Best in Energy – 19 December 2022

U.K. parliament warns hydrogen is not a panacea

Employment transition and future energy system

Europe’s challenge to refill gas storage in 2023

ING bank closes offices to conserve energy ($BBG)

U.S. SPR to purchase small amount of crude oil

U.S. shale chief warns against more drilling ($FT)

China set for surge in coronavirus cases ($BBG)

Australia/China try to mend relations ($BBG)

U.S. southeast prepares for cold snap ($BBG)

U.K. utilities warn of cash crunch risk ($FT)

U.S. WELL DRILLING shows signs of having hit a peak and starting to fall as the sector responds to lower prices. The number of active rigs targeting oil or gas has fallen in the most recent two weeks and is no higher than at the end of October. As a result, the rig count has increased by an average of just +1.0 per week in the last 13 weeks:

Best in Energy – 27 October 2022

LNG stocks in floating storage off coast of Spain ¹

U.S. trucking firms report mixed demand ($BBG)

U.S. officials try to finalise Russia oil price cap

U.S. officials water down price cap plan ($BBG)

U.S. uranium indigenisation strategy  planned

U.S. uncompleted oil wells at lowest since 2013

¹ Floating storage is more expensive than storing on land. Storing LNG is especially expensive because it needs to be kept super-chilled. But the extreme contango in European futures for nearby delivery months has made relatively long duration floating storage commercially viable. As a result, Europe’s available inventories are even higher than shown in the daily storage reports from Gas Infrastructure Europe.

U.S. PETROLEUM INVENTORIES including the strategic reserve fell by -5 million bbl in the week to October 21. Stocks have depleted by a total of -491 million bbl since the start of July 2020 and are at the lowest seasonal level since 2004. Oil inventories are on an unsustainable trajectory. “If something cannot go on forever, it will stop,” according to the aphorism popularised by Herbert Stein, chief economic adviser to U.S. President Richard Nixon. Global production must grow faster. Consumption must grow more slowly. Or both:

Best in Energy – 10 October 2022

Saudi Aramco pledges to maintain supply to Asia

U.S. uncompleted oil and gas wells fall to new low

U.S./Saudi relations strained by output cut ($FT)

Taiwan tries to stabilise relations with China

Wargames – nuclear warfighting scenarios

U.S. OIL AND GAS drilling has levelled off. The number of rigs drilling for both oil and gas has been essentially flat for two months since the middle of August 2022, the first time there has been no growth since drilling began to recover in August 2020 from the first wave of the pandemic:

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Best in Energy – 3 October 2022

[MUST READ] Shipping lines cancel dozens of sailings ($WSJ)

United States cannot avert dollar’s rise ($WSJ)

Central banks and “fiscal dominance” ($WSJ)

OPEC+ discusses output cuts to support prices

Europe’s refiners plan extensive maintenance

Permian Basin oil well productivity still rising

Europe gas use still unsustainably high ($BBG)

Emerging markets hit by capital outflow ($FT)

NORTHWEST EUROPE faces the first test of whether it can lower energy consumption this winter. After warmer than normal temperatures in the first half of September, temperatures were below average in the second half, creating the first significant heating demand earlier than normal:

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Best in Energy – 20 September 2022

Germany’s auto sector emissions remain high

China boosts imports of coal from Russia

EU/Africa tensions over gas investment ($FT)

La Niña to boost winter heating in Japan ($BBG)

U.S. shale producers hit drilling limits ($WSJ)

U.S. central bank refocuses on inflation ($WSJ)

Stranded asset story and the energy crisis ($FT)

Renewables and domestic energy security ($FT)

California relies on nuclear for 10% of electricity

United States is shifting policy on Taiwan ($BBG)

Coal boom leads to expansion of marginal mines

U.S. TREASURY securities with ten year maturity are yielding 3.53%, the highest since 2010, as traders anticipate the central bank will have to keep interest rates higher for longer to bring down inflation. Yields are rising at the fastest year-over-year rate since 1999. The increase is testing the downward trend in place since the mid-1980s. If the increase is sustained it will force a widespread re-pricing of most other assets:

HEDGE FUNDS and other money managers made few changes to their positions in the six most important petroleum futures and options contracts in the week to September 13. There were total net purchases of +4 million barrels with buying in NYMEX and ICE WTI (+10 million) and Brent (+3 million) but sales of U.S. gasoline (-5 million), U.S. diesel (-3 million) and European gas oil (-1 million):

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Best in Energy – 27 May 2022

White House articulates strategy towards China

U.K. announces windfall tax on oil and gas firms

Europe protects households from energy prices

EU runs into problems negotiating Russia oil ban

Offshore drilling experiences cyclical recovery

U.S. hot economy has unwanted side effects ($FT)

Thailand/Vietnam explore rice cartel ($BBG)

Space-based solar power – how realistic is it?

BRENT’s six-month calendar spread is moving into an increasingly steep backwardation again as traders anticipate a growing shortage of crude. High margins for diesel and gasoline are encouraging refineries to maximise crude processing which is intensifying the downward pressure on already-depleted crude inventories:

U.K. DIESEL and gasoline inventories depleted further in March as late-cycle tightness was intensified by the impact of Russia’s invasion of Ukraine and some panic-buying by consumers and road haulage firms. Diesel/gas oil stocks were at the lowest seasonal level since 2014 and before that 2006:

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Best in Energy – 23 May 2022

U.S. president ends strategic ambiguity on Taiwan

India cuts fuel taxes and boosts subsidies

Russia ends gas deliveries to Finland on pay dispute

Global refiners in dilemma whether to boost capacity

Electricity supplies are stretched worldwide ($BBG)

Saudi Arabia reiterates commitment to OPEC+ ($FT)

Fuel tax cuts are poor response to high prices ($BBG)

BRENT’s six-month calendar spread has increased to a backwardation of more than $13 per barrel, up from just $3 in early April, as traders anticipate planned EU sanctions on Russia’s petroleum exports will intensify the global shortage of crude oil and refined products:

U.S. RIG COUNT rose by +14 to 728 last week, with the addition of +13 rigs targeting oil-rich rock formations and +1 rig targeting predominantly gas-rich rock. The number of rigs drilling for oil has risen by +404 from its cyclical low in August 2020 but is still -107 below the pre-pandemic level:

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Best in Energy – 11 April 2022

EU’s Russia coal ban upends market ($BBG)

U.S. SPR sales and impact on oil prices

Nigeria power grid collapses for second time

Germany expects “brief spike” in coal costs

Germany to help firms hit by sanctions ($FT)

EU divided on Russia energy embargo ($FT)

EU divided on Russia oil import ban ($WSJ)

Biomass supplies hit by Russia conflict ($FT)

U.S. transport firms raise fuel surcharges ($WSJ)

Japan orders gas companies to boost inventories

EU/Japan competition for energy imports ($FT)

China’s grain supply threatened by covid ($BBG)

U.S. nuclear generation fell in 2020 and 2021

China accelerates nuclear armament ($WSJ)

U.S. OIL AND GAS producers added +16 new rigs last week with increases in both oil (+13) and gas (+3). The total number of active rigs climbed to 689, up from a cyclical low of 244 in August 2020 but below the pre-pandemic level of 793 in early March 2020:

U.S. NET GAS EXPORTS averaged 332 billion cubic feet per month in the three months from November to January compared with 294 billion in the same period a year earlier, as a result of the growth in liquefaction capacity and strong demand from Europe and Asia:

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