Best in Energy – 15 November 2022

OPEC trims oil consumption forecast for 2023

Northeast Asia LNG prices fall on high stocks

Indonesia to get loans to cut coal generation

U.S./China summit – U.S. version

U.S./China summit – China’s version

U.S. electric service reliability in 2021

FedEx furloughs workers as freight falls ($BBG)

EUROPE’s gas inventories have continued to accumulate later into the start of the traditional winter heating season than any other year in records dating back to 2011. Gas inventories in the European Union and the United Kingdom (EU28) were still rising on November 13, later than the previous record of November 12 in 2011 and far past the median peak occurring on October 26. The late fill is attributable to a combination of warmer-than-normal temperatures and high prices rationing consumption. Late fill is lifting inventories close to a record high and reducing the probability stocks will fall critically low before the end of winter:

GREAT BRITAIN’s maximum winter loads on the transmission system since 1990/91 are illustrated in the chart below (loads exclude Northern Ireland which has its own electricity network). Loads shown are “triads” – the three highest half-hourly loads separated by at least 10 days occurring each winter between November and February. Triads are used to set transmission network use of system (TNUoS) charges for large electricity consumers who are metered on a half-hourly basis. Triads are declared retrospectively after the end of each winter in March (“What are electricity triads?” National Grid, 2018).

Half-hourly (HH) customers are billed for TNUoS based on the amount of electricity they use during the three triad half-hours. Triads set charges for the entire year. In the limit, if a HH consumer uses no electricity from the grid during those three half hour periods, their TNUoS is set at zero for the entire year. The possibility a triad might be declared gives HH customers a strong incentive to minimise electricity use and/or generate their own power during periods when the total load on the network is expected to be very high.

Triad charging helps reduce strain on the grid during the winter peak, usually between 1630 GMT and 1800 GMT, when street lighting comes on, families start preparing the evening meal, but many shops and offices are still open and occupied. Several consultancies offer triad forecasting services – alerting HH consumers when there is an elevated risk that a triad could occur so they can reduce their net load temporarily.

In winter 2021/22, triads occurred on Thursday December 2 (43.7 GW at 1630-1700 GMT); Wednesday January 5 (42.8 GW at 1700-1730 GMT); and Thursday January 20 (43.5 GW at 1700-1730 GMT) (“Triads 2021/22”, National Grid, March 29, 2022).

Triad loads have been declining since 2007/08, and especially since 2010/11, as a result of improvements in energy efficiency, sluggish economic growth, changes in the industrial mix, and an increase in self-generation by HH consumers as well as embedded generation from solar panels added to homes, offices and local distribution networks:

Best in Energy – 3 November 2022

Africa’s governments demand fair energy transition

U.S. gas production and injections drive prices lower

China’s gas consumption growth stalls in 2022

Australia’s mining companies explore renewables

Saudi Arabia’s more independent foreign policy ($FA)

South Africa’s newest coal generator damaged ($BBG)

Aero-engine makers struggle to meet demand ($FT)

Canada excludes China from lithium sector ($FT)

China’s quarantine system – an inside view ($FT)

U.S. INTEREST RATE TRADERS expect the Federal Reserve to raise its federal funds target for longer to peak at a higher level and sustain them at a higher rate than before, following a warning by the central bank’s chief. Policy-controlled interest rates are expected to continue rising until they peak at 5.00-5.25% in May 2023, up from 3.75-4.00% at present, and still be at 4.00-4.25% at the end of 2024:

U.S. PETROLEUM INVENTORIES including the strategic reserve fell by -3 million barrels in the week to October 28. Stocks have depleted in 90 of the last 122 weeks by a total of -494 million barrels since the start of July 2020:

Best in Energy – 12 October 2022

U.S. president vows “consequences” for Saudi Arabia

White House to re-evaluate Saudi relationship ($FT)

U.S./Saudi relationship under pressure

U.S./Saudi relations under strain ($WSJ)

U.S./Saudi relations under strain ($FT)

U.S./Saudi relations congressional primer ¹

Global mining and the future energy system

La Niña’s impact on weather in China (trans.)

¹ This briefing paper is the best overview of the strategic relationship and tensions between the United States and Saudi Arabia. The U.S. Congressional Research Service (CRS) sets the benchmark for non-partisan, fact-driven, insightful and well-written policy research. CRS has always been a major inspiration for best in energy and my own research notes. The late CRS defense specialist Stephen Daggett has been one of the three biggest influences on my own writing.

EU28 GAS INVENTORIES are accumulating at a record rate for such a late date in the refill season. Gas storage increased by almost +3 TWh per day in the seven days ending on October 10, the fastest seasonal increase on record. Total stocks have risen to 1,027 TWh compared with 865 TWh at the same point in 2021 and a prior ten-year average of 919  TWh.

In response to government mandates and exceptionally high prices, the refill season is on course to persist later into October or even November than usual, boosting the volume of gas in storage, and delaying the onset of drawdowns later than usual:

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Best in Energy – 29 September 2022

Germany says gas consumption too high

German economists predict recession in 2023

Rotating blackouts could hit cell service¹

California’s demand response in heatwave

China says yuan stable and healthy (trans.)²

Lebanon forced to devalue currency ($FT)

Nord Stream: too early to conclude sabotage

Nord Stream fourth leak discovered ($BBG)

Nord Stream who sabotaged the lines? ($FT)

Hydrocarbon investment in energy transition

Global spending on advertising is falling

¹ Fixed line telephone systems carried their own electricity supply so the network would remain operational during power cuts. From this story it appears cell towers rely on the public distribution system and have not (yet) been prioritised in the same way as hospitals and other essential customers to ensure they remain operational during rotating power cuts. It is a classic example of how complexity and the unplanned evolutionary growth of networks can lead to the fusion or “coupling” of formerly separate systems, unintentionally creating a single point of failure (“Normal accidents”, Perrow, 1999). It is also an example of how the failure of the petroleum, gas or electricity networks can result in the failure of other systems critical to the functioning of a modern economy and society (“Brittle power”, Lovins and Lovins, 1982).

² If a government or a business or any other organisation has to say publicly everything is okay, or some variant, that’s an important sign of problems and stresses. If it really was okay, there would be no need to say it. Do don’t say. So statements such as this are important markers thought not in the way policymakers intend.

U.S. PETROLEUM inventories depleted by -13 million barrels last week, the largest decline this year. Drawdowns included crude (-5 million barrels), gasoline (-2 million), jet fuel (-2 million) and distillate fuel oil (-3 million). Petroleum inventories have depleted in 86 out of the last 117 weeks by a total of -464 million barrels since the start of July 2020. Distillate inventories are just 114 million barrels, the lowest for the time of year since 1996:

Best in Energy – 12 May 2022

South Africa’s coal and a just energy transition

U.K. economy on the cusp of a recession

U.S. East Coast hit by local jet fuel shortage

U.S. West Coast ports start pay talks ($WSJ)

China’s top leaders jockey for position ($WSJ)

China calls for elderly to get vaccinated (trans.)

U.K. REAL GDP declined in both February and March, a sign growth was stalling even before the rise in utility prices and payroll taxes took effect in April:

TEXAS power consumption has surged to a near-record as the state is hit by a sustained period of much higher than normal temperatures for the time of year:

U.S. PETROLEUM inventories increased by +3 million bbl to 1,699 million bbl last week (SPR crude  -7 million; commercial crude  +8 million; gasoline  -4 million; distillate  -1 million; and jet  +2 million):

U.S. DISTILLATE inventories fell -1 million bbl to 104 million bbl. Distillate availability shows no improvement but it is not deteriorating either at present:

U.S. GASOLINE inventories depleted by -4 million bbl to 225 million bbl last week, the lowest for the time of year since 2014, as distillate shortages bleed across into gasoline: