Tag: California

Best in Energy – 9 September 2022

China’s lockdowns are cutting oil consumption

U.S. officials indicate Russia oil cap around $60

Hungary warns against capping Russia gas price

U.S. digital assets boosting energy consumption

India alert as generators’ coal stocks fall ($BBG)

California text messages conserve power ($WSJ)

INDIA’s power producers hold coal stocks equivalent to 10 days of consumption compared with just 4 days at the end of September 2021 and 11 days in September 2019. In recent years, September has marked the low-point in the annual inventory cycle. At the moment stocks appear sufficient to avoid widespread generator closures but the government is monitoring levels closely:

U.S. PETROLEUM INVENTORIES including the strategic reserve increased by +4 million barrels last week.  But inventories have declined in 84 of the last 114 weeks by a total of -450 million barrels since the start of July 2020 illustrating the persistent shortage of oil available to the market. Stocks are at the lowest seasonal level since 2004 and are still trending lower:

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Best in Energy – 7 September 2022

California warns of possible power cuts

European smelters call for emergency help

(see letter from Eurometeaux trade group)

EU banks prepare to cut electricity demand

EU reverts to coal generation in crisis ($FT)

U.S. LNG export capacity

CALIFORNIA’s power grid is running short of capacity in the early evening when consumption, driven by air-conditioning, is past its late afternoon peak but still high and solar generation is rapidly fading. The load curve below for September 6 shows the strain on dispatchable generating capacity between around 1600 and 2100 hrs local time. The California Independent System Operator (CAISO)’s forecast curve shows the same problem is expected today on September 7:

BRENT spot prices and calendar spreads are consistent with a market that is still tight but past its cyclical peak. The six-month calendar spread has softened to a backwardation of $5.60 per barrel (97th percentile) from a record of more than $21 in the immediate aftermath of Russia’s invasion of Ukraine in early March. The spread from December 2022 to December 2023 has softened to a backwardation of under $10 from a peak of $16 in early June. Softening spreads reflect an increased probability that a cyclical slowdown in the major economies will cut consumption and lead to an accumulation of inventories over the next year:

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Best in Energy – 6 September 2022

Nuclear generators and service extensions

California calls for electricity conservation

U.S. gas-fired generation hits record high

Economic warfare and energy bills ($FT)

Energy crisis myths dispelled by IEA ($FT)

EU smelters close on high energy costs ($FT)

EU/UK POLICYMAKERS are considering how to protect households and businesses from surging gas and electricity prices. History suggests there are four basic options that can be employed singly or in combination. Multiple refinements are possible with each option – but the four basic responses have been the same since at least 400 BCE:

EUROZONE manufacturers reported business activity declined for the second month running in August. The composite purchasing managers’ index slipped to 49.6 in August from 49.8 in July and 52.1 in June as the conflict between Russia and Ukraine, record gas and power prices, broader inflation, and falling household and business confidence tipped the regional economy towards recession:

HEDGE FUND and other money manager positions in the six major petroleum futures and options contracts on August 30:

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Best in Energy – 9 May 2022

China prioritises energy and food security (trans.)

California forecasts power shortages to 2025

U.S. grids warn of electricity shortfalls ($WSJ)

IEA sidelined by White House on oil release

India’s prolonged electricity blackouts

India’s fuel distributors trim volumes

Japan to phase out Russian oil imports

U.S. fuel prices rise faster than crude

Global refining margins widen ($BBG)

U.S. refiners run out of capacity ($FT)

CO2 removal becomes focus for policy

Pandemic results in 15 million deaths

U.S./Ukraine intelligence sharing ($WSJ)

INDIA’s temperatures have fallen over the last week and are closer to the seasonal average, reducing electricity consumption slightly and easing stress on the power grid. The grid’s frequency has moved closer to the 50 Hz target and periods of under-frequency have become shorter and less severe, showing a closer balance between generation and demand:

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Best in Energy – 6 April 2022

EU/Russia coal ban would strain supply ($BBG)

U.S. central bank signals rapid move to neutral

U.S. Treasury warns of economic shock ($BBG)

Europe’s economy faces energy shock ($BBG)

India’s coal imports to rise in 2022/23

Argentina’s gasoil consumption rises

Crude physical benchmarks weaken

LME sees sharp reduction in positions

California’s emissions price increases

Reuters has created new web pages where you can find all the columns by our commodities experts in one place:

* Industrial metals www.reuters.com/authors/andy-home

* Asian markets www.reuters.com/authors/clyde-russell

* Agriculture www.reuters.com/authors/karen-braun

* Energy markets www.reuters.com/authors/john-kemp

EUROPE’s midsummer-midwinter gas futures calendar spread from July 2022 to January 2023 has narrowed sharply to a backwardation of less than €4/MWh down from a record €72 in early March. To ensure inventories can be accumulated over the next six months for use next winter, without incurring large losses, the spread needs to move into contango to cover storage costs. The July 2022 futures price must fall, the January 2023 price must rise, or both. So far, both prices appear to be adjusting in the expected direction:

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