Tag: Iran

Best in Energy – 27 March 2023

Iraq to control oil exports from Kurdish region

EU plan to diversify critical materials sourcing

Recycling and the availability of critical metals

U.S./China compete to control undersea cables

Australia LNG exports and domestic customers

Aramco to boost low-sulphur distillate exports

China boosts coal output to cut import reliance

Iran’s leaders debate change from above ($FT)

Russia’s shadow tanker fleet raises risk ($BBG)

Russia’s diesel exports hit record high ($BBG)

China’s contract exporters struggle ($FT)

Oil price fall accelerated by hedges ($WSJ)

Oil price rebound – delayed? ($BBG)

Iraq’s oil output growth has stalled

EUROPE has made an early start refilling gas storage ahead of winter 2023/24. Storage has risen in six out of the most recent eight days as increasing temperatures cut gas consumption while high prices continue to restrain demand and attract imports. Storage facilities were 56.0% full on March 25, a record for the time of year, slightly exceeding the previous peak on March 25, 2020:

Best in Energy – 16 March 2023

Climate target of 1.5°C called in doubt ($FT)

Credit Suisse gets lifeline from central bank

Banks as privately-owned state agents ($FT)

Exxon ramps up new crude distillation unit

Iran/Saudi deal to end arming Yemen ($WSJ)

If you are interested in banking supervision and financial failures, I can strongly recommend “Integrity, Fairness and Resolve”, a short monograph published by the Federal Reserve Bank of Kansas City about the savings and loan crisis of the 1980s. “Belly Up: The Collapse of the Penn Square Bank” also comes with my highest recommendation for a combination of insight and dark humour.

OIL PRICES fell sharply on March 15 in response to growing fears about a banking crisis and its impact on the economy. Brent futures were pushed bellow the bottom of the recent trading range:

U.S. DISTILLATE fuel oil inventories amounted to 120 million barrels on March 10. Inventories were -13 million barrels (-10% or -0.81 standard deviations) below the prior ten-year average. But the deficit has narrowed from -21 million barrels (-16% or -1.62 standard deviations) at the start of 2023 and -31 million barrels (-22% or -2.05 standard deviations) on October 7, 2022:

Best in Energy – 13 March 2023

U.S. regulators take over failed Silicon Valley Bank

U.S. central bank acts to shore up liquidity

China/Iran/Saudi diplomatic talks ($WSJ)

Aramco sees oil market “tightly balanced”

Cobalt prices slump on output surge ($FT)

U.S. central bank and a hard landing ($FT)

U.S. INTEREST RATE traders have slashed exectations for future rate rises as the banking system comes under strain. Banks are heavily engaged in maturity and liquidity transformation, funding longer-term loans with shorter-term deposits and other borrowing. The progressive inversion of the yield curve is putting that function under increasing strain. Silicon Valley Bank (SVB), which failed on March 10 after a run by depositors, may have been an outlier. But the intensifying inversion poses challenges for all banks. Following the run on SVB, traders increasingly think concerns about financial stability will constrain future interest rate increases. Futures prices imply benchmark overnight interbank rates will end the year at around 4.50% (the same level as now) rather than 5.50-5.75% (which was expected as recently as March 8):

U.S. DRILLING activity continues to slow. The combined oil and gas rig count fell by -3 in the seven days to March 10. The total number of active rigs has fallen in 9 of the last 14 weeks by a total of -38 rigs (-5%) since early December:

HEDGE FUND and other money manager positions in the six major petroleum futures and options contracts on February 21, 2023:

Best in Energy – 30 January 2023

India requests coal-fired generators stay in service

India plans to order maximum coal-fired generation

Jet fuel prices surge on post-pandemic consumption

Asia’s seaborne coal prices slip on plentiful supplies

Russia/Ukraine: which side does time favour? ($WSJ)

BP publishes revised energy outlook through 2050

EU gas price cap sparks plan to shift TTF to London

Israel/Iran drone attack ($WSJ)

EUROPE’s gas futures summer-winter calendar spread for July 2023 to January 2024 has slumped into an increasingly wide contango as traders anticipate a record carryover over inventories from winter 2022/23 which will leave the storage system short on space.  Lower gas prices in summer 2023 will encourage more consumption by power generators and major industrial users. Higher prices may still be needed to restrain consumption during the peak of next winter:

U.S. OIL DRILLING has started to slow in response to the fall in prices since the middle of 2022. The number of rigs drilling for oil was just 609 on January 27 down from a cyclical high of 627 on December 2:

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 – 19 January 2023

Energy conservation and excess mortality ($BBG)

J.B. Hunt earnings confirm freight decline ($WSJ)

U.S. refiners schedule more maintenance in 2023

U.S. gas prices forecast to fall in 2023/24 by EIA

Russia’s oil revenues predicted to decline ($FT)

Iran hit by winter gas shortages ($BBG)

Nuclear weapons and decision-making ($FT)

U.S. MANUFACTURERS are raising prices more slowly as input costs for raw materials and energy ease and demand for goods falls. Producer selling prices for finished products other than energy and food increased at an annualised rate of +4.2% in the three months to December 2022 down from an annualised +11.5% increase in the three months to April 2022. But selling prices are still rising twice as fast as the central bank’s target of a little over 2% per year for overall inflation, keeping upward pressure on interest rates:

Best in Energy – 16 January 2023

[MUST READ] U.S. shale revolution has ended ($FT)

EU boosts diesel imports from Russia ahead of ban

Iran oil exports rise as sanctions enforcement eased

India oil imports from Russia at record high ($BBG)

Iran hit by cold weather-related gas shortage ($BBG)

U.S. gas output growth set to decelerate as prices fall

U.S. oil refinery distillation unit to start up in Q1 2023

Russia’s crude oil exports able to avoid G7 sanctions

Germany boosted non-Russian coal imports in 2022

U.S. heating oil stocks are more comfortable ($WSJ)

U.S./Taiwan relations and next election cycle ($FT)

FRANKFURT and the rest of Northwest Europe are roughly half-way through the 2022/23 heating season. In the three decades between 1981 and 2010, on average 50% of heating degree days and heating demand at Frankfurt occurred before January 15. For London and southeast England, the half-way point arrives a few days later on January 23. So far this winter has been much milder than average. Frankfurt had accumulated 860 degree days up to January 15 compared with a long-term average of 1,078:

Best in Energy – 8 December 2022

Semiconductors as fulcrum of U.S./China conflict ($FT)

U.S./EU explore deal on technology and subsidies ($WSJ)

Saudi/China summit showcases U.S. triangulation ($FT)

China’s relationship with the Arabian peninsula (trans.)

Western allies try to unblock oil queue at Turkish Straits

Renewables growth sharpens focus on need for dispatch

United Kingdom approves first new coal mine for decades

U.K. temperatures fall well below seasonal average

U.S. coal-fired generation in slow retreat

Abadan oil crisis – U.K. official history

BRITAIN’s electricity transmission system is heading towards what is likely to be the first triad event of winter 2022/23 on the early evening of December 8. Freezing temperatures with little wind and an early end to solar generation will maximise demand on the island-wide transmission system from 1630-1800 GMT. Net demand has been climbing steadily towards likely-triad levels in recent days. Major customers with discretionary loads have a strong incentive to reduce demand in these critical periods to benefit from lower transmission charges through throughout the entire year ahead. Deliberate “triad avoidance” behaviour helps curb peak loads and reduce stress on the system:

Best in Energy – 23 November 2022

[MUST READ] U.S. Treasury publishes regulations for Russia price cap

Vitol chief says price cap will divert flow to small traders

Iran’s leaders struggle to reach out to moderates ($WSJ)

South California vessel queue dissipates  ($WSJ)

China’s coronavirus controls are multiplying

China’s renewable generation hits record high

U.S./Canada gas flows support winter reliability

Europe’s business confidence slumps ($FT)

Selective self-deception is an important leadership skill, especially in politics and diplomacy, but sometimes leaders say things they must know to be untrue, and I’m reminded of the exchange between Alice and the White Queen in Lewis Carroll’s “Through the Looking-Glass”:

“I can’t believe that!” said Alice.

“Can’t you?” the Queen said in a pitying tone. “Try again: draw a long breath, and shut your eyes.”

Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

BRENT’s front-month futures price is trading close to the average since the start of the century once adjusted for inflation. The current price of around $87 per barrel is in the 54th percentile for all months since 2010 and the 47th percentile for all months since 2000:

Best in Energy – 5 October 2022

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[MUST READ] Critical infrastructure protection ($BBG)

Germany plans more financial help for gas importers

Nord Stream sites off limits as authorities investigate

U.S. trade oil groups warn against banning exports

Europe accelerates deployment of electric vehicles

Bangladesh hit by widespread electricity blackout

U.S./Saudi relations strained by oil policy ($FT)

Iran’s social unrest is broadening ($WSJ)

EU28 GAS STOCKS were +158 TWh (+19%) higher on October 3 than on the same date in 2021, after one of the largest inventory accumulations on record this summer:

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