Tag: renewables

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 – 24 March 2023

Russia oil exports and rising shadow fleet risks

India grows both coal and renewable generation

U.S. energy chief says SPR refill could take years

EU plans to indigenise solar supply chain ($FT)

U.S. central bank’s sharp policy dilemma ($WSJ)

EUROZONE manufacturers have reported a widespread decline in business activity so far in March, the ninth consecutive monthly decline since July 2022. The preliminary purchasing managers’ index fell to 47.1 (17th percentile for all months since 2006) in March from 48.5 (25th percentile) in February:

EARTH’s northern hemisphere from 45°N poleward was hit by severe geomagnetic storm peaking around 0300Z to 0600Z on March 24, according to warnings issued by the Space Weather Prediction Center. The storm registered G4 / K9-minus, the second most severe rating, something expected to happen on only 60 days in every 11-year solar cycle. Solar activity, as measured by sunspots, is intensifying towards the next cyclical peak expected around 2025/26:

Best in Energy – 7 March 2023

OPEC/U.S. shale firms discuss tight capacity

EU to launch joint gas buying system ($BBG)

China’s next premier will be Li Qiang

BP resets renewable energy strategy

South Korea boosts coal-fired power

Russia’s crude shipped to Middle East

U.S. Customs clears China solar panels

U.S. solar generation and wind farms

U.S. oil firms to get CCS subsidies (FT)

India trade pivots to U.S. allies ($WSJ)

U.S. recession postponed again ($WSJ)

U.S./China relations deteriorate ($FT)

U.S./China escalation strategies ($FT)

U.S. INTEREST RATE traders continue to boost their expectations for benchmark short rates at the end of the year as the central bank signals rates may have to go higher and stay there for longer to bring inflation back to target. Rates are now expected to be around 5.25-5.50% in December 2023 up from an expectation of 4.25-4.50% at the start of February:

COMMITMENT OF TRADERS reports – the U.S. Commodity Futures Trading Commission (CFTC) and ICE Futures Europe suspended publication of their commitments of traders reports in late January following a ransomware attack on a major market participant and infrastructure provider which resulted in incomplete submissions. Both are now starting to catch up with the backlog of missed weekly reports. ICE has caught up; the CFTC is still some weeks behind. I am not going to publish a weekly analysis again until they have both caught up fully since the reports now contain very out of date information. For reference, however, the hedge fund and money manager positions on February 7, the most recent currently available, are shown below:

Best in Energy – 22 February 2023

EU gas consumption fell 19% in Aug-Jan period

U.S. Treasury outlines Russia sanctions strategy

China’s renewable energy deployment (trans.)

Iberia’s gas and power markets remain isolated

Kazakhstan plan to export oil via Russia ($BBG)

Freeport LNG obtains approval for partial restart

Derivatives go dark after cyber-attack ($BBG)

U.S. commercial property in recession ($WSJ)

Lithium prices retreat from record high ($FT)

Australia/China coal shipments resume

BRENT’s front-month futures price has fallen to $82 per barrel down from a high of $127 at the end of May 2022, after adjusting for inflation. But is that still fairly high or already below the long-term average? It depends whether or not the comparison includes the long period of low prices in the 1990s. In real terms, $82 is in the 65th percentile for all months since 1990, still fairly high. But if the 1990s are excluded, prices are in the 42nd percentile for all months since 2000 and the 48th percentile for all months since 2010, already in the lower half of the distribution:

Best in Energy – 20 January 2023

China traders buy spot market crude

EU LNG price survey off to slow start

U.S. renewables displace gas and coal

EU refiners focus on biofuels growth

Russia is losing the energy war ($FT)

Turkey’s energy transition stalled in 2022

U.S. REAL PERSONAL INCOMES less current transfer payments (PILT) were down marginally in the three months from September to November 2022 compared with the same period in 2021. Real PILT captures the combined impact of changes in employment, wages and other compensation, and inflation. Turning points are one of the main indicators the National Bureau of Economic Research (NBER)’s Business Cycle Dating Committee uses to identify the onset of recessions and expansions. The deceleration in PILT to zero is a sign the economy is close to stalling:

U.S. PETROLEUMINVENTORIES including the strategic reserve increased by +2 million barrels in the seven days ending on January 13 after rising by +22 million barrels the week before. The combined two-week increase was the largest since the first wave of the coronavirus pandemic in the second quarter of 2020. But similarly large increases occurred in the first weeks of 2020 and 2019 so the rise was probably attributable in part to seasonal factors. Inventories are still -94 million barrels (-5% or -2.76 standard deviations) below the prior ten-year seasonal average:

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 – 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 – 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 – 22 November 2022

China hit by worst coronavirus outbreaks since April ¹

European Union proposes gas price cap, without figures

Australia’s gas consumers try to avoid high export price

Saudi Arabia boosts renewable power to export oil ($FT)

U.S./India diplomatic and economic relationship

¹ China has reported severe coronavirus outbreaks in megacities across the entire country, including Beijing and Tianjin in the northeast, Guangzhou in the southeast, and Chongqing in the southwest. Xinjiang in the northwest has been under semi-permanent lockdown for months. The central government’s lockdown and suppression strategy is failing to control transmission and disrupting the entire economy. But there is still no sign of an exit strategy that would enable the country to live with the virus, worsening the economic and oil consumption outlook for 2023.

BRENT calendar spreads for the first half of 2023 have softened significantly as traders anticipate a business cycle slowdown and China’s postponed re-opening from coronavirus will relieve some pressure on crude supplies and inventories:

Best in Energy – 10 November 2022

City leaders plan for 24/7 carbon-free energy

Aramco to ship full crude volumes to Asia in Dec

Coal prices tumble as winter supply fears ease

Corporate-level emissions receive more focus

U.S. PETROLEUM INVENTORIES including the strategic reserve fell by -4 million barrels in the week to November 4. There were only minor changes in stocks of distillate fuel oil (-1 million barrels), jet fuel (+1 million barrels) and gasoline (-1 million barrels). Total inventories have depleted by -498 million barrels since the start of July 2020 and are at the lowest seasonal level since 2004: