Asia – JKempEnergy.com

Best in Energy – 25 May 2023

U.S. LNG exports and impact on domestic prices (EIA)

OPEC⁺ expected to leave output unchanged (Bloomberg)

Greenhouse effect’s intellectual history (Conversation)

Mining as limiting factor for energy transition (Reuters)

Asia coal imports rebound in 2023 (Reuters)

China/Russia gas pipeline negotiations (FT)

U.S. airlines report more near-misses (WSJ)

U.S./China cyber-espionage (Reuters)

(see also joint statement by Five Eyes)

U.S. PETROLEUM INVENTORIES including the strategic reserve depleted by -12 million barrels in the seven days ending on May 19 to the lowest seasonal level since 2004. There was a major drawdown in commercial crude stocks (-12 million barrels) with smaller draws in gasoline (-2 million) and distillate fuel oil (-0.5 million) but a small build in jet fuel (+1 million). Commercial crude stocks are in line with the prior ten-year seasonal average (+0.01 standard deviations) but there are substantial deficits in gasoline (-1.20 standard deviations) and distillates (-1.45 standard deviations):

Best in Energy – 22 May 2023

China’s lithium futures prices rebound (Reuters)

Nigeria starts up major new oil refinery (Reuters)

California approves more transmission (Reuters)

U.S. military to indigenise explosives supply (WSJ)

Asia LNG imports rise following price drop (Reuters)

Argentina oilfield workers strike on safety (Reuters)

Crude oil prices are falling in real terms (Bloomberg)

Russia’s oil output increasingly opaque (Bloomberg)

Russia/Asia energy trade volume rises (Bloomberg)

EUROPE’s front-month gas futures price has fallen below €30 per megawatt-hour from €77 at the start of January 2023 and a record of almost €340 in August 2022. Gas inventories are plentiful following a mild winter and cuts in industrial consumption. As a result storage is on course to be full well before next winter starts. Prices are declining to stimulate industrial demand and divert LNG to more price-sensitive customers in South and East Asia:

U.S. OIL DRILLING is slowing in response to the fall in prices since the middle of 2022. The cyclical upturn in drilling activity that started after the end of the first wave of the pandemic in August 2020 is likely over. The number of active rigs targeting oil-rich formations fell to 575 over the seven days ending on May 19 down -11 compared with the previous week and by a total of -52 compared with the early December 2022:

Best in Energy – 14 April 2023

El Niño starts to form in eastern Pacific area

Asia’s refiners switch from gas oil to gasoline

OPEC cites downside risks to oil consumption

China’s crude oil imports accelerated in March

U.S. GAS STOCKS increased by +25 billion cubic feet over the seven days ending on April 7, the first increase since early January, and the largest since early November, as the refill season started. Inventories were +219 billion cubic feet (+13% or +0.48 standard deviations) above the prior ten-year seasonal average but the surplus has narrowed slightly from +262 billion cubic feet (+15% or +0.61 standard deviations) on March 6:

Best in Energy – 30 March 2023

U.S. oil and gas expansion stalled in first quarter

China independent refiner in marketing deal

China starts up new refinery for heavy crudes

Ford invests in China/Indonesia nickel project

Asia’s thermal coal imports accelerate in March

California to regulate gasoline refining margins

U.S. LNG delayed by tighter financial conditions

Central banks warn over price-price spiral ($FT)

Europe’s gas storage outlook for 2023/24 ($BBG)

U.S. gas production increased by 4% in 2022

U.S. INTEREST RATE traders expect the central bank to lower its target for the federal funds rate to 4.25-4.50% by December 2023, down from 4.75-5.00% at present. Tighter credit conditions and increased caution among households and businesses following regional bank failures are expected to enforce a slowdown on borrowing and economic growth, bearing down on inflation:

U.S. PETROLEUM INVENTORIES including the strategic reserve fell -11 million bbl in the seven days to March 24, after declining -10 million in the week to March 17:

Best in Energy – 23 March 2023

U.K. power trading under scrutiny ($BBG)

China’s resurgent oil use and price impact

Asia’s distillate fuel oil stocks are swelling

U.S. central bank and tighter credit ($FT)

U.S. households and gas use in 2020

SINGAPORE distillate inventories have started to rise from multi-decade lows set in the final months of 2022:

U.S. PETROLEUM INVENTORIES depleted by -10 million barrels over the week ending on March 17, the largest drawdown since the end of 2022. Draws in gasoline (-6 million barrels), distillate fuel oil (-3 million) and propane/propylene (-2 million) more than offset a small build in crude (+1 million):

Best in Energy – 20 February 2023

Freeport LNG’s poor safety culture ($FT) ¹

Asia’s diesel margins fall to 11-month low

IEA chief warns of gas shortage next winter

Pakistan/Bangladesh hit by expensive LNG

China becomes major LNG reseller ($BBG)

CFTC reports still disrupted by cyber attack

U.S. construction worker shortages ($FT)

Semiconductor prices fall by a third ($BBG)

China/Russia diplomatic ties deepen ($WSJ)

U.S./China espionage history review ($FT)

¹ Freeport LNG suffered a catastrophic failure after multiple safety systems failed and personnel ignored warning signs and lost situational awareness about the state of the plant. The resulting explosion is a classic example of what James Reason called an “organisational accident” – multiple systems should have prevented an incident but they were allowed to erode because of a poor internal safety culture leading to a rapid increase in risk (“Managing the risks of organisational accidents”, Reason, 1997).

Reason’s book is one of the best I have read on any topic, offering powerful insights in an engaging and accessible way. He provides a general framework for understanding why many catastrophic industrial and transportation failures happen. Everyone operating critical systems and machinery should be required to read it as part of their training. I can strongly recommend it to everyone else who is interested in safety, reliability and resilience systems.

U.S. OIL AND GAS drilling rates have stalled in response to the slump in prices since the third quarter of 2022. There has been no net increase in the number of active rigs (760) for the last 31 weeks:

Best in Energy – 2 February 2023

[MUST READ] Battery manufacturing ($FT)

Japan’s utilities try to diversify coal sourcing

Asia crude imports at record high in January

EU to launch global LNG price assessment

EU will need to cut gas use in winter 2023/24

U.S./Philippines reach deal on military bases

U.S. senators try to ban SPR oil sales to China

Qatar/Airbus reach aircraft settlement ($WSJ)

FRANKFURT, a proxy for northwest Europe, reached roughly 60% of the way through the winter heating season on February 1. So far the accumulated heating demand has been -17% below the long-term average and is the lowest since 2015/16 and before that 2006/07. But after an exceptionally long period of mild temperatures between December 19 and January 15, temperatures have turned significantly colder, causing the heating deficit to narrow slightly:

Best in Energy – 30 January 2023

India requests coal-fired generators stay in service

India plans to order maximum coal-fired generation

Jet fuel prices surge on post-pandemic consumption

Asia’s seaborne coal prices slip on plentiful supplies

Russia/Ukraine: which side does time favour? ($WSJ)

BP publishes revised energy outlook through 2050

EU gas price cap sparks plan to shift TTF to London

Israel/Iran drone attack ($WSJ)

EUROPE’s gas futures summer-winter calendar spread for July 2023 to January 2024 has slumped into an increasingly wide contango as traders anticipate a record carryover over inventories from winter 2022/23 which will leave the storage system short on space. Lower gas prices in summer 2023 will encourage more consumption by power generators and major industrial users. Higher prices may still be needed to restrain consumption during the peak of next winter:

U.S. OIL DRILLING has started to slow in response to the fall in prices since the middle of 2022. The number of rigs drilling for oil was just 609 on January 27 down from a cyclical high of 627 on December 2:

Best in Energy – 1 December 2022

China set to announce easing of quarantine controls

China scales back epidemic quarantine control (trans.)

China considers another round of vaccinations ($BBG)

U.S. Treasury signals concern about too low price cap

Asia’s crude oil imports hit record high in November

China modernises and expands strategic nuclear force

United States eases oil sanctions on Venezuela ($FT)

U.S. wind farms and seasonal variations in generation

CHINA’s manufacturers reported a steep decline in activity last month as the economy buckled under pressure from city-level lockdowns. The official purchasing managers’ index slipped to 48.0 in November (1st percentile for all months since 2011), the lowest since April 2022, and before that the first wave of the pandemic in February 2020:

U.S. DISTILLATE inventories rose +4 million bbl to 113 million bbl last week. Stocks are still -20 million bbl (-15%, -1.04 standard deviations) below the pre-pandemic five-year average but the deficit has narrowed from -34 million bbl (-24%, -2.05 standard deviations) on October 7:

Best in Energy – 23 September 2022

U.S. central bank signals a hard landing ($WSJ)

U.S. trucking – possible decarbonisation pathway

China’s refiners anticipate higher exports ($BBG)

India plans more coal generation by 2030 ($BBG)

Asia LNG sales stall as prices hit resistance ($BBG)

ADNOC chief sees little room to manoeuvre in oil

Taiwan says blockade would be act of war

FedEx to cut costs and raise parcel prices ($WSJ)

U.S./China relations –Asia Society speech (trans)

EUROZONE manufacturers reported a further deterioration in business activity this month according to preliminary results from the purchasing managers’ survey. The composite activity index fell to 48.5 in September (24th percentile) down 49.6 in August (28th percentile) and 49.8 in July (29th percentile). The region’s economy is sliding into recession – even before expected energy shortages this winter:

U.S. INITIAL CLAIMS for unemployment benefits are still running at very low rates, with just 213,000 new claims filed last week on a seasonally adjusted basis. Core inflation is unlikely to fall to the Federal Reserve’s target of a little over 2% per year with the labour market this tight – which explains the central bank’s aggressiveness in raising interest rates:

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