Tag: electric vehicles

Best in Energy – 17 May 2023

[MUST READ] U.S./China diplomatic rivalry (Bloomberg)

Oil price decline driven by porous sanctions (Bloomberg)

Vehicle tyres, electric vehicles and air pollution (Reuters)

India to complain to WTO over EU carbon tariff (Reuters)

China to accelerate rural rollout of electric cars (Xinhua)

Russia/NATO economic warfare and asset seizures (FT)

India’s surging air-conditioning demand (Bloomberg)

Indonesia wants cheaper transition funds (Bloomberg)

Australia’s LNG exports and energy transition (Reuters)

U.S. office occupancy flat as return-to-office stalls (WSJ)

U.S. office sale prices slump (WSJ)

U.S. gas price forecast to rise (EIA)

U.S. rural electric subsidies (Reuters)

Nuclear fusion supply chain (Reuters)

U.S. oilfield services see sharp slowdown (FT)

U.S. MANUFACTURING production excluding volatile output of vehicles and parts was down -1.6% in April 2023 compared with April 2022. Production for the three months from February to April was down -1.5% compared with the same period a year earlier:

U.S. BUSINESS INVENTORIES remain elevated despite efforts to reduce them which implies the softness in industrial and freight activity is likely to be prolonged for several more months. Manufacturers, distributors and retailers held inventories equivalent to 1.39 months of sales in March 2023, unchanged from December 2022, and up from just 1.30 months in March 2022. Excess inventories are particularly high at distributors and retailers which will remain a drag on new orders:

Best in Energy – 16 May 2023

U.S. electric vehicle deployment projection (EIA)

EU wants end Russian oil imports via India (FT)

U.S. SPR plans to buy 3 million barrels (DOE)

Vietnam approves power plan to 2030 (Reuters)

China promotes intelligent coal mining (Xinhua)

Marathon refinery suffers fatal incident (Reuters)

U.S. DIESEL crack spreads for December 2023 have firmed to $191 per tonne on May 15 up from a recent low of $172 on April 28. Inventories have tightened despite the weakness in the industrial business cycle:

BRENT futures have drifted lower since mid-April as the impact of OPEC⁺’s unexpected production cuts has been more than offset by concerns about a slowing global economy and the strength of consumption. Prices for the remainder of 2023/24 are close to their lowest levels since the start of 2022:

Best in Energy – 9 May 2023

Battery recycling and electric vehicles (FT)

Europe’s record end-winter gas stock (EIA)

India’s plan to cap coal generation (Reuters)

India transition to electric vehicles (Reuters)

U.S. fusion experiments (Bloomberg)

GERMANY’s manufacturing production is flat-lining as businesses struggle with weak demand for durable goods and energy prices remain elevated compared with before Russia’s invasion of Ukraine:

NORTHWEST EUROPE’s heating season has largely ended and temperatures have been above the long-term seasonal average at Frankfurt in Germany since late April. Frankfurt has experienced a total of 1,804 heating degree days since July 1, 2022, compared with a long-term seasonal average of 2,146, a deficit of -16%:

Best in Energy – 19 April 2023

Russia oil price cap comes under strain (Reuters)

Tesla cuts prices again to boost sales (Bloomberg)

Brazil’s rising distributed solar generation (EIA)

Europe gas inventories at comfortable level (FT)

Dealmakers focus on Permian oil firms (Reuters)

U.K. forecasts enough gas this summer (Reuters)

Clear-air turbulence (WSJ)

NORTHERN INDIA’s temperatures have risen faster than normal since the start of April. Average daily temperatures in the New Delhi suburb of Palam reached 33.4°C on April 18 up from 20.7°C on March 31. Temperatures have been above the long-term seasonal average every day since April 14 after being continuously below average for almost a month between March 17 and April 13. So far, the transmission network has coped with the rapid increase in demand for refrigeration and air-conditioning. Network frequency has dipped as temperatures climb but remains reasonably close to the target of 50.0o Hz. Periods of severe under-frequency below 49.90 Hz are generally around 12% or less each day, which is fairly typical in India:

Best in Energy – 23 February 2023

Chesapeake to reduce gas drilling and completions

Auto firms split on electrification timeline ($WSJ)

Commodity markets adapt to Russia/Ukraine war

Europe’s gas storage and refill for winter 2023/24

U.K. government to cut costs for big energy users

U.K. steelmaker plans to close coking ovens

U.S./Russia/China armaments supply ($WSJ)

IEA chief warns EU about complacency ($FT)

BRENT’s six-month calendar spread is trading in a backwardation of $1.80 (71st percentile for all days since 1990). The spread has tightened from a contango of $0.65 (34th percentile) since December 9 as expectations for a soft-landing in the global economy have increased. But it is well below levels before Russia’s invasion of Ukraine, implying the market is comfortably supplied despite sanctions on Russia and output restraint by OPEC⁺ and U.S. shale firms:

Best in Energy – 27 January 2023

Freeport LNG takes first steps to restart

EU floats $100 price cap for Russia diesel

Pennsylvania’s transition from coal to gas

India’s electric cars and fuel consumption

China becomes major car exporter ($BBG)

U.S. labour market starts to weaken ($WSJ)

EUROPE’s gas prices continue to slide as traders anticipate a record carry over of inventories at the end of winter 2022/23. Futures prices for deliveries in March 2023 fell to just €55 per megawatt-hour on January 26 from €110 on December 19 and €177 at the start of the winter season on October 3. Prices are falling to encourage more consumption, principally from energy-intensive industrial users and power generators, to ensure there is more storage space left to absorb excess production in summer 2023:

U.S. GROWTH stalled in the fourth quarter of 2022. Real final sales to private domestic purchasers (FSPDP), a measure excluding volatile changes in inventories, trade and government spending, increased at an annualised rate of just +0.2% in the fourth quarter, slowing from +1.1% growth in the third quarter, and +2.6% a year earlier. Real FSPDP advanced at the slowest rate since the first wave of the pandemic in 2020 and before that the recession in 2009.

Business inventories increased rapidly between October and December contributing +1.46 percentage points to reported output growth in the fourth quarter of 2022. Inventory accumulation was probably unplanned as sales were lower than expected. Large inventory changes are normally reversed within one or two quarters. The accumulation during the fourth quarter of 2022 is likely to be followed by efforts at depletion which will make a negative contribution to reported output growth in the first and second quarters of 2023:

Best in Energy – 26 January 2023

Europe’s gas-fired generators reduced output

Indonesia coal exports hit record high in 2022

South Africa’s coal exports slumped last year

U.S. oil output growth set to slow in 2023/24

Microsoft warns about revenue outlook

Higher-earners reduce hours worked ($WSJ)

Tesla discounts vehicles to drive sales ($WSJ)

U.S./Iran nuclear talks near breakdown ($FT)

CHINA’s Lower Yangtze mega-region is being hit by a wave of intense of cold which will drive a significant increase in heating demand, though most factories are closed for the Lunar New Year holiday. Temperatures in Nanjing were more than -6°C below the long-term seasonal average on January 25. So far this winter heating demand (731 HDDs) has been lower than average (789 HDDs). But the recent run of cold weather has trimmed the cumulative deficit in heating demand to -7% down from -11% on January 13:  

U.S. PETROLEUM INVENTORIES including the strategic reserve rose +4 million barrels to 1,606 million barrels in the seven days to January 20. But stocks were -170 million barrels below the level a year ago and -304 million barrels below the level before the pandemic in 2019. Commercial crude stocks have increased by +33 million barrels compared with the same point last year. But only because the strategic petroleum reserve has been depleted by -220 million barrels:

Best in Energy – 13 January 2023

Germany’s gas buying intensified price spike ¹

PJM probes generator unavailability in storm

EU economy boosted by drop in energy prices

EU seeks alternatives to Russian diesel ($BBG)

China’s epidemic moves to rural areas ($BBG)

Tesla discounts cars after missing sales target

¹ Germany’s government-directed gas buying in the spot market likely contributed to the spike in prices in summer 2022 and subsequent slump in winter 2022/23. Price spikes normally occur when a price-insensitive buyer is forced into the market to buy no matter the cost and no matter how much it moves prices higher against themselves.

Spikes are often characteristic of a short-seller forced to buy back their position (“short and caught” or “he who sells what isn’t his’n, must pay the price or go to prison”).

In this case Germany purchased gas for storage regardless of cost to increase inventories and improve energy security ahead of the winter, anticipating a disruption of Russian pipeline flows. Playing the role of “forced buyer”, Germany’s buying likely caused or at least accelerated the rise in prices to record levels in August 2022. Once the forced buying was completed, however, prices corrected lower.

Some EU policymakers have suggested the spike shows the futures market “failed” in the summer of 2022 and needs to be reformed or replaced with an alternative and more representative and liquid benchmark. But arguably the market was simply responding to the presence of a very large and completely price insensitive buyer.

U.S. SERVICE SECTOR inflation appears to have peaked. But prices are still rising at an annualised rate of 5.5-7.5%, two or three times faster than the central bank target of 2.0-2.5% per year. Inflation in the labour-intensive services sector tends to be stickier than for commodities and merchandise, which is why it tends to be a focus for policymakers:

Best in Energy – 20 December 2022

European Union approves gas price cap

France upgrades electric reliability forecast

China completes 16 GW Beihetan hydro project

Commercial buildings and energy efficiency ($FT)

U.S. Treasury delays battery subsidy rules ($WSJ)

EUROPEAN gas futures prices for deliveries in March 2023, the end of the heating season, have been falling since early December, as traders become more confident there will be enough to satisfy consumption this winter. Prices are currently trading around €106/MWh down from €150 on December 7:

U.S. CONTAINER trade through the nine most important container ports was equivalent to just 2.72 million TEUs in October, down from 2.94 million TEUs in October 2021, and the lowest for the time of year since 2017, as manufacturers and retailers attempted to reduce excess inventories by reducing new orders:

Best in Energy – 14 October 2022

U.S./Saudi relationship strained but not broken

U.S./Saudi recriminations over OPEC+ cut ($FT)

EU explores possible gas market interventions

U.S. electric vehicles stimulate battery boom

China tests electric-powered freighter (trans.)

U.S. winter fuels outlook (EIA)

U.S. SERVICES PRICES were rising at an annualised rate of +10.1% between August and September and were +7.4% higher than a year earlier, a sign inflation is proving persistent even as some energy and commodity prices have eased:

U.S. INTEREST RATE traders expect the central bank to increase its target federal funds rate to 4.75-5.00% by April 2023 up from just 3.00-3.25% at present as they try to bring inflation back under control:

U.S. DISTILLATE fuel oil shortages are worsening. Inventories fell -5 million bbl to just 106 million bbl last week and are now at the lowest level for the time of year for more than 40 years:

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