Tag: India

Best in Energy – 18 November 2022

India’s coal-fired generation rises over 10%

China solar installers hit by lockdowns ($BBG)

China food and energy security focus (trans.)

Hess chief marks the end of shale revolution

U.S. heating oil prices up 65% from year ago

Australia’s changing defence strategy ($FT)

Qatar Energy – company profile and ($FT)

BRENT’s six-month calendar spread has fallen to a backwardation of $4.90 per barrel (95th percentile for all trading days since 1990) down from $7.60 (98th percentile) a month ago and a record over $15-20 in the first months after Russia’s invasion of Ukraine. The softening spread is consistent with a recession in Europe and China, possibly spreading across the rest of the world, easing pressure on oil supplies in 2023:

U.S. TREASURY yield curve is now more inverted between two-year and ten-year maturities than at any time since September 1981 at the start of the second instalment of the double-dip recession. U.S. interest rate traders anticipate an exceptionally rapid turn around in monetary policy. Such a rapid pivot is consistent with a soft-landing allowing the central bank to unwind rate rises quickly, or because a hard-landing eliminates inflation and requires it to support growth and employment instead:

Best in Energy – 16 November 2022

India’s refiners prepare for price cap from early December

China’s refiners request state aid on Russian crude ($BBG)

Europe’s energy crisis and supply security lessons ($BBG)

U.K. households and the increase in energy debts ($BBG) ¹

California ports report drop in container volumes ($WSJ)

Freeport LNG – root cause report on explosion

¹ Food and energy shortages have always been about prices and affordability rather than physical supplies and availability. Higher-income and wealthier households will always find ways to put food on the table and heat their homes, it is lower-income and poorer households that lack financial resources that are unable to cope and hit hardest (“Corn supply of ancient Rome”, Rickman, 1980).

SOUTHERN CALIFORNIA’s ports are experiencing a sharp drop in container traffic reflecting contentious labour negotiations and the threat of a strike as well as the slowdown in global merchandise trade and efforts by U.S. manufacturers and distributors to cut excess inventories. Combined container traffic through the neighbouring ports of Los Angeles and Long Beach was just 0.84 million twenty-foot equivalent units (TEUs) in October, down from 1.07 million TEUs in the same month in 2021, and the lowest for the time of year since the recession of 2009:

Best in Energy – 11 October 2022

Europe still faces shortage of gas supplies

U.S. senator urges freeze on Saudi relations

(see also senator’s press statement)

Global refinery capacity shortage

China intensifies post-holiday lockdowns

Coal prices retreat as shortage fears recede

EU explores more emergency energy rules

Iraq cannot afford to cut oil output ($WSJ)

Computer shipments drop sharply ($WSJ)

INDIA’s electricity transmission system is in a much healthier condition than this time last year. Power grid frequency has been kept much closer to its target of 50.0 Hertz indicating a much closer and more stable balance between generation and load. Frequency has only fallen below the acceptable threshold of 49.9 Hertz 3.9% of the time in the first ten days of October compared with 14.4% of the time in the same period last year.

Cooler temperatures have helped by reducing air-conditioning and refrigeration demand. Temperatures were -2.5°C below the long-term seasonal average in the first ten days of October compared with +1.0°C above average in the same period last year.

Coal inventories are also more plentiful ensuring generators can remain online. Stocks at power plants are currently 24.7 million tonnes compared with just 7.3 million tonnes at the same point last year:

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Best in Energy – 23 September 2022

U.S. central bank signals a hard landing ($WSJ)

U.S. trucking – possible decarbonisation pathway

China’s refiners anticipate higher exports ($BBG)

India plans more coal generation by 2030 ($BBG)

Asia LNG sales stall as prices hit resistance ($BBG)

ADNOC chief sees little room to manoeuvre in oil

Taiwan says blockade would be act of war

FedEx to cut costs and raise parcel prices ($WSJ)

U.S./China relations –Asia Society speech (trans)

EUROZONE manufacturers reported a further deterioration in business activity this month according to preliminary results from the purchasing managers’ survey. The composite activity index fell to 48.5 in September (24th percentile) down 49.6 in August (28th percentile) and 49.8 in July (29th percentile). The region’s economy is sliding into recession – even before expected energy shortages this winter:

U.S. INITIAL CLAIMS for unemployment benefits are still running at very low rates, with just 213,000 new claims filed last week on a seasonally adjusted basis. Core inflation is unlikely to fall to the Federal Reserve’s target of a little over 2% per year with the labour market this tight – which explains the central bank’s aggressiveness in raising interest rates:

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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 – 11 August 2022

Physical oil prices soften in recent weeks

Chile’s troubled lithium industry ($WSJ)

Yield curve inversion slows bank lending

EIA’s weekly petroleum reporting system

INDIA’s coal-fired power plants have 11 days of fuel on hand, an improvement on just 7 days at the end of August 2021, but still slightly below the 13 days at the same point in 2019. The central government has prioritised replenishing fuel stocks to avert a repeat of the power shortages and blackouts that hit the country in October 2021:

U.S. FREIGHT SHIPMENTS accelerated in June after slowing slightly in May. Freight volumes were up +4.6% in June compared with the same month a year earlier. Volumes advanced at the same annualised rate of +4.6% in the most recent three months from March to June. The strong growth was surprising since other manufacturing indicators pointed to a slowdown in activity during the second quarter:

U.S. PETROLEUM INVENTORIES including the strategic reserve rose by +8 million bbl last week, one of the largest weekly increases in the last two years. There were increases in stocks of commercial crude (+5 million bbl), distillate fuel oil (+2 million), propane (+2 million) and other oils (+8 million) partially offset by reductions in jet fuel (-1 million), gasoline (-5 million) and strategic crude stocks (-5 million):

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Best in Energy – 2 August 2022

India starts rationing gas to industrial users

Australia grapples with pricing for domestic gas

Baker Hughes plan to sell Russia unit to insiders

Rosatom tightens grip on nuclear energy ($BBG)

China focuses on energy indigenisation (trans.)

U.S./Saudi visit: what did Biden achieve? ($BBG)

United Kingdom closes nuclear power generator

EU struggles to balance energy security and transition ($WSJ)

U.S./EU responses to energy security and transition challenges

U.S. MANUFACTURERS reported a further slight deceleration in growth last month, with the ISM purchasing managers’ index slipping to 52.8 in July (50th percentile for all months since 1980) from 53.0 in June (53rd percentile). New orders fell for the second month running, slightly faster in July (48.0, 14th percentile) than June (49.2, 17th percentile), implying business activity will slow further over the next few months:

U.S. DISTILLATE CONSUMPTION has begun to fall in line with the deceleration in manufacturing activity. The volume of distillate supplied was down -0.4% in March-May compared with the same period a year earlier. Distillates are the most cyclically sensitive part of the oil market, so the business cycle slowdown is filtering through into lower fuel use, part of the market rebalancing process:

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Best in Energy – 11 July 2022

Saudi Arabia’s oil production capacity scrutinised

Canada to return Nord Stream impounded turbine

Ocean carriers likely to revert to slow steaming

India rejects US/EU calls to boycott Russian oil

France plans for complete loss of Russian gas

France prepares to switch from gas to fuel oil

Freight rates start to soften as volume falls ($WSJ)

U.S. central bank tries to avoid stop-go policy ($WSJ)

U.K. businesses prepare for onset of recession ($FT)

China boosts coal by rail deliveries by +9% (trans.)

Texas appeals for electricity conservation on July 11

U.S. BUSINESS inventory ratios have started to climb as sales slow and firms struggle to shift extra items ordered on a precautionary basis at the height of the supply-chain crisis. Manufacturers, wholesalers and retailers held inventories equivalent to 1.29 months worth of sales in April up from a cyclical low of 1.26 months in November. Excess stocks are concentrated at the retail level where the ratio has climbed to 1.18 months up from 1.09 months in October 2021.

U.S. inventory ratios remain low by pre-pandemic standards but will climb quickly if sales slow further in response to rapid inflation and a business cycle downturn. Inventory reduction is likely to weigh on economic growth over the next six months as businesses to limit or reverse overstocking:

TEXAS temperatures have climbed well above the long-term seasonal average since the start of July increasing the strain on the state’s isolated electric grid. Cumulative cooling degree days since the start of the year have been almost +30% higher than the 1981-2010 average:

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Best in Energy – 6 July 2022

India limits gasoline and diesel exports

China issues new fuel export quotas

EU relaxes oil sanctions on Venezuela

Global LNG: trade report and statistics

U.S. recession indicators mixed ($WSJ)

Qatar is big winner from gas war ($FT)

BRENT’s front-month futures price fell -$10.73 (-9.5%) on July 5. The decline came on a day with little new information about production or consumption but traders seemed to anticipate a higher probability of an economic slowdown. In percentage terms, the decline was the third-largest since July 2020 and 4.1 standard deviations away from average since 1990:

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