or will we see another surge when people go back to work/office in September?https://twitter.com/GasBuddyGuy/status/1414286726281969671?s=20Biden's quest for cheap gasoline tests his climate goalshttps://www.eenews.net/stories/1063736567- Did Biden really try to get OPEC+ to increase production?- Is Biden really concerned about higher gasoline prices right now?Higher Inflation Is Here to Stay for Years, Economists Forecasthttps://www.wsj.com/articles/higher-inflation-is-here-to-stay-for-years-economists-forecast-11626008400- 3.9% inflation in May excluding energy and food. 3.9% including food and energy. - But energy impacts everything over the line- Fed still thinks inflation is transitory due to bottlenecks and hiring difficulties.- But lots of industries are having issues that aren't related to CovidOPEC+ yet to make progress in resolving impasse, sources sayhttps://financialpost.com/pmn/business-pmn/opec-yet-to-make-progress-in-resolving-impasse-sources-say- Will OPEC get its act together? Analysis: Big Oil keeps brakes on spending even with crude rally windfallhttps://www.reuters.com/business/energy/big-oil-keeps-brakes-spending-even-with-crude-rally-windfall-2021-07-12/BP Report Tries To Explain What Really Happened to Energy Markets in 2020https://jpt.spe.org/bp-report-tries-to-explain-what-really-happened-to-energy-markets-in-2020- China to the rescue when it comes to natural gas demand in 2020- Will natural gas prices decline or increase as we get into winter?
More from Ryan:https://twitter.com/ryanraysrhttps://shor.by/insidethewarroomConnect with Ellen:https://twitter.com/EnergzdEconomyPaul Hickin with S&P Global Platts @GramscianPaulUndersea gas pipeline rupture causes fire in Gulf of Mexicohttps://apnews.com/article/mexico-fires-business-e6e053384af21242722f2f3fc1acb27d- PEMEX fault, not “capitalism”- Mexico actually the first country to nationalize its subsoil resources- PEMEX doesn't maintain infrastructure well and chronically underfundedExplosion rocks Caspian Sea near Azerbaijan gas fieldhttps://www.theguardian.com/world/2021/jul/05/explosion-rocks-caspian-sea-near-azerbaijan-gas-fieldSaudi oil minister highlights need to extend Opec+ dealhttps://www.argusmedia.com/en/news/2231047-saudi-oil-minister-highlights-need-to-extend-opec-dealSaudi Arabia pushes back on UAE opposition to OPEC+ dealhttps://www.reuters.com/business/energy/saudi-energy-minister-pushes-back-uae-request-over-baseline-oil-output-says-2021-07-04/- Iraq committed to OPEC+ deal, doesn't want a price war- Favors extendedPaul Hickin with S&P Global Platts @GramscianPaul- OPEC and OPEC+ — different situation from Saudi/Russia spat last year- When UAE first raised baseline issue, prices were only in $40 range. Different scenario now- UAE made more sacrifices than other members- UAE looking to go up to 5 mbpd by 2030- Is it realistic to change the baselines? Would be hard is only some baselines change.- Prices have surged a bit - perhaps likelihood of no new deal? Or an OPEC fudge?- China's oil storage: little bit of a black box- Has gone from 50 days cover in imports 5 years ago to 100 days of imports. Puts China on par with IEA countries, which have to cover 90 days- Shows how important China views oil, still.- 2 million bpd in refining/petrochemical capacity to come online- If China wants to play a role as a swing consumer, it could do this using its oil stocks. - China buys when crude is cheap, less keen when crude is higher, but still buy a lot because of domestic demand. Oil security means won't draw down too far into reserves.
Upbeat US shale sector still not primed for growthhttps://www.argusmedia.com/en/news/2228807-upbeat-us-shale-sector-still-not-primed-for-growth- lack of new capital for oil and gas investments could hamstring production in coming years.- 1/400 investors seems willing to provide fundingAhead of talks, OPEC forecasts point to oil supply deficit in Augusthttps://www.reuters.com/world/middle-east/ahead-talks-opec-forecasts-point-oil-supply-deficit-august-2021-06-28/- Is there REALLY an oil supply deficit? How much is in storage?- OPEC will have returned 5.8 million bpd to the market of the 9.7 million bpd they took off last year. Saudi Aramco bets on blue hydrogen exports ramping up from 2030https://www.arabianbusiness.com/energy/465332-saudi-aramco-bets-on-blue-hydrogen-exports-ramping-up-from-2030- $1 billion just to capture the carbon for every million tons of blue ammonia producedTrump's Thwarted Oil Buy Would've Given Biden $6 Billion Bonanzahttps://www.bloomberg.com/news/articles/2021-06-25/trump-s-thwarted-oil-buy-would-ve-given-biden-6-billion-bonanzaSupreme Court rules in favor of refiners on exemptions from renewable fuel obligationshttps://www.ogj.com/general-interest/government/article/14205845/supreme-court-rules-in-favor-of-refiners-on-exemptions-from-renewable-fuel-obligationsBiden's ticking climate clockhttps://www.axios.com/biden-climate-change-ticking-clock-4ea5d1c4-aa85-402b-ba9f-2ada754af43d.htmlThe Dark Side of Solar Powerhttps://hbr.org/2021/06/the-dark-side-of-solar-power
Column - Global passenger aviation's uneven recovery from the pandemic: Kempwww.reuters.com/article/us-global-aviation-kemp-column/column-global-passenger-aviations-uneven-recovery-from-the-pandemic-kemp-idUKKCN2DX1M1- domestic travel in the US is up - TSA screened 2.1 million travelers on Sunday- business travel people will put up with the restrictions and possibly getting stuck. Leisure won't pick up until the covid protocols go awayClimate Policies Could Hand Power and Profits Back to OPEChttps://foreignpolicy.com/2021/06/16/climate-goals-opec-oil-prices-energy-crisis-shortages-fossil-fuels/#- NOCs are in position to make a lot of money as oil prices trend higher and western companies divest from fossil fuels- balance of power is shifting towards Saudi Arabia, Russia, UAE, etc.- Are shale producers de facto cahooting with OPEC by not producing more- will investors continue to keep out of oil companies as oil prices get higher?Why oil prices may shoot at least 15% higher: Goldman Sachshttps://finance.yahoo.com/news/why-oil-prices-may-shoot-at-least-15-higher-goldman-sachs-130028408.htmlThe Natural-Gas Glut Has Evaporated, Driving Prices Higherhttps://www.wsj.com/articles/the-natural-gas-glut-has-evaporated-driving-prices-higher-11624134728- Less drilling, drought meaning the demand for natural gas is up and the supply isn't keeping upDr. Dean Foreman - API Monthly Statistical Report- The economy is coming back! The data show. Demand in April and May is within a hair of where it was in 2019, the highest demand in 11 years.- $20 trillion of economic stimulus is doing something, perhaps, in a broad sense. Causing price inflation and showing up in petroleum demand- Urban commuting picking up- Trend that contrast is when we look at capex, investment and drilling activity- NEVER been lower, even during Great Financial crisis in 2008.- Many companies say they are "people limited" have to find employees.- Is it just a US issue? - MENA region is also not showing growth. Sovereign level too.- Record demand recovery and also need to replace natural decline in oil wells. Record low - Policy really matters - in Colorado new setback rules have pushed drilling to the edges of the basin. This is why breakeven price has risen there.- Bakken basin shift isn't related to regulatory activity- Private companies vs. public companies drilling: less questioning for private companies so they can ramp up faster. Public companies more capital discipline.- Will US drilling be as nimble as they have been?- Drilling activity isn't keeping up with EIA model for US drilling. They expect over 1 million bpd more from US and it doesn't look like that's happening. - Brent/WTI price differential is less than $1 per barrel. Tells us that there's a pull for US crude as opposed to Brent and that is pushing the price differential down. - Consumers aren't planning for continued rise in prices. Federal leasing moratorium, tax proposals, state regulations are factoring into price expectations in futures markets and that factors into our prices today.- we know that people are driving less and flying less, but shift towards freight shipping is picking up the slack in oil consumption- naphtha and other products are WAY up. enduring need for medical plastics and packaging to support online retailing.- Instead of 13 million bpd of production in 2019, US is only around 11 million bpd and the difference is coming from imports.- Even though we have very high oil exports in May, we're still importing more oil.- We need more investment and policies that enable that. We are seeing the result of less investment in oil and gas resources right now.
ExxonMobil might change its tune on regulatory mattersWTI Oil Hits $70 for First Time Since 2018 as Market Tightenshttps://financialpost.com/pmn/business-pmn/wti-oil-hits-70-for-first-time-since-2018-as-market-tightens- China importing less oil now. 11.34 mbpd in May 2020, 9.86 mbpd in May 2021- OPEC deciding not to increase production more than planned- Anticipated Iranian oil didn't come back on the market- Demand rising, especially in USOptions Traders Bet on Return of $100 Oilhttps://www.wsj.com/articles/options-traders-bet-on-return-of-100-oil-11623061227- Goldman Sachs still says $80 by Q3U.S. conservatives stake claim to climate activism with Miami rallyhttps://www.reuters.com/world/us/us-conservatives-stake-claim-climate-activism-with-miami-rally-2021-06-05/- what actually IS conservative policy on climate?- carbon tax is supported by old time Republicans but not by Liberals anymoreSquare will invest $5 million to build solar-powered bitcoin mining facilityhttps://www.theverge.com/2021/6/5/22520436/square-invest-5-million-solar-powered-bitcoin-mining-facility-blockstream-cryptocurrency- El Salvador will accept bitcoin as legal tender.- New Cold War of bitcoin: economies that accept bitcoin and make it totally legal vs. economies that make bitcoin illegal or very difficult to use bitcoin. Bitcoin-bloc and the anti-bitcoin-bloc. Developing nations might be interesting.ANALYSIS: Asia hopes it can revive love affair with Iranian crude sooner than laterhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/060421-analysis-asia-hopes-it-can-revive-love-affair-with-iranian-crude-soon-than-later
COVID 19 IMPACT ON EUROPEAN AVIATIONhttps://www.eurocontrol.int/sites/default/files/2021-05/covid19-eurocontrol-comprehensive-air-traffic-assessment-20052021.pdf- travel within Europe is down 57% — because of lockdowns as opposed to fear?- intra-Europe flow as increased 16% over 2 weeks but intra-Europe flight are still down 63% compared to 2019.Are Vaccinated Americans Powering the Economy? Not Yet, Data Showhttps://www.wsj.com/articles/are-vaccinated-americans-powering-the-economy-not-yet-data-show-11621848600- The vaccine isn’t getting rid of fear and fear needs to be overcome before the economy can recover.Oil to stay below $70/bbl if Iran sanctions lifted -Indian refiner HPCLhttps://www.reuters.com/article/us-india-iran-hpcl-idUSKCN2D217A- controlling the narrative about Iranian oil is a part of the deal. India wants sub-$70/oil and Iranian oil badly.Goldman sees oil hitting $80/bbl despite likely return of Iran supplyhttps://uk.investing.com/news/commodities-news/goldman-sees-oil-hitting-80bbl-despite-likely-return-of-iran-supply-2380027- Goldman is clinging to its $80/barrel call at all cost- Say that even if there’s robust Iranian exports, there will still be $80/barrel by Q4.Lack of truck drivers could lead to fuel shortage this summerhttps://abcnews.go.com/US/lack-truck-drivers-lead-fuel-shortage-summer/story?id=77374905- between 20-25% of tank trucks in the fleet are parked. That is a lot of trucks that aren’t in use.- Saying the drivers are retired or moved to other industries.China's construction boom is sending CO2 emissions through the roofhttps://www.cnn.com/2021/05/21/economy/china-co2-emissions-construction-intl-hnk/index.html- China’s plan is to build its way out of pandemic economic issues is also pushing its carbon emissions to record highs.- 9 % higher than their emissions in 2019- 60% of the uptick in coal usage came from power structure- 70% of the growth in emissions in Q1 came from increased coal useChina’s Latest Crackdown on Bitcoin, Other Cryptocurrencies Shakes Markethttps://www.wsj.com/articles/chinas-latest-crackdown-on-bitcoin-other-cryptocurrencies-shakes-market-11621853002- is cryptomining draining the power grid?- or is China trying to push people into its “official” cryptocurrency?Listen to pipelines and cyber security here:https://soundcloud.com/user-609485369/energy-security-cubed-the-colonial-pipeline-and-cyber-energy-security
Check out Ellen’s new column: Green Energy Solutions Start at Factory Gateshttps://www.bloomberg.com/opinion/articles/2021-05-17/green-energy-factories-can-solve-emissions-by-generating-own-powerBlackouts Threaten Entire U.S. West This Summer as Heat Awaitshttps://finance.yahoo.com/news/u-west-facing-white-knuckle-111527363.html- the issue is that coal and gas powered plants are closing and not being replaced, not the rapidly changing climate. Demand is outpacing supply and wildfires make it even more difficult.- Sweden also had less spare capacity because they are closing nuclear plants. Curbing electricity exports.Solar panels are key to Biden's energy plan. But the global supply chain may rely on forced labor from Chinahttps://www.cnn.com/2021/05/14/energy/china-solar-panels-uyghur-forced-labor-dst-intl-hnk/index.html- Report “In Broad Daylight: Uyghur Forced Labor and Global Solar Supply Chains- components for solar energy “may be created with dirty coal and forced labor”APIEnergy Monthly Statistical Report- demand is almost back but not nearly- 19.6 million bpd for April, up 2.5% from March- crude oil production: wavered between 10.5 million bpd and 11 million bpd despite structural downturn in drilling.- despite high prices, drilling is historically long- ramifications for EIA’s outlook. This week’s EIA weekly petroleum status report has 1 million bpd downgrade in natural gas liquids. But this data has been there since February and they are just beginning to reflect on it. More supply pressures in the data than has been shown. Retroactive changes.- If the expectation is for record oil demand growth for next 2 years, EIA expects US to supply 30% of the supply to meet that. But drilling activity isn’t picking up right now to match that.- US economic growth plus lack of oil production growth means we are a net importer.- Refinery throughput was 15.5 mbpd in April, increase of 6.6% from March. Inventories in good shape going into Colonial Pipeline issue last week. But its not back from where it was. EIA data showed 2.5 million bpd drop in exports before Colonial Pipeline. Refiners are gearing up but we have to watch May carefully to see where we are heading for the summer.- Jet fuel: jet fuel delivery is up 7.7% from March, but 31.2% below April 2019. We are adding a lot of domestic flights back, but not so many international flights.- Can the sudden pick up in jet fuel demand be met by supply chain?
Colonial Pipeline- if things get fixed by Tuesday shouldn’t have problems. - If it goes on longer could really see problems- some reports that Motiva shut crude oil units due to this, but could be it was duet o a power outageUS passes emergency waiver over fuel pipeline cyber-attackhttps://www.bbc.com/news/business-57050690U.S. Pipeline Shutdown Exposes Cyber Threat to Energy Sectorhttps://www.wsj.com/articles/u-s-pipeline-shutdown-exposes-cyber-threat-to-energy-sector-11620574464Hacked Pipeline May Stay Shut for Days, Raising Concerns About Fuel Supplyhttps://www.nytimes.com/2021/05/09/business/energy-environment/colonial-pipeline-shutdown-gasoline.htmlMideast Gulf gasoline coursing to the US Atlantic coasthttps://www.argusmedia.com/en/news/2213440-mideast-gulf-gasoline-coursing-to-the-us-atlantic-coast?China’s greenhouse gas emissions exceed those of U.S. and developed countries combined, report sayshttps://www.cnbc.com/2021/05/06/chinas-greenhouse-gas-emissions-exceed-us-developed-world-report.html- China is now responsible for more than 27% of global emissions- US responsible for 11%- India responsible for 6.6%- EU responsible for 6.4%Everyone else is responsible for at least half of the emissions.Biden's Paris Agreement commitment will be tough on Americans — and ineffectivehttps://thehill.com/opinion/energy-environment/551809-bidens-paris-agreement-commitment-will-be-tough-on-americans-and?rl=1OPEC+ crude oil production rises in April, on surges from Iran,Russia: Platts surveyhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/051021-opec-crude-oil-production-rises-in-april-on-surges-from-iran-russia-platts-survey- OPEC is 111% compliant but Iran’s oil production is up to 2.43 million bpd
Eliminating natural gas in housing could cost $5.9Bhttps://www.sfexaminer.com/news/eliminating-natural-gas-in-housing-could-cost-5-9b/Wyoming backs coal with $1.2M threat to sue other stateshttps://columbiabasinherald.com/news/2021/may/03/wyoming-backs-coal-with-12m-threat-to-sue-2/- San Francisco gets 60% of its electricity from the Hetch Hetchy dam- Even switching away from natural gas won’t eliminate enough emissions to actually make a difference.Surging oil profits could actually be good for the clean energy racehttps://qz.com/2003903/what-oil-companies-first-quarter-earnings-mean-for-clean-energy/- BP tried to paint its Q1 earnings as a good showing by its green portfolio but really it was due to higher price of oil and also the oil and gas trading unit.Oil rises to $67 as demand hopes counter India concernhttps://www.reuters.com/world/middle-east/oil-climbs-demand-optimism-overshadows-india-worries-2021-05-03/- Oil should be higher except India?- We don’t really know what the situation in India is when it comes to oil demand — mobility data can be flawed.Indian oil imports: Saudi claws back No.2 supplier status from U.S.https://www.reuters.com/article/india-oil-imports/table-indian-oil-imports-saudi-claws-back-no-2-supplier-status-from-u-s-idUSL4N2MM2YFU.S. Denies Any Deal With Iran to Ease Sanctions, Swap Prisonershttps://finance.yahoo.com/news/u-denies-deal-iran-talks-143713721.html#click=https://t.co/6aQ32QDpMe- Is there anything new in this deal?- Do we inflate Iran’s place in the world? Goes back to GWB? Goes back even further.United Arab Emirates investment fund to acquire Israeli deep gas project as ties between the two countries strengthenhttps://ihsmarkit.com/research-analysis/uae-investment-fund-to-acquire-israeli-deep-gas.html- The more more cross-boarder investment that happens the less conflict there is- First step, will see more energy collaboration between the twoView: Sorry, Aramco. Reliance just isn’t that into you https://economictimes.indiatimes.com/industry/energy/oil-gas/view-sorry-aramco-reliance-just-isnt-that-into-you/articleshow/82307790.cmsExxon, Chevron Put Permian in Cruise Controlhttps://www.energyintel.com/pages/eig_article.aspx?DocID=1104817- Both Exxon and Chevron have plans to increase investment in the Permian and increase production by 2025.
Oil demand to buckle in India as COVID-19 surge wreaks havochttps://financialpost.com/news/oil-demand-to-buckle-in-india-as-covid-19-surge-wreaks-havocCrude runs, oil demand feel pain as India's COVID-19 crisis hits like never beforehttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/042621-crude-runs-oil-demand-feel-pain-as-indias-covid-19-crisis-hits-like-never-before- Is Covid in India going to destroy oil demand?- India consumes 4 million bpd- Percapita oil use isn’t that much- Run cuts might not be substantial because India can sell unused products to others in the region- How will this impact OPEC+ later this week?Newsom, State Attorney General among those challenging sale of oil and gas leases in Kernhttps://bakersfieldnow.com/news/local/newsom-state-attorney-general-among-those-protesting-sale-of-oil-and-gas-leases-in-kern- will this go through if Newsom is renewedProf. James Coleman- fossil fuel subsidies mean different things to different people- IMF study used in many news reports that give a value on how much oil companies should be taxed on carbon - How much income in theory does the company have and how much should they pay based on corporate income tax rate? Are we letting them take deductions on this?- How are they taxed compared to other industries?- If goal of tax system is to be neutral, does it meet that neutrality standard?- It is pretty neutral - there are some incentives but not larger than any other industry. But are they taxed at their full income level?- President Biden says he wants agencies to “get rid of fossil fuel subsidies” (whatever that means)- Federal agencies do things that impact profitability of oil companies, but don’t do the taxes. Real issue is Congress. Have tried to change it over past 70 years and have been changes to make it less favorable to fossil fuel companies. - What is meant by oil and gas companies? - There is a lot that could impact this on the margins — - Severance taxes could be reduced. They have been reduced before on shale wells and that amounts to a subsidy. A severance tax goes over all other taxes. Wind and solar don’t have a severance tax, for example. Similar to royalties. Biden admin can have a lot of influence on how royalties are calculated on Federal Land. When come out of “leasing pause” they may have new policies. On older leases they can change how the royalty is calculated based on interpretations, etc.- US royalty system is VERY antiquated. Leaves a lot of corners where its not very rational.- Individual landowners have much more sophisticated process for extracting revenue from oil and gas companies than the federal government does.- Hard to believe that Fed gov will get more money without a complete overall. But if the goal is to end fossil fuel production then just slap more severance taxes on it.- For upstream oil and gas, they get to deduct intangible costs of building wells sooner. But there are so many tax incentives allowing companies to deduct expenditures sooner that this special provision for oil and gas isn’t really all that necessary. Reason for it was that when you used to drill a well you didn’t know if it would produce enough to cover costs. But now with technology we have a much better idea of whether it will produce.- Is there any tax benefit to not completing a well (DUC)? As soon as get income, have to pay tax, but want income. Going to get the deduction when you have the income. No reason to worry about deductions if not paying tax. But if you want to carry forward deduction from an investment. Have to choose whether will capitalize expense or not, but must do it by end of year.- Congress is constantly playing with these. - You are allowed to deduct a percentage of your income because oil from well has been sold and its not longer there. But those are very limited fo big oil companies. Most of the provisions just benefit small companies and independent producers. Depletion deduction percentage has gone down from 27% to 15% recently. But very hard to get rid of depletion percentage overall because it applies to all manufacturers.Follow him @EnergyLawProf on twitter and Clubhouse
Top official says asking China to do more on climate is "not very realistic"https://www.axios.com/china-climate-change-226c9e50-243e-44e6-a4bf-e1fb1522bb19.htmlDo we want to partner with China on how they regulate things at all?China probably won’t institute what we can China to do on climate change?China commits to peak emissions by 2030, which is totally unrealistic unless they totally stop manufacturing steel.What about border adjustments for climate taxesIndia may build new coal plants due to low cost despite climate changehttps://www.reuters.com/world/india/exclusive-india-may-build-new-coal-plants-due-low-cost-despite-climate-change-2021-04-18/75% of India’s annual power output comes from coalIn 2019 and 2020 coal’s contribution to electricity actually fell, but this trend doesn’t seem to be continuing.Earthquake in southern Iran disrupts oil production: state mediahttps://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/041821-earthquake-in-southern-iran-disrupts-oil-production-state-mediaIran is now exporting over 1.5 million bpd of oil anyway, and they only want to get up to 2.3 million bpdCould this earthquake impact that? Perhaps. What about the Vienna talks?For more on Iranian oil situation, read: https://www.investing.com/analysis/oil-lifting-sanctions-on-iran-might-have-unexpected-repurcussions-200573196Historic oil glut amassed during the pandemic is almost gonehttps://www.worldoil.com/news/2021/4/16/historic-oil-glut-amassed-during-the-pandemic-is-almost-goneIs potential risk baked in?Does this mean the price is over-inflated now?Dr. Dean Foreman and API Monthly Statistical Report- economic recovery driving demand NOT just seasonality- especially rural gasoline demand picked up- but rig activity hasn’t picked up nearly enough to EIA production estimate by the end of this year. EIA saying 900,000 bpd increase but not happening yet.- What are the issues: lack of personnel, budgets already set, capital isn’t there- Jet fuel: more cargo going by air than before but still lower due to lack of people traveling. But supply of jet fuel has gone way down to only 4% of a barrel of oil. Jet fuel has been converted. - petrochemicals are still leading because demand for personal plastics and PPE is continuing. Still high. Usually its 25-27%, but now its up to 30% - Propane also had a winter element to it- Propane demand picked up over the winter but it’s ALSO a contributor to propalyne which is used to make medical plastics. Will it normalize? - Propane distribution has been disrupted a big. - Are we really back down to “normal” inventory? Well, it can be sketchy. API data says we’re still a little high on crude oil, especially with refining disruptions.- We’re not back up to 85% refinery utilization which is really good.- From a 5 year range perspective, US petroleum deliveries are at the top of the 5 year range, which is a very bullish sign. But weekly data have a lot of variation in them.- Market could remain slightly short but as OPEC puts more barrels back on the market will cap prices. But resumption in US supply of 900,000 bpd by end of year is baked into this and might not happen. Will be lucky to meet half that, and if you don’t get 900,000 bpd, opens door for OPEC but also for higher prices given growth in world economy.- Investment isn’t in place to meet demand next year.- Breakeven estimates for Bakken and Denver have risen from $60 to $80 per barrel making them un-producable. State regulation and also impact of DAPL potentially being taken offline.- Biden admin policies are “quietly tectonic”- Tax provisions in infrastructure bill would put upward pressure on consumer gasoline prices.- Sandwich of federal and state regulations could push prices up.
Blackout Hits Iran Nuclear Site in What Appears to Be Israeli Sabotagehttps://www.nytimes.com/2021/04/11/world/middleeast/iran-nuclear-natanz.html- read this as a message to the Biden administration- What about relationship to China? Is this activity pushing Iran into the arms of China?- pushing the Iranians towards China - is that really what we want?Total signs key deals for Uganda's Lake Albert projecthttps://www.argusmedia.com/en/news/2204271-total-signs-key-deals-for-ugandas-lake-albert-project- What does this say about the future of oil and gas development in Africa? Which firms will be doing the development?- Should African countries join OPEC?Higher gasoline margins may cut China’s fuel oil outputhttps://www.argusmedia.com/en/news/2204212-higher-gasoline-margins-may-cut-chinas-fuel-oil-output- how will this impact China’s oil demandSaudi Arabia meets May crude supply for most Asian buyershttps://www.reuters.com/article/saudi-oil-asia-int/saudi-arabia-meets-may-crude-supply-for-most-asian-buyers-sources-idUSKBN2BZ0RJ- India cuts back on oil purchases from Saudi Arabia by 36%Tesla set to 'attack and conquer' trillion-dollar energy market, Canaccord sayshttps://financialpost.com/commodities/energy/electric-vehicles/tesla-to-conquer-trillion-dollar-energy-market-canaccord-saysGrant Strem, CEO of Proton Technologies - Calgary, Albertahttps://proton.energy- Need to separate hydrogen from its bonded elements and that takes a lot of energy.- hydrogen can be low cost but with high carbon footprint or high cost with low carbon footprint.- hydrogen can be used with any system we use electricity for through hydrogen turbines and/or fuel cells. Also most transportation fuels can be replaced with hydrogen. No air pollution. Nothing except water comes out, reduces air pollution.- Hydrogen is flexible. Can store just like hydrocarbons. Element on on-demand use.- Can divert extra energy from systems into hydrogen system. - Baseload reliability as opposed to wind and solar which are intermittent.- Go to large, existing oil fields and oxidize hydrogen in place. Thermal energy is trapped, trigger reactions that give us hydrogen in the process. Use a filter to bring hydrogen up to the surface.- Can oxidize remaining oil from old aging oil fields right where it is.- Can you move hydrogen with existing natural gas pipelines? Some can! But there are regulatory challenges.- Clean hydrogen vs. green hydrogen vs. blue hydrogen? The color schemes are meaningless. But has worked its way into border adjustments and tariffs. Can be significant quantifiable mechanism to tax imports. Calculate the carbon intensity and apply offset.
On this episode of the Energy Week Podcast Ryan Ray and Ellen Wald discuss the recent OPEC meeting, Iranian output, and Janet Yellen's global tax plan. Saudis Hike Oil Prices for Key Asia Market in Sign of Confidencehttps://finance.yahoo.com/news/saudis-hike-oil-prices-key-095420230.htmlSaudi Aramco raises all Asia-bound May OSPs, cuts most US and Europe OSPshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/040521-saudi-aramco-raises-all-asia-bound-may-osps-cuts-most-us-and-europe-osps- Saudis and OPEC+ saying demand is coming back, so prices rose after the meeting- Past few times Saudis cut and this was a signal demand was soft.Oil Declines After OPEC+ Wagers Market Can Absorb Extra Barrelshttps://finance.yahoo.com/news/oil-drops-opec-decides-gradual-232011239.htmlOil drops below $64 as rising OPEC+, Iranian output weighshttps://www.reuters.com/article/global-oil/update-5-oil-drops-below-64-as-rising-opec-iranian-output-weighs-idUSL1N2LY012- Are rising rig counts in the US enough for oil production in the US to increase? - Oil rigs are down everywhere year on year except for Canada, which is up.Iran to seek removal of sanctions during Vienna talkshttps://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/040521-iran-to-seek-removal-of-sanctions-during-vienna-talks- Likely more Iranian oil than this is on the marketExclusive: Janet Yellen to call for global minimum tax ratehttps://www.axios.com/janet-yellen-global-minimum-tax-rate-51c7395b-e46a-4a5c-b18b-bdcf5d8bd352.html- Is this a PR stunt? How could this possibly be a serious idea?- Are they trying to protect the dollar as the reserve currency rate?- Creates a barrier of entry into the global space. Makes it harder to enter and will be cutting out bottom level competition.Fracking titan is bulking up with $6.4 billion acquisition as oil prices recoverhttps://www.cnn.com/2021/04/02/energy/pioneer-natural-resources-doublepoint-acquisition/index.html- recently bought Parsley Energy recently- Pioneer CEO is thinking/acting like a “big oil” company. - Acquisitions are to enlarge itself to get the political heft of big oil- What would we be saying about the Anadarko/Oxy acquisition if it had happened during Covid?Biden will push through infrastructure plan if no Republican support - energy secretary sayshttps://www.reuters.com/article/us-usa-biden-infrastructure-idUSKBN2BR0FVSatellite images show huge Russian military buildup in the Arctichttps://edition.cnn.com/2021/04/05/europe/russia-arctic-nato-military-intl-cmd/index.html- Apparently the “climate crisis” is causing the ice to recede and now Russia is building more military bases there.
Biden’s ‘BackDoor’ Climate Planhttps://www.wsj.com/articles/bidens-backdoor-climate-plan-11616020338?-Can the EPA force states to regulate C02 regulations under current ozone laws?-It is possible and this is something the EPA may be working toward if Biden Admin climate legislation doesn’t work-And what about federalism?Oil Investors Hunt for Cash Gushershttps://www.wsj.com/articles/oil-investors-hunt-for-cash-gushers-11616151615-Where the Saudis right?-Why isn’t Texas producing more? Banks aren’t interested in lending to frackers when Saudis could change their mind about production any month?Saudi Aramco to prioritise China for next 50 yearshttps://www.argusmedia.com/en/news/2198029-saudi-aramco-to-prioritise-china-for-next-50-yearsColumn: China’s five-year plan focuses on energy securityhttps://www.reuters.com/article/us-column-china-energy-kemp/column-chinas-five-year-plan-focuses-on-energy-security-kemp-idUSKBN2BB1Y1-China says it wants carbon neutrality by 2060, peak carbon emissions 2030-COuld China unpeg oil from the dollar?Interview with API Chief Economist, Dr. Dean ForemanHow are we doing a year later? Rebounding?- pretty remarkable rebounding- Both in January and February oil demand is within 1.2% and 2% of where it was a year ago- Baker Hughes rig counts aren’t coming up despite the fact that we had $65 WTI. Will take more for the industry to come back.- Global oil demand recovery in 2021 and 2022 could become the largest 2 year increase on record since 1950.- Need to have a lot more investment into capex and drilling activity in US. - US LNG exports have increased to Europe, but with Nordstream 2 coming online soon, will this hurt US LNG exports? Demand is so strong there’s room for both!- Europe will probably get a better deal out of this, but US cost effectiveness is good.- More agreements for LNG- US liquid fuel consumption could return to 2019 levels but he second half of 2021- Passenger traffic is down by over 50% year on year but flights are only down 13%. Still substantial decline in jet fuel use.- Refinery utilization in Feb dropped to 56% (lowest point ever seen) at one point due to Texas Freeze.- Inventory build aren’t actually that bad because we do have demand and it should normalize. Lingering impacts in data through March but then should be fully normalizing.- Have stimulus checks impacted demand?
Brent crude slips from $70 as outlook brightens but inflation weighshttps://www.reuters.com/article/us-global-oil/brent-crude-hits-70-as-china-energy-demand-outlook-brightens-idUSKBN2B703D- China buying from allies and enemies in the Middle East- Will China reshape foreign policy in the Middle East- Iranian oil sales to China saved Iran during sanctions- We are still 20,000 flights under where we were pre-pandemicCrude to $100: Trader makes the case for a spike in oil priceshttps://www.cnbc.com/amp/2021/03/13/crude-to-100-trader-makes-the-case-for-a-spike-in-oil-prices.html- Consumer couldn’t withstand this- OPEC+ monthly meeting prevents this- It’s not like we can’t increase the drilling. We can. - Consumers don’t have the same wealth to withstand higher oil pricesU.S. becomes India's second biggest oil supplier, Saudi plunges to No. 4https://www.reuters.com/article/india-oil-imports/u-s-becomes-indias-second-biggest-oil-supplier-saudi-plunges-to-no-4-idUSKBN2B70LRUS picks up pace of drilling permit approvalshttps://www.argusmedia.com/en/news/2195167-us-picks-up-pace-of-drilling-permit-approvals- Is Biden now the oil President?- What’s going to happen between the end of the 60 day moratorium and when they issue their report on the entire process in “early summer”?Cobalt prices soar as China stockpiles metal used in smartphones, electric car batterieshttps://www.scmp.com/news/china/diplomacy/article/3125373/cobalt-prices-soar-china-stockpiles-metal-used-smartphones- Is this how Tesla ends? Tesla has a factory in China and either Elon Musk will say something bad or China will say we don’t need you anymore- Battery life and grid resiliency is not the only limiting factor in EV adoption here — so is Cobalt, 70% of which is transported between DRC and China through South AfricaThree ships carrying U.S. ethanol head to China - sourceshttps://www.reuters.com/article/us-usa-ethanol-china-exclusive/exclusive-three-ships-carrying-u-s-ethanol-head-to-china-sources-idUSKBN2B02JNTo go electric, America needs more mines. Can it build them?https://www.reuters.com/article/us-usa-mining-insight/to-go-electric-america-needs-more-mines-can-it-build-them-idUSKCN2AT39Z- No, because flowers and thirsty squirrels. Really.Check out How a Fake Saudi Prince Stole $8M from Investorsryanhttps://www.vanityfair.com/video/watch/true-crime-how-a-fake-saudi-prince-stole-$8m-from-investors
The World For Sale, interview with authors Javier Blas and Jack FarchyInspiration for the book? People know very little about who these commodity traders are. After 20 years covering the industry, decided to write the book about these people themselves. Tell the story of how a few commodity trading houses moved commodities and became influential in the market.Technology- today you couldn’t do what the commodity traders were doing in South Africa with oil because of satellite tracking. Traders won’t take these risks because they know people are watching. Reaction has been pretty good from industry but not entirely so. In general, reviews consider book fair to industry.Oil companies themselves are seeing the benefits of getting into oil trading - especially Aramco and Adnoc. Why should they leave money on the table when they can make money? Not clear whether the national oil companies have the risk appetite that the trading houses do.Concerns about disproportionate influence of China in trading market - Western commodities traders say Chinese traders are willing to take risks even they aren’t. Willing to operate in places western traders can’t or won’t go. Only traders left to interact with Iran are Chinese.Saudi crude exports normal following missile attackshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/030821-saudi-crude-exports-normal-following-missile-attacksBrent falls below $70 after Saudi attack as inflation worries mounthttps://www.reuters.com/article/us-global-oil/oil-slips-after-hitting-pandemic-high-above-70-after-saudi-attack-idUSKBN2B001JIs there a risk premium baked into oil prices? Saudi Arabia Is Playing Chicken With U.S. Shalehttps://www.bloomberg.com/opinion/articles/2021-03-07/u-s-oil-rally-saudi-arabia-plays-chicken-with-shale-as-prices-riseOPEC+ Surprise Sends Oil Past Gulf Budget-Balancing Levelshttps://www.yahoo.com/now/opec-surprise-sees-oil-soar-113001476.htmlIs “Drill baby drill” really over? Does that mean we have to get 13 million bpd? Would 12 mbpd suffice?
Is the oil market actually as tight as people think it is?- China incentivized to release from SPR to keep prices low.- Saudi and Russia should want to keep lid on prices so that China and India (consumers) stay happy- US production hasn’t increased much beyond 11 mbpd but it couldOPEC oil output falls in February on Saudi additional cut - surveyhttps://www.reuters.com/article/us-oil-opec-survey/opec-oil-output-drops-in-february-as-saudi-makes-further-cut-survey-idUSKCN2AT2CKUAE says OPEC adding 1.5 mil b/d in April hinges on vaccine rollout, demand recoveryhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/022821-uae-says-opec-adding-15-mil-bd-in-april-hinges-on-vaccine-rollout-demand-recoveryIndia's daily gasoline sales in February rise 1.5% y/y, diesel sales fall 5.3%https://www.reuters.com/article/india-oil-sales/indias-daily-gasoline-sales-in-february-rise-15-y-y-diesel-sales-fall-53-prelim-data-idUSKCN2AT1Y4- India has a lot of potential new drivers- Driving, plastic purchases, flying - all areas where oil demand can increaseU.S. report on Khashoggi weighs on Saudi shareshttps://www.reuters.com/article/mideast-stocks-int/u-s-report-on-khashoggi-weighs-on-saudi-shares-idUSKCN2AS0ERFor the Biden Administration, Saudi Arabia Is Both an Ally and a Problemhttps://www.haaretz.com/us-news/.premium-for-the-biden-administration-saudi-arabia-is-both-an-ally-and-a-problem-1.9578780- Report didn’t show anything revelatory, probably just a political releaseChina’s Oil Reserves Are Close to Reaching Storage Capacityhttps://news.yahoo.com/china-oil-reserves-close-reaching-034719436.htmlCOLUMN-Asia's physical crude oil isn't as tight as Brent pricing suggests: Russellhttps://www.reuters.com/article/column-russell-oil-asia/rpt-column-asias-physical-crude-oil-isnt-as-tight-as-brent-pricing-suggests-russell-idUSL2N2KZ0BX
thewarroomnewsletter.comBay Area Cities Go to War Over Gas Stoves in Homes and Restaurants https://www.usnews.com/news/cities/articles/2021-02-10/bay-area-cities-go-to-war-over-gas-stoves-in-homes-and-restaurants- when the power goes out, gas powered stoves, fireplaces, etc. can be very helpful for cooking, etc. when electricity is out.- people who think gas is bad refuse to hear any other perspectiveAfter Texas Crisis, Biden’s Climate Plan Hangs on Fragile Power Gridhttps://news.yahoo.com/texas-crisis-biden-climate-plan-100003694.html- Of all the people/things to blame for Texas power crisis, Biden certainly isn’t.- Is wind power to blame? Should Texas have paid to winterize its wind turbines? - What’s the responsibility of the power company to provide power to residents? Or is it a disaster preparedness issue?- More nuclear needed?Discussion of API Monthly Statistical Report- demand, despite fuel switching is very close to where it was pre-Covid- How do we balance inflation with oil prices?- Global demand is exceeding supply, inventories drawing down, investment isn’t at what it needs to be to even replace what is being used.- Question of when not if supply is short. Investment pace will impact prices- Every is typically 6.5% of a household’s expenses. Over last decade energy went down, but now its going up. Biden proposals could raise energy cost and could also raise housing and vehicle costs, especially for lower-income households.- What are we using all of the petrochemicals for? Naphtha, gas oil, propane —> winter and single use plastics. 33.1% of total US petroleum demand. Also exports. Potentially a permanent shift.- Demand in first half of February was up a lot, up 5.5% year on year in US for first half of February. But second half of February will look different because of disruptions. - Home prices are up, used vehicle prices are rising too.- Production trends continue to “defy gravity.” + or minus 11 million barrels of oil a day which is huge considering how much drilling is down. Decreases in global drilling as well. How fast do you eat through OPEC + Russia’s ability to put barrels back on the market? Between 8 and 9 barrels, but that’s demand growth alone over the next two years.- Gasoline prices? Chance of upward pressure and if you overlay Biden admin official policies on top of that we could see national average of gasoline price going up to $3/gallon.- 4Q capex spending for oil companies is only marginally more than it was in Q3. Notion that continued output growth will continue without investment is just not going happen.
https://www.wsj.com/articles/chinese-regulators-summon-tesla-on-quality-issues-11612788928- Tesla Shanghai is only foreign car company to own its plant, maybe China wants a piece?Amazon orders hundreds of trucks that run on natural gashttps://www.reuters.com/article/us-amazon-engines-natural-gas-exclusive/exclusive-amazon-orders-hundreds-of-trucks-that-run-on-natural-gas-idUSKBN2A52ML- Makes sense to convert diesel trucks to natural gas instead of EV- Ordered 700 compressed natural gas trucksAlaska seeks to build natgas pipeline from North Slope to Fairbankshttps://www.reuters.com/article/usa-alaska-lng/update-1-alaska-seeks-to-build-natgas-pipeline-from-north-slope-to-fairbanks-idUSL1N2KB2B8- logical because it would bring down heating costs in Fairbanks and emissions- Will the federal gov want to fund this project, which will include a pipeline to an LNG plant?Tightening Oil Supplies Inject New Momentum Into Price Rallyhttps://www.wsj.com/articles/tightening-oil-supplies-inject-new-momentum-into-price-rally-11612693802- Saudi Arabia and Russia are thrilled with Biden, especially Russia because it didn’t have to make any production cuts like Saudi Arabia did.- Saudi Arabia should have gotten out of Yemen while they were ahead, while Trump was president so they looked good. Now the world has turned against that war.- Oil market was softer last year at this time but the economy was so much better. So can we go to $80?Pipe laying for Nord Stream 2 restarts in Danish watershttps://www.reuters.com/article/us-russia-nordstream2-gas-pipes-idUSKBN2A60OT- Germany’s position is that this is a commercial project- No sympathy for leadership of EUA Super Bowl Ad That the Biden Presidency Made Possiblehttps://www.theatlantic.com/science/archive/2021/02/why-gms-super-bowl-ad-for-electric-cars-is-so-important/617958/- Oatly? What was that?- GM is saying Norway has better EV adoption than the US, but really its about trying to get subsidies from the Biden admin.Massachusetts climate official proposes targeting regular people who heat their homes: 'We have to break your will'https://www.washingtonexaminer.com/news/climate-official-regular-people-break-willChinese solar group blasts US calls to avoid supplies from Xinjianghttps://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/chinese-solar-group-blasts-us-calls-to-avoid-supplies-from-xinjiang-62496859- Significant issue that needs to be addressed by ESG investors. Is the E worth endorsing slave labor in China?Elon Musk pledges $100 million for new X Prize carbon removal competitionhttps://www.theverge.com/2021/2/8/22245100/elon-musk-100-million-carbon-capture-removal-x-prize-competition- What about trees?- Competition rules will officially be announced on April 22 (Earth Day)
Biden Revokes Oil Drilling Permits for Additional Reviewhttps://finance.yahoo.com/news/biden-yanks-just-approved-drilling-174208569.html- If you thought you were in the clear because you got your permit in before the Jan 20 EO, sorry. Permits issued without the extra political review are invalid. - 33 permits for wells in the Gulf of Mexico have to sense drilling pending the political review- Pretty substantial riskCanadian rails see crude increasing on Keystone XL cancellation, DAPL uncertaintyhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/012921-canadian-rails-see-crude-increasing-on-keystone-xl-cancellation-dapl-uncertainty- Make crude by rail great again!- So can rail companies now argue that crude by rail is the “environmentally safe” option compared to pipelines?GM aims to end sale of gasoline, diesel-powered cars, SUVs, light trucks by 2035https://www.reuters.com/article/us-gm-emissions/gm-aims-to-end-sale-of-gasoline-diesel-powered-cars-suvs-light-trucks-by-2035-idUSKBN29X2AYhttps://twitter.com/lawyer4laws/status/1354526622460891137?s=21- 95% coal- ground the private jets to save the planetExxon, Chevron CEOs Discussed Mergerhttps://www.wsj.com/articles/exxon-chevron-ceos-discussed-merger-11612126203- Let’s get the band back together!- Standard Oil Trust was broken up in 1911 into Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Standard Oil of California (Chevron), Standard Oil of Ohio, etc. etc.- Floating idea for traction- Would it help deal with regulatory burden from Biden adminOPEC+ Sees Almost Full Oil-Cuts Compliance in Decemberhttps://news.yahoo.com/opec-sees-almost-full-compliance-163554530.html- China’s transportation numbers for lunar New Year now make Saudi ‘surprise’ cut seem prescient.Nuisance Laws an Ineffective Way to Hold Big Oil Accountable for Climate Changehttps://news.bloomberglaw.com/environment-and-energy/nuisance-laws-an-ineffective-way-to-hold-big-oil-accountable-for-climate-change- Supreme Court heard arguments on whether these lawsuits should be heard in federal court or state court. WIll probably be dismissed if they go to federal court.Russia Cuts Crude Exports to Avoid Fuel Shortagehttps://www.energyintel.com/pages/eig_article.aspx?DocID=1096531Fossil fuel transition: Expect oil price spikes as capital investment declineshttps://www.worldoil.com/news/2021/1/29/fossil-fuel-transition-expect-oil-price-spikes-as-capital-investment-declines- Total global investment into oil and gas exploration and production fell by 34% last year to $261 billion, the lowest since 2004- Annual investment needs to be 25% higher over the next three years to stave off a supply crisis, the report estimated
On today's show, Ellen Wald and Ryan Ray discuss the woes facing refiners, the implications of the Biden administration suspending federal leasing and discuss Keystone XL with Prof. James Coleman from SMU.Big Oil hits brakes on search for new fossil fuelshttps://www.reuters.com/article/us-oil-exploration-cuts/big-oil-hits-brakes-on-search-for-new-fossil-fuels-idUSKBN29U00V- tale as old as time- BP leading the way to not becoming an oil companyU.S. oil refiners set for worst earnings quarter of the pandemichttps://www.reuters.com/article/us-usa-refining-results/u-s-oil-refiners-set-for-worst-earnings-quarter-of-the-pandemic-idUSKBN29U0F0- will refineries continue to shift away from jet fuel, transportation fuels and more towards components for petrochemicals?Biden administration suspends federal leasing, permittinghttps://www.offshore-mag.com/regional-reports/us-gulf-of-mexico/article/14196032/biden-administration-suspends-federal-oil-and-gas-leasing-permitting- KXL was low hanging fruit- 60 moratorium on fracking permits- Is this is the start of more stringent regulations? Yes- New Mexico voted for Biden. Division between those in federal lands areas and those in cities. But all of New Mexico benefits from the money.Biden’s stimulus may be too big amid economic recovery, should be targeted at those most impactedhttps://www.cnbc.com/2021/01/24/bidens-stimulus-may-be-too-big-amid-economic-recovery-should-be-targeted-at-those-most-impacted.htmlIraq's dominance over Indian crude market to be tested if Iran returnshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/012121-iraqs-dominance-over-indian-crude-market-to-be-tested-if-iran-returnsSpecial Guest Prof. James Coleman from SMU. Find him at www.energylawprof.com- Keystone XL pipeline got more cash last year which indicates that it wasn’t doing so well to start with.- 13 years for an energy transport project give a cautionary tale for investors in energy transportation.- Trump tried to get pipeline built for 4 years, but nothing really happened. Problems for building energy infrastructure show that Presidents can’t get energy transport built but they sure can kill it.- More likely TC Energy will request damages under NAFTA. Strong claim on its face, but no claim has ever succeeded against US with NAFTA- Trans-Mountain expansion will likely go ahead. Only federal approval needed if its inter-provincial. Line 3 Enbridge still could have some hurdles but if they get that replaced and TM in place they might be ok without KXL- State Energy Cartels - for more information check out Prof. Coleman’s paper here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3567236- case of Alberta, making every company cut back when prices were rock bottom. Oil price went up 300% - huge benefit to cash flow even with everyone cutting production. Transport constraints played an important role.- Flaring is down a lot now but usually when transportation is constrained you get higher flaring. Flexible system to phase in small cuts.- Alberta exempted some of the smallest producers from cuts, which is an important part. - “Federal anti-trust law is no joke. Don’t mess with it.” But the states can regulate.- North Dakota and Texas have similar problems with rapid build out and flaring. SImilar model.- Alberta is a model for good things and mistakes. DIdn’t phase in cuts, cut to rapidly and got rid of differential and killed their crude by rail investment.- Look at what Texas did before: in the past the federal gov coordinated things. - In the past, coastal energy consumers would have flipped out at attempts to curb oil and gas production. Now, these people would applaud.- Because flaring is way down, now is the time to develop regulatory structures.- Best app, real time info, info that TRC puts out isn’t nearly as good. EIA stats are best in the world.
Check out Ellen's column on Wednesday at thewarroomnewsletter.comBiden indicates plans to cancel Keystone XL pipeline permit on first day in office, sources confirmhttps://www.cbc.ca/news/canada/calgary/biden-keystone-xl-1.5877038Keystone XL Oil Project Pledges Zero Carbon Emissionshttps://www.wsj.com/articles/keystone-xl-oil-project-pledges-zero-carbon-emissions-11610930642- Can a pipeline even run on renewable energy?- Solar panels likely- But REALLY, they mean that the company will fund 1.6 gigawatts of renewable power.- What does this mean for the future of infrastructure projects in the US? - Job contracts were awarded, Alberta wants to sue, potentially- So many people involved in the process, when a snafu happens in one place it kills it for everyoneRising oil prices test US producers’ willpowerhttps://www.woodmac.com/news/opinion/rising-oil-prices-test-us-producers-willpower/- Is the price right now? Or do people think it will go higher?China economy grows in 2020 as rebound from virus gainshttps://apnews.com/article/pandemics-europe-coronavirus-pandemic-china-japan-9ffd848ef5639f07e77588efde424dcc- Can we trust China’s numbers? - Government spending on industrials vs. the consumer economy China wants to become Adnoc defies retreat from oil with push to pump up outputhttps://www.ft.com/content/b13efad3-f494-46a8-842c-ccf7124ad43d- good idea? Bad idea? To increase capex while other companies have been cutting theirs- Wants to ramp up to 5 million bpd from 3 million bpd by 2025Total quits API citing climate policy disagreementhttps://www.argusmedia.com/en/news/2177425-total-quits-api-citing-climate-policy-disagreementTotal speeds up renewables push with $2.5 billion investment in Indian solar powerhttps://www.reuters.com/article/us-total-india-adani/french-energy-group-total-buys-20-stake-in-indias-adani-green-energy-idUSKBN29N0C5These Companies Want to Charge Your Electric Vehicle as You Drivehttps://www.wsj.com/articles/these-companies-want-to-charge-your-electric-vehicle-as-you-drive-11610965800- is it worth changing all the infrastructure?- how about try it out in one small city first...
Debanking Hurts Everyonehttps://www.barrons.com/articles/debanking-hurts-everyone-51610145010Saudi cut to boost oil market de-stocking, even as demand faltershttps://www.reuters.com/article/us-global-oil-inventories-graphic/saudi-cut-to-boost-oil-market-de-stocking-even-as-demand-falters-idUSKBN29F06DMajor OPEC Producers, Cued by Saudis, Raise Asia Crude Pricinghttps://uk.finance.yahoo.com/news/iraq-raises-crude-pricing-asia-145210101.htmlhttps://www.api.org/products-and-services/statistics/apis-economic-industry-outlookJapan power generators facing LNG shortage amid supply crunch, cold weatherhttps://energy.economictimes.indiatimes.com/news/power/japan-power-generators-facing-lng-shortage-amid-supply-crunch-cold-weather/80153824
OPEC news:OPEC+ is still undecided as to whether it will increase productionRole of additional lockdowns being announced during break between OPEC meetingsAlso role of Qatar—Saudi end of airspace blockadeSouth Korean-flagged tanker seized by Iran, media reportshttps://www.reuters.com/article/iran-tanker/update-1-south-korean-flagged-tanker-seized-by-iran-media-reports-idUSL1N2JF0L8- Is this the next big conflagration?- how much is this related to sanctions? South Korea is holding $7 billion of Iranian money because of US sanctions- Are Iranians forcing the hand of the incoming US administration to see where they stand?Oil prices touch multi-month highs as OPEC+ expected to cap outputhttps://www.reuters.com/article/us-global-oil/oil-prices-touch-multi-month-highs-as-opec-expected-to-cap-output-idUSKBN299035- price fall today more related to US stock market falling than what’s specifically happening with oil- What about China?Saudi energy minister urges OPEC+ discipline as some members seek output gainshttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/010421-saudi-energy-minister-urges-opec-discipline-as-some-members-seek-output-gains- Saudi—Russia in very different positions but the stakes aren’t as high as they were back in March 2020. Fewer barrels bpd and another monthly meeting coming up.OPEC secgen says ready to adjust oil output increaseshttps://uk.reuters.com/article/oil-opec/opec-secgen-says-ready-to-adjust-oil-output-increases-idUKL8N2IJ3OWChina’s Wintry Cold Lifts Diesel Use as Factories Buy Generatorshttps://www.bloomberg.com/news/articles/2021-01-03/china-s-wintry-cold-lifts-diesel-use-as-factories-buy-generators- bottlenecks like import restrictions. Leaving coal on the boat in the ocean. It’s paid for and sitting in China’s harbors.December diesel demand crawls up to 97% of pre-pandemic level http://timesofindia.indiatimes.com/articleshow/80063323.cms- mixed indicators of good and bad economic growth, just like in the U.S.Investors challenge ExxonMobil on multiple frontshttps://www.argusmedia.com/en/news/2173720-investors-challenge-exxonmobil-on-multiple-fronts
Oil rises to touch $52 after Trump signs aid billhttps://www.reuters.com/article/us-global-oil/oil-firms-after-trump-signs-aid-bill-demand-concerns-linger-idUSKBN2920FZ?il=0- Demand in the US isn’t good but oil stay just under $52 with vaccine news. - But will increased vaccination actually lead to increased economic activity?- Market is forward looking but just HOW forward looking is it?- There could be a sell off when the market reaches the point where demand is back where it is.- Russia sees demand at 7-8mbpd below pre-pandemic levels but expects growth of only 5-6 mbpd.Japan to Phase Out Gasoline-Powered Cars, Bucking Toyota Chiefhttps://www.wsj.com/articles/japan-to-phase-out-gasoline-powered-cars-bucking-toyota-chief-11608887640- also planning to increase coal powered plants so EVs in Japan will be running off of coal.- Japanese grid can’t handle the increase in power demandToyota’s Chief Says Electric Vehicles Are Overhypedhttps://www.wsj.com/articles/toyotas-chief-says-electric-vehicles-are-overhyped-11608196665Asia’s oil sector in 2021: China drives recovery, strengthens status as refining centerhttps://www.spglobal.com/platts/en/market-insights/blogs/oil/122420-asia-oil-sector-2021-china-recovery-refining-transport-cars- predicts oil demand back at 99.53 mbpd in 2021- China and India will lead the demand growth but India won’t become the next ChinaCarbon Prices Jump Despite Record Drop in Emissionshttps://www.wsj.com/articles/carbon-prices-jump-despite-record-drop-in-emissions-11608814801?page=1- Carbon credits are like gold. Credits tied to carbon emissions are having a better year than gold.- Pricing in of increased ambition- Morgan Stanley forecasts that EU carbon credit prices could rise from 44 Euros to 76 EurosBiden camp adds pressure on EU to hit brakes on China dealhttps://www.japantimes.co.jp/news/2020/12/23/business/economy-business/biden-eu-china-investment-trade/- If EU doesn’t back China they have no where to turn to- Biden promoted multilateralism but can he bring that to bear on China?How tough will Joe Biden be on the US shale industry?https://www.theguardian.com/us-news/2020/dec/27/joe-biden-us-shale-industry-fracking-banU.S. shale oil just had its worst year and the pain could bleed into 2021https://www.reuters.com/article/us-usa-shale-outlook-analysis/analysis-u-s-shale-oil-just-had-its-worst-year-and-the-pain-could-bleed-into-2021-idUSKBN28W17P- Growth growth growth was the model for so long that the demise of growth is seen as the death of the industry but that is not necessarily the case.- Oil productions as going to decrease anyway, 2020 just send up the process the most painful way possible.- Revamping, reshaping of shale oil industry underway and still underway.
Crude oil futures plummet on concerns over new coronavirus strainhttps://www.spglobal.com/platts/en/market-insights/latest-news/oil/122120-crude-oil-futures-plummet-on-concerns-over-new-coronavirus-strainOil tumbles as new virus strain revives demand worrieshttps://www.reuters.com/article/global-oil-int/oil-tumbles-as-new-virus-strain-revives-demand-worries-idUSKBN28V04N-Shows that likely vaccine will be required for travel-Brent dropping below $50 on news of more shutdowns but if this the start of a real sell-off -Will the stimulus bill ($900 billion+) lift the economy and prices?Russia Favors Further OPEC Output Hike In Februaryhttps://financialpost.com/pmn/business-pmn/russia-favors-further-opec-output-hike-in-february- Novak floats 500,000 bpd increase for February and oil prices stay at or above $50, so this seems like a good signal for January 4 meetingReal Oil Price Rally Fades as Asia’s Buying Spree Winds Down https://www.bloombergquint.com/business/physical-oil-rally-fades-with-asian-buying-cooling-after-spree- It is possible that this is just a price correction brought about by an end to Asia's oil buying spree.China to Have Oversupplied Oil Market for Decadeshttp://www.energyintel.com/pages/eig_article.aspx?DocID=1092970- China sees that its own oil products market will be oversupplied through 2050 and it will continue to refine more products and build more refineries anyway and sell the products it produces.- The forecast comes from a belief that there will be a shift away from oil powered vehicles to “new energy” vehiclesOPEC+ Will React Faster, Be More Hands-On With Oil Markethttps://finance.yahoo.com/news/opec-react-faster-more-hands-163842347.html- Is this really better for the market?- To keep the US from over drilling it is an effective way to keep US companies from opening up more drilling- Also, is there enough trust? Does the market actually trust OPEC producers to produce what they say they are and will produce?API Industry Outlook Fourth Quarter 2020- GDP growth seen at 4.8%- Demand growth coming from developing nations- Demand growth in the U.S. will be uneven geographically.
Planet FWD debuts carbon-neutral snackshttps://www.axios.com/planet-fwd-carbon-neutral-snacks-f4c6ef3a-c5fe-45d5-925f-055a6b221d62.html- fully carbon neutral manufacturing process- Ellen is making “low-carbon” crackers and she would like to pursue seed funding for her venture. PS: low-carbohydrate versions coming soon.OPEC cuts forecast for 2021 growth in oil demandhttps://www.marketwatch.com/story/opec-cuts-forecast-for-2021-growth-in-oil-demand-2020-12-14- This comes after OPEC decides to raise production 500,000 bpd in January Iran Sends Ship to Load Venezuela Oil in Defiance of Sanctionshttps://finance.yahoo.com/news/iran-sends-ship-load-venezuela-172517460.html- how long would it take for Venezuela to restore oil production?Conversation with Dr. Dean Foreman of API on Monthly Statistical Report- Oil demand in November returned to within the 5 year range- Gasoline month on month went down despite holiday travel.- Usually see season decrease in driving between Oct and Nov but this decrease was larger- Overall demand rose from diesel and distillates because of transportation and industry. Also jet fuel picked up. - Air travel traffic picked up.- Other oils: naphtha and gas oils that are used in petrochemicals picked up. Usually 25% of demand in Nov it was up to 30%. Increased petrochemical demand and throughput with it.- Growth in petrochemical industry in US that we didn’t have 20 years ago.- Rig count: what is it telling us? Rig count doesn’t look like its high enough to sustain oil production BUT productivity is way up and production has been up. People are drilling their very best rigs with the most productive rigs and equipment.- Ability to spool back up in Permian Basin and other places. Productivity won’t be as high though, when it returns. But many processes put in place to increase productivity will remain in place.- Refiners are able to respond to changes in demand conditions. The economy and oil demand go hand in hand. If economy continues to recover, then refiners that can supply the product will increase.- lowest imports of products+crude in 30 years and lowest crude imports from OPEC. Seen increase in domestic refineries using light, sweet crude oil and adapting to the environment they are given. Narrower international vs. domestic crude oil (Brent vs. WTI) differential.- Record pipeline gas going to Mexico right now.
Opec+ ministers to next meet on 4 Januaryhttps://www.argusmedia.com/en/news/2166600-opec-ministers-to-next-meet-on-4-january- OPEC+ deal to increase production by 500,000 bpdCould there have been some pressure from China on UAE and Russia to increase production because China wants to buy more?- Will meeting more regularly have more or less impact on the market?- Should OPEC set production policy for 6-12 months or should it become a rapid-response reactive group, adjusting production policy every month?- Does it deter U.S. producers from increasing production too much? Would it influence the shale oil industry?Energy Pipelines’ Bad Year Has a Silver Lininghttps://www.wsj.com/articles/energy-pipelines-bad-year-has-a-silver-lining-11607342400- Will all of the companies have product flowing through their infrastructure? For those that do, the value of their infrastructure will be increased.- Value could come years later if pipeline permitted becomes so difficult its nearly impossible to get pipelines permitted.- But would drillers put out capital to drill if there’s no possibility of getting pipeline space.- Got to get through 2021 to see where demand is and see how many producers actually make it to 2022.- Would they be absorbed by a super-major?Exxon Under Pressure From New Activist Fundhttps://www.wsj.com/articles/exxon-under-pressure-from-new-activist-fund-11607310000- Engine No. 1 investment fund is pushing for Exxon to invest more in clean energy technology, etc. - Why not just buy shares in BP and Shell?U.S. gasoline demand during Thanksgiving week lowest since 1997: OPIShttps://www.reuters.com/article/usa-products-gasoline/u-s-gasoline-demand-during-thanksgiving-week-lowest-since-1997-opis-idUSKBN28H1UQ?il=0- people are NOT driving- WHY then, are oil prices up?- What will happen for Christmas travel? But with new lockdowns, curfews, etc. can we really expect people to travel for Christmas?- How much will the lack of demand for Black Friday show up in diesel for package delivery? Not enough to offsetExxon Holds Back on Technology That Could Slow Climate Changehttps://www.bloomberg.com/news/features/2020-12-07/exxon-s-xom-carbon-capture-project-stalled-by-covid-19The COVID-19 Shock and the Curious Case of Missing Barrelshttps://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/12/The-COVID19-Shock-and-the-Curious-Case-of-Missing-Barrels.pdf- China probably imported them!
Sunday was the busiest day for US air travel since the pandemic beganhttps://www.cnn.com/travel/article/thanksgiving-travel-volume-2020-pandemic/index.html- TSA screened 1.17 million people on Sunday after Thanksgiving 2020- TSA screened 2.8 million people on Sunday after Thanksgiving 2019- What about gasoline? Probably not as many people traveled this Thanksgiving but gasoline might be inflated because people used more gasoline because they traveled longer distances instead of flying- What does this mean for Christmas and gasoline demand?OPEC oil output rises for fifth month on Libyan recovery, Reuters survey showshttps://www.reuters.com/article/us-oil-opec-survey/opec-oil-output-rises-for-fifth-month-on-libyan-recovery-reuters-survey-shows-idUSKBN28A1KW- Libyan oil production ramps up to 750,000 bpd will be higher.- When will OPEC deal with Libyan oil production?OPEC members agree to extend oil cuts by three months, Algeria sayshttps://uk.reuters.com/article/global-oil-opec/opec-members-agree-to-extend-oil-cuts-by-three-months-algeria-says-idUKS8N2GC08ZU.S., Russia Race to Outflank Each Other on Russian Pipelinehttps://www.wsj.com/articles/u-s-russia-race-to-outflank-each-other-on-russian-pipeline-11606645800- US should be working to help Europe diversify its sources of natural gas as opposed to just working to stop the big bad pipeline, which it was working for with deals with Poland.- Germany is basically getting into bed with the mob (Russia) willingly.- Who is really a viable threat to the U.S.? Iran’s Top Nuclear Scientist Killed in Ambush, State Media Sayhttps://www.nytimes.com/2020/11/27/world/middleeast/iran-nuclear-scientist-assassinated-mohsen-fakhrizadeh.html- Assassinating the head of Iran’s nuclear program - Israel + U.S. or just Israel?- Iran got off easy on shooting the airliner down