Tag: France

Best in Energy – 28 March 2023

China’s coal imports rebound as economy restarts

France hit by fuel shortage due to industrial unrest

Kurdish regional oil output falls after pipeline halt

Sustainable aviation fuel adoption in United States

U.S. renewable generation surpasses coal or nuclear

Freight forecasts downgraded on stock glut ($WSJ)

U.S. retailers negotiate cuts in freight rates ($WSJ)

U.S. shale producers avoid forward oil selling ($FT)

Aramco’s downstream integration into China ($FT)

Aramco downstream integration into China ($BBG)

Central banks constrained by inflation targets ($FT)

U.S. CONTAINER PORTS handled loaded boxes amounting to 2.24 million twenty-foot equivalent units (TEUs) in February 2023, down from 2.77 million TEUs in February 2022, and the lowest for the time of year since 2015. Businesses are still trying to reduce excess inventories as a result of the pivot from spending on merchandise to services following the lifting of epidemic controls, as well as the general slowdown in the business cycle:

Best in Energy – 1 February 2023

South Asia’s LNG buyers express interest after prices fall

France’s nuclear generators key for power prices in 2023

India to boost government capital spending in 2023/24

U.S. refiners predict high margins on Russian sanctions

U.S. road haulage firms see recovery in late 2023  ($WSJ)

Greek tankers resume shipments of Russian oil

Pakistan prepares for IMF loan – or debt default

U.S. gas consumption hit record on December 23

Freeport LNG requests authorisation to restart one unit

U.S. CRUDE OIL including condensates production fell by -35,000 b/d to 12.38 million b/d in November compared with October. But production was up by +585,000 b/d (+5.0%) compared with the same month a year earlier. Annual growth levelled off at around +600,000 b/d for most of 2022:

Best in Energy – 18 January 2023

Europe’s gas supply gets lucky with warm winter ($BBG)

IEA forecasts global oil use to rise +1.9 million b/d

France electric grid cites improved reserve margin

Texas needs more progress on electricity reliability

Europe’s coal prices slump in competition with gas

U.S. airlines report strong passenger demand ($FT)

LONDON’s Heathrow airport handled 109,151 metric tonnes of air cargo in December 2022 down by -14% compared with 127,188 metric tonnes in December 2021. Air freight volumes are slackening as the global manufacturing sector enters a downturn, with the United Kingdom one of the hardest-hit economies:

Best in Energy – 12 January 2023

PJM says 46 GW of generators failed to respond ¹

U.S. says price cap is cutting Russia’s oil earnings

Global LNG import volumes hit record high

Freeport LNG outage extended to February

French aluminium smelter begins restart

South Africa hit by worst ever power cuts

Freight forwarder cuts employment ($WSJ)

Australia/China coal trade restarts ($WSJ)

Saudi Arabia plans full nuclear fuel cycle

LME’s nickel-market breakdown inquiry

¹ PJM’s post-event study for winter storm Elliot on December 24 is worth reading in full and confirms the major problem was the failure of many generators to respond to instructions from the grid because of a failure to start up or secure enough fuel (principally gas). Generators were unavailable even though they had been given repeated warnings of an extreme weather event for several days beforehand and told to prepare for a plunge in temperatures. In many cases, generators provided less than 1 hour of notice they would not be available. If generators cannot be depended upon to respond to instructions they cannot be considered firm dispatchable power for reliability purposes.

In response, PJM was forced to initiate a series of relatively extreme emergency measures to protect the transmission system, including voltage reductions and an order for flat-out maximum generation from units that were available.

U.S. PETROLEUM INVENTORIES including the strategic reserve totalled 1,599 million barrels on January 6, the lowest seasonal level since 2004. Stocks have fallen by -185 million barrels over the last 12 months and are down by -518 million barrels from their peak in mid-2020 as production has persistently fallen below consumption:

Best in Energy – 3 January 2023

Europe’s energy crisis eased by mild weather ($BBG)

U.S./Venezuela crude oil trade set to resume

Russia/China struggle to bridge gaps on Ukraine

France energy security improves on mild weather

U.S. shale oil production growth slows in 2022/23

U.S. winter storm reveals energy fragility ($BBG)

U.S. regional indicators point to future recession

Semiconductor market moves into surplus ($WSJ)

Global supply chains starting to normalise ($WSJ)

Tesla discounts to clear excess inventories ($WSJ)

United Kingdom explores more steel subsidies ($FT)

CHINA’s manufacturers reported a severe contraction in business activity in December as coronavirus infections surged following the end of the government’s suppression policy. “The epidemic has had a great impact on the production and demand of enterprises, the arrival of personnel, and logistics and distribution,” according to the National Bureau of Statistics. The purchasing managers index fell to 47.0 (1st percentile for all months since 2011) in December down from 48.0 in November (2nd percentile) and 50.1 (26th percentile) in September:

NORTHWEST EUROPE’s temperatures ended 2022 much higher than normal, sharply reducing gas consumption and pulling down prices. On December 31, the average temperature at Frankfurt in Germany was almost +14°C higher than the long-term seasonal average. Frankfurt has experienced 764 cumulative heating degree days so far in winter 2022/23 compared with a seasonal average of 901, a deficit of -15%:

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 – 12 December 2022

U.S. official berates shale firms and investors ($FT)¹

U.K. grid orders coal-fired units to start warming up²

France ramps up nuclear generation, easing shortages

China’s shipbuilders move into LNG tanker market

India’s coal mine production rises, with spot auctions

U.S. container trade moves to east coast ports ($WSJ)

Open source tests traditional spying agencies ($WSJ)

U.S./EU diplomacy on price cap reconstructed ($WSJ)

U.S. officials claim fusion power breakthrough ($FT)

Texas crypto-mining boom turns into bust ($BBG)

Thurrock council’s $500 million loss on solar ($BBG)

G7/Russia oil price cap introduced smoothly ($WSJ)

Anti-oil protests and theory of social change ($FT)

¹ When policymakers appeal to “patriotism,” or decry its absence, it usually means they have run out of good arguments. When I hear arguments based on patriotism and its variants, I am instinctively suspicious about the speaker’s motivations, and try to work out how someone is trying to mislead or distract attention from their own failures.

² Coal-fired units need roughly four hours to reach full generation from a warm start and 10-12 hours from a cold start. The grid’s instruction to start warming up ensures the two massive coal-fired units at Drax will be available to help meet electricity consumption during the evening peak on December 12. Before privatisation of the U.K. electricity industry, the state-owned Central Electricity Generating Board (CEGB) would often keep at least one coal-fired power station warmed up but not generating so it could be brought into service at relatively short notice. Long ramping times for coal-fired units, and the enormous quantity of fuel burned before commercial generation starts, are one reason gas-fired units are more efficient and have largely supplanted them.

CHINA’s semiconductor (integrated circuits) trade – export earnings have grown rapidly, but the cost of imports has risen even faster, so the country’s trade balance has become increasingly adverse:

Best in Energy – 6 December 2022

Renewables deployment accelerated by energy crisis

North Carolina substations in sophisticated sabotage

Oil tankers in queue to transit Turkish straits ($FT)

France prepares for tight power supplies next week

New England grid outlines winter reliability plan

EU retail sales fall with economy in recession ($WSJ)

EU plan for gas price cap distracts from real problem

U.S. jet fuel consumption below pre-pandemic level

BRENT’s six-month calendar spread has collapsed to a backwardation of just 67 cents per barrel (54th percentile for all trading days since 1990) from $8 (98th percentile) at the start of November. Month-to-month spreads are flat through April 2023. Traders anticipate crude supplies will remain comfortable through the first few months of next year because: (a) the EU/G7 price cap on Russia’s exports was set at a relatively high level; (b) policymakers have signalled a relaxed approach to enforcement (c) refiners have boosted purchases and inventories ahead of the price cap’s introduction; and (d) the slowing global economy is expected to dampen oil consumption:

Best in Energy – 30 November 2022

Guangzhou and other cities see more protests, arrests

France says most energy use reduction due to weather

Europe accelerates deployment of domestic heat pumps

(see also IEA report on future of heat pumps)

Europe increases LNG imports from Russia ($BBG)

EU struggles to agree caps on oil and gas prices ($FT)

Europe’s energy price controls cost €700 billion ($BBG)

Los Angeles port loses cargo share ($BBG)

CHINA’s official Xinhua news agency and other government-run sites are running multiple stories and commentaries emphasising epidemic controls must be applied with “softness”, “greater precision”, ensuring daily life and healthcare continues.  There has been a marked change of tone from the previous military-themed rhetoric and analogies to battling the epidemic, with greater focus on resuming as much normality as possible. Like other governments facing widespread social unrest, China appears to be pursuing a mixed strategy of rolling up protestors, intensifying street policing, while trying to make selective concessions to keep the majority of the population in line by relaxing epidemic controls to reduce their social and economic costs.

BRENT’s calendar spreads for the first part of 2023 have slumped from a steep backwardation at the start of November close to contango as the end of the month nears. The nearest to deliver January-February spread is no longer a useful indicator as the January contract nears expiry and there is insufficient liquidity to make the price representative. But the more active February-March and March-April spreads are now trading close to flat from backwardations of around $1.50 per barrel at the start of the month.

Refiners and traders seem to have accelerated purchases ahead of the introduction of the planned G7 price cap on Russia’s crude exports from early next month to protect themselves against any possible disruption. Concern about the impact likely drove up prices and spreads in September and October.

But the cap itself now appears likely to be set at a relatively high level with relaxed enforcement, at least initially. The result is a marked softening in the market. At the same time, the business cycle continues to weaken across most of Europe and Asia, dampening crude demand. All of this is weighing on prices and spreads for nearby futures contracts with deliveries in early 2023:

Best in Energy – 17 November 2022

U.S. hydrogen – funding and technology deployment

Aramco plans downstream investment in South Korea

U.S. diesel inventories at 70-year seasonal low ($FT)

Texas tries to prepare better for extreme winter cold

U.K. inflation accelerates to 11.1% in October

France’s nuclear generation starts to recover

China/Taiwan bilateral communications cease

U.S. PETROLEUM INVENTORIES depleted by -11 million barrels in the week to November 11. Large drawdowns in commercial crude (-5 million bbl), crude in the strategic petroleum reserve (-4 million) and other oils (-3 million) were partially offset by increased stocks of gasoline (+2 million), distillate fuel oil (+1 million) and jet fuel (+0.3 million). Total inventories have depleted by -509 million barrels since early July 2020, the largest drawdown on record and a symptom of persistent under-supply: