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 – 9 January 2023

Australia/ China coal shipments mostly symbolic value

U.S. SPR rejects first round of offers to refill inventories

Mass transit systems struggling after pandemic ($WSJ)

North Korea becoming full nuclear weapons state ($FT)

Solar storms and the risk to GPS systems and shipping

Local newspapers – disruption, finance and innovation

U.S. GAS INVENTORIES ended the year at 2,891 billion cubic feet on December 30. Stocks were -293 billion cubic feet (-9%) below the pre-pandemic five-year seasonal average down from a deficit of -71 billion cubic feet (-2%) on December 16, the result of a heavy weather-driven depletion in the final two weeks of the year:

U.S. NON-MANUFACTURING businesses reported an unusually sharp deceleration in activity in December. The Institute for Supply Management’s purchasing managers’ survey, which covers services, construction, mining and real estate, slumped to 49.6 (8th percentile for all months since 1997) in December from 56.5 (63rd percentile) in November and 54.4 (35th percentile) in October.

Non-manufacturing activity has been slowing in line with the manufacturing sector over the last 12 months  following the post-pandemic boom. The ISM non-manufacturing index is more volatile than its manufacturing counterpart, so the sudden deceleration should be treated with extreme caution. But if confirmed in the next couple of months it would indicate the business cycle downturn is spreading from merchandise to services:

Best in Energy –  24 October 2022

Russia oil exports will be able to evade price cap

Russia’s nuclear forces – command and control

China boosts diesel and jet exports in September

U.S. shale producers disregard SPR refill offer

U.S. oil firms reluctant to increase output ($WSJ)

Southern California’s port backlog clears ($WSJ)

Schlumberger rebrands itself as SLB

U.S. SPR used more actively ($FT)

U.S. gas flows in 2021 (Sankey diagram)

Venezuela’s opposition seeks deal ($FT)

UN climate talks lose momentum ($BBG)

EUROZONE manufacturers report the sector has entered recession, based on preliminary results from the monthly purchasing managers survey. Partial results show the manufacturing activity index slipped to just 46.6 in October (14th percentile for all months since 2006) from 48.4 in September (24th percentile):

EUROPE’s temperatures are expected to be at or above the long-term seasonal average during the three months from November to January, according to the European Centre for Medium-Range Weather Forecasting. Mild temperatures through October and the relatively warm outlook for the first part of the winter have contributed to downward pressure on the region’s gas futures prices:

Best in Energy – 17 October 2022

[MUST READ] U.S./China relations in Xi Jinping era ($WSJ)

[MUST READ] Nuclear war lessons from past crises ($WSJ)

[MUST READ] China prioritises energy security ($BBG)

Europe’s gas supply still at risk from cold winter weather

EU tries to reach internal consensus on capping gas prices

OPEC+ officials defend Saudi Arabia after U.S. criticism

NOPEC law would escalate U.S./Saudi tensions ($BBG)

California drought drains Lake Shasta ($WSJ)

China plans to boost coal and oil inventories

China to stop LNG resales to Europe ($BBG)

Retailers accelerate sales as inflation rises ($BBG)

Diesel shortage threatens global economy ($BBG)

EUROPE’s gas futures prices for November and December have continued to fall as regional storage facilities near maximum capacity. There is enough gas in stock to ensure supplies through the first half of the winter. But the risk to supplies in the second half and during next year’s refill season is keeping prices for 2023 high:

Best in Energy – 10 October 2022

Saudi Aramco pledges to maintain supply to Asia

U.S. uncompleted oil and gas wells fall to new low

U.S./Saudi relations strained by output cut ($FT)

Taiwan tries to stabilise relations with China

Wargames – nuclear warfighting scenarios

U.S. OIL AND GAS drilling has levelled off. The number of rigs drilling for both oil and gas has been essentially flat for two months since the middle of August 2022, the first time there has been no growth since drilling began to recover in August 2020 from the first wave of the pandemic:

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Best in Energy – 11 April 2022

EU’s Russia coal ban upends market ($BBG)

U.S. SPR sales and impact on oil prices

Nigeria power grid collapses for second time

Germany expects “brief spike” in coal costs

Germany to help firms hit by sanctions ($FT)

EU divided on Russia energy embargo ($FT)

EU divided on Russia oil import ban ($WSJ)

Biomass supplies hit by Russia conflict ($FT)

U.S. transport firms raise fuel surcharges ($WSJ)

Japan orders gas companies to boost inventories

EU/Japan competition for energy imports ($FT)

China’s grain supply threatened by covid ($BBG)

U.S. nuclear generation fell in 2020 and 2021

China accelerates nuclear armament ($WSJ)

U.S. OIL AND GAS producers added +16 new rigs last week with increases in both oil (+13) and gas (+3). The total number of active rigs climbed to 689, up from a cyclical low of 244 in August 2020 but below the pre-pandemic level of 793 in early March 2020:

U.S. NET GAS EXPORTS averaged 332 billion cubic feet per month in the three months from November to January compared with 294 billion in the same period a year earlier, as a result of the growth in liquefaction capacity and strong demand from Europe and Asia:

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