Why 2023 Is Likely To See Much Higher Oil Prices (November 30 2022): By Alex Kimani - Earlier this week, oil prices plunged to 2022 lows as energy markets panicked about demand amid COVID chaos in China that has resulted in an unexpected and extraordinary manifestation of street protests and even calls for Chinese President Xi Jinping to step down. The market’s response to this, according to Rystad Energy, was an overreaction. Rystad believes that China’s zero-COVID policy and its new wave of lockdowns to counter a surge in new cases will have only a minor impact on its short-term oil demand. Indeed, the market is sentimental and fickle these days, with volatility running at an all-time high. By Wednesday, oil prices were trending in the opposite direction with just as much zeal. Brent crude was up over 2.8%, to $85.37 per barrel, at 10:53 a.m. EST, and WTI was up 3.45% to $80.90 per barrel. (Source: Oil Price)
Next Week Will Be Critical For Oil Markets (29 November 2022): By Tsvetana Paraskova - The next few days will be one of the most crucial for the oil market in weeks as several events and factors at the same time could determine the trend in prices by the end of this year and beyond. While the Chinese zero-Covid policy and protests against that policy weigh negatively on market sentiment, the OPEC+ meeting on December 4 and the beginning of the EU embargo on Russian seaborne crude oil imports on the next day are likely to shape the course of the prices. Uncertainty is high, which would stoke further volatility in prices. Oil slumped early on Monday to the lowest level in nearly a year – since December 2021, weighed down by risk aversion in commodity markets amid protests in China over the authorities’ strict Covid curbs policy. The recent price rout, with Brent plunging by 10% in one week, intensified speculation that OPEC+ members could consider another production cut when they meet on Sunday, December 4. On the following day, December 5, the EU ban on imports of Russian crude oil and the associated G7-EU price cap begins, with the exact price of the cap yet to be agreed on and announced. (Source: Oil Price)
Disagreement Over Gas Price Cap Jeopardizes EU Energy Crisis Plan (28 November 2022): By Irina Slav - The European Union’s energy crisis response plan is being challenged by the bloc’s members’ differing opinions on whether a price cap should be implemented on natural gas imports and, if yes, how exactly this implementation should look. While EU officials try to put on a brave face and send positive signals to the public only, the sheer number of EU members and their very different energy needs and priorities are factors significant enough to make the agreement on such an important issue difficult at best. Once you add to these two factors several members’ open criticism of the idea of a price cap for natural gas imports, the situation becomes even more complicated, with agreement harder to come by. “The discussion is extremely complicated because there are simply different views . . . [but] we want to work hard in the remaining days to reach an agreement,” said Jozef Sikela, Czechia’s energy minister, last week, as quoted by the Financial Times. (Source: Oil Price)
Disagreement Over Gas Price Cap Jeopardizes EU Energy Crisis Plan (28 November 2022): By Irina Slav - The European Union’s energy crisis response plan is being challenged by the bloc’s members’ differing opinions on whether a price cap should be implemented on natural gas imports and, if yes, how exactly this implementation should look. While EU officials try to put on a brave face and send positive signals to the public only, the sheer number of EU members and their very different energy needs and priorities are factors significant enough to make the agreement on such an important issue difficult at best. Once you add to these two factors several members’ open criticism of the idea of a price cap for natural gas imports, the situation becomes even more complicated, with agreement harder to come by. “The discussion is extremely complicated because there are simply different views . . . [but] we want to work hard in the remaining days to reach an agreement,” said Jozef Sikela, Czechia’s energy minister, last week, as quoted by the Financial Times. (Source: Oil Price)
Oil Futures Market Points To Sluggish Demand (28 November 2022): By Tsvetana Paraskova - The structure of the oil futures market is showing signs of sluggish global oil demand and sufficient supply, despite the imminent EU embargo on imports of Russian crude oil from December 5. Prices of crude grades on the physical market have declined this month, while the futures market is flirting with contango compared to large backwardations seen earlier this year. Contango is the state of the market in which prices for delivery at later dates are higher than prompt prices—a market situation signaling oversupply. The opposite market situation—backwardation—typically occurs at times of market deficit, and in it, prices for front-month contracts are higher than the ones further out in time. Last week, the front-month futures prices of both major benchmarks, WTI Crude and Brent Crude, were in and out of contango compared to the second-month futures, signaling a weak demand or an oversupply, or a combination of both. (Source: Oil Price)
Will The World See A U-turn In Nuclear Energy? (26 November 2022): By ZeroHedge - As seen in data by the World Nuclear Industry Status Report, most nuclear energy programs were started in the 1970s, a fact that reflects in the age of nuclear reactors today. Despite some nuclear programs having ended (and many more scheduled for phase-out), the number of nuclear programs in the world has plateaued for many decades as some nations still take up the technology, most recently the United Arab Emirates and Belarus in 2020. Poland at the end of October announced that it is looking to start using nuclear energy in 2033. Around that time, six other nuclear programs - among them the ones in Belgium, Germany, Switzerland and Spain - will be scheduled to have shut down, even though this could now be subject to change. Balancing out a dip in nuclear programs could be Italy, which is discussing taking up the technology again under its new right-wing government despite abandoning and even outlawing it after the 1986 Chernobyl disaster. More u-turns are possible in Sweden and the Netherlands. (Source: Oil Price)
Britain Falls Behind G7 Economic Peers (22 November 2022): By City A.M - The UK economy will languish behind its rich counterparts next year amid a tough inflation surge driven by worker shortages and an “untargeted” energy support package, a new report reveals. Britain’s economy will shrink 0.4 percent next year, the worst performance of any country in the G7, according to the Organisation for Economic Co-operation and Development (OECD). In fact, out of the broader G20 group, Britain will come third bottom, only ahead of Russia, which has been frozen out of the global economy through sanctions in response to its invasion of Ukraine, and Sweden. (Source: Oil Price)
Are Small Scale Modular Reactors Becoming Too Expensive? (21 November 2022): By Leonard Hyman & William Tilles - According to industry reports the builders of the NuScale small modular reactor (SMR) project recently submitted revised cost estimates to their muni and co-op partners. Initial cost estimates were for power to be produced at about $58/MWh. This figure was recently revised upwards to roughly $90-$100/Mwh, a projected price increase of 60-70%. The causes cited by management for these price increases were twofold: inflation (in material costs, i.e. steel) and higher interest rates. This initial NuScale project located at the federal government’s Idaho National Laboratories in Idaho Falls would consist of six 77 MW reactors with the units slated to enter commercial service in 2029-2030. These estimates of per KWH cost are significantly above those we have seen recently for renewables plus storage. (Source: Oil Price)
How Europe’s Energy Crisis Could Turn Into A Food Crisis (20 November 2022): By Irina Slav - Runaway energy price inflation has wreaked havoc on European industrial activity, with the heaviest consumers taking the brunt. Aluminum and steel smelters are shutting down because of energy costs. Chemical producers are moving to the United States. BASF is planning a permanent downsizing. There is, however, a bigger problem than all these would constitute for their respective industries. Fertilizer makers are also shutting down their plants. And fertilizer imports are down because the biggest suppliers of fertilizers for Europe were Russia and Belarus, both currently under sanctions. Both countries have retaliated against the sanctions by cutting off exports of fertilizers to Europe, and European officials repeating that fertilizer exports are not sanctioned is not really helping. (Source: Oil Price)
Sustainable Plastics Could Revolutionize Waste Management In Emerging Markets (17 November 2022): By Oxford Business Group - As an increasing number of countries ban single-use plastics, waste remains a significant environmental issue – although a variety of initiatives promise to make emerging markets the focus of the global struggle against plastic waste. The Covid-19 pandemic saw a decline in plastic usage; however, it led to an increase in littering from personal protective equipment (PPE) and single-use plastics. Additionally, much of this waste is disposed of unsustainably, ending up either incinerated or stored in landfill, the third-largest source of methane emissions globally. According to OECD figures, only about 9% of the global volume of plastics was recycled in 2019, and 22% was mismanaged. (Source: Oil Price)
Oil Prices Fall As Druzbha Pipeline Resumes Flows (16 November 2022): By Alex Kimani - Oil prices have been falling in Wednesday’s session after oil flows on the Druzhba pipeline from Russia to Eastern Europe resumed after having been temporarily suspended following repairs on electrical infrastructure damaged in Moscow’s latest assault on Ukraine. Brent crude was trading down 2.11% at 11:50 a.m. EST, while WTI was down 2.83%. The extent of the disruption is yet to be determined, but came concurrent with a big explosion in eastern Poland near the Ukrainian border that raised widespread alarm especially among NATO countries. (Source: Oil Price)
How The Price Cap On Russian Oil Could Cripple India’s Crude Imports (15 November 2022): By ZeroHedge - India would be one of the countries most exposed if Russia refuses to sell crude oil at the capped price under proposed sanctions to be imposed by the United States and the European Union. In 2021, India was the world’s third-largest crude importer (214 million tonnes) after China (526 million tonnes) and the United States (305 million tonnes) (“Statistical review of world energy”, BP, 2022). India and China rely on imports by tanker from the Middle East, Russia and other regions, in contrast to the United States, which receives most of its imports by pipeline from neighbouring Canada. India’s domestic crude and condensate production has been stuck at 30-40 million tonnes per year for the last two decades, data from India’s Ministry of Petroleum and Natural Gas shows. (Source: Oil Price)
The Growing Anti-OPEC Movement Is Disastrous For Oil Markets (13 November 2022): By Irina Slav - Earlier this year, Italy’s then-PM Mario Draghi floated the idea of large oil buyers clubbing together and standing up to OPEC+. The idea did not progress much further than the floating stage because one obvious problem could not be ignored: OPEC would retaliate. Yet it seems that some ideas tend to be so attractive that they resurface, again and again, in slightly different forms. The idea of an anti-OPEC buyers’ club has also resurfaced, and not just that, but a NOPEC bill has moved to the Senate in the United States and, according to media coverage, has a chance of passing. Some, however, have gone further than a bill. One Bloomberg columnist, Carl Pope, recently detailed his vision of an anti-OPEC grouping, which manages to combine the idea of both affordable oil and a push for the electrification of transport. Again, the problems are too obvious to overlook. (Source: Oil Price)
Rainforests Emerge As Key Sources Of Carbon Credits In Emerging Markets (13 November 2022): By Oxford Business Group - In the fight against climate change, forests are vital carbon sinks, absorbing twice as much carbon as they produce each year globally. Tropical rainforests play a particularly vital role, storing an estimated 25% of the world’s terrestrial carbon. Public and private sector actors are increasingly collaborating to protect these areas, which are mostly located in emerging markets, through green bonds that foster sustainable development in sectors such as agriculture, energy and technology. Against the backdrop of the COP27 UN Conference on Climate Change in Sharm El Sheikh, Egypt, Brazil, Indonesia and the Democratic Republic of the Congo (DRC) are in talks to form a strategic conservation alliance, nicknamed the “OPEC for rainforests”. The three countries are home to approximately 52% of the world’s remaining primary tropical rainforests. (Source: Oil Price)
The Future Of The Grid: More Government, Less Private? (9 November 2022): By Leonard Hyman & William Tilles - The European Space Agency proposes to build a solar power satellite, not a new idea. NASA looked at the concept over twenty years ago and did nothing. Too bad. The satellite would generate solar power with huge panels, and beam the power back to earth as microwaves. Each satellite would equal a utility scale power plant. If started now the demo project might be ready for operation by 2040. In the United Kingdom, Rolls Royce plans to develop modular nuclear power plants. Rolls Royce predicts 2030 for the first unit. American reactor developers have similar ideas. NuScale targets 2030 as the operating date for its first commercial reactor. Massive utility scale solar and wind projects, the renewable equivalents of a power station, may take five or more years from conception to completion, much of the time fighting over permits. (Source: Oil Price)
The Biofuel Boom Needs Greater Oversight (9 November 2022): By Felicity Bradstock - There is great optimism around the future of biofuels, which may offer a low-carbon alternative to several widely used fossil fuels if given the necessary government support to help develop an international biofuels industry within the coming years. Biofuels are liquid fuels made from biomass materials, such as organic waste from plant materials to animal waste, known as feedstocks. They can be used to fuel transportation, as well as for heating and electricity generation. Depending on the use, ‘bio’ is often added to the type of fuel, for example, biodiesel or biojet, to suggest that the fuel was produced using biomass. In addition, some clean, green, low-carbon, renewable, or sustainable fuels are also produced using bio feedstocks, such as sustainable aviation fuel. (Source: Oil Price)
Is U.S. Shale Production Peaking? (7 November 2022): By David Messler - I have argued in a succession of OilPrice articles, here, here, and here, that the era of rapid growth in shale output was coming to an end. Until recently it was a little difficult to see as production has ramped +/- a million barrels a day from 2020 lows. Still, there has been a disconnect between a couple of reports put out by the Energy Information Agency-EIA, that are used to track U.S. domestic output. I refer to the EIA-Drilling Productivity Report-DPR, issued monthly, usually at the beginning of week-3, and the EIA-914, a monthly report published on the last day of the month. The DPR projects the present month and the next month to come, making it a forecast of production based on industry reports and governmental and state agency filings. The 914 is considered to offer more accurate data as it shows production two months in arrears. Each report has its utility and is the best compilation of data that can be had from public sources. (Source: Oil Price)
Coal Is Casting A Shadow Over China’s Remarkable Renewable Achievements (7 November 2022): By Haley Zaremba - China is struggling to balance its pressing need to shore up energy security with its ambitions to position itself at the forefront of the global clean energy transition. As the world gears up for the 27th annual United Nations Climate Change Conference, more commonly known as COP27, the world’s major political powers will be competing to place themselves at the vanguard of a brave new energy world. While China has made great strides in the clean energy sector and has secured a chokehold on many of the supply chains that feed into renewable energy expansion the world over, however, Beijing has also continued to burn increasingly massive quantities of coal in order to keep the lights on at home. (Source: Oil Price)
3 Things That Could Slow Down The Global Solar Boom (6 November 2022): By Haley Zaremba - The solar revolution is well underway. For years, the price of solar power has been plummeting, and is now the cheapest form of new electricity generation in many markets, including 16 U.S. states, Spain, Italy and India, according to energy research and consultancy firm Wood Mackenzie. Even through the pandemic, solar development stayed strong. In 2020, global solar capacity installation exceeded 115 gigawatts (GW). And even as solar panel prices rose last year, the cost of solar still managed to fall in 2021. While solar expansion has been on the rise in accordance with its increasingly competitive prices, however, it has not been swift or serious enough to fit with the growth trajectory needed in order to achieve the decarbonization targets set by the Paris Agreement in 2015. Instead, the renewable revolution has been met by the massive and seemingly immovable force of inertia. (Source: Oil Price)
Rural America Is Pushing Back Against The Renewable Boom (3 November 2022): By Haley Zaremba - The world still has a long way to go toward meeting its climate goals. Keeping temperatures from warming more than 1.5 degrees Celsius over pre-industrial averages is essential to avoiding the worst impacts of climate change, but achieving that will require an unprecedented level of commitment, investment, and cooperation from policy makers, industry leaders, scientists, and all levels of government. As global leaders start to push harder for a clean energy transition, however, the rapid expansion of large-scale solar and wind farms is stepping on toes and galvanizing opposition and NIMBYism in many of the communities where such projects are being developed. (Source: Oil Price)
The UK Looks To Repurpose Natural Gas Infrastructure For Hydrogen (2 November 2022): By Felicity Bradstock - As the hype around green hydrogen intensifies, several energy firms and governments are exploring the potential for transforming existing natural gas infrastructure to be used to transport hydrogen as the world transitions away from fossil fuels. Now, the U.K. has announced a new development, trialing a hydrogen-gas project to see if this vision can become a reality. The U.K. will trial using existing gas infrastructure with hydrogen to see whether it is possible to transform this infrastructure to be used in renewable energy projects, rather than constructing an entirely new network of plants and pipelines. London-listed Centrica plans to inject hydrogen into a gas-fired, grid-connected power station to integrate the energy carrier into existing infrastructure. The trial will take place over 12 months in a gas-peaking facility in Lincolnshire, east England. (Source: Oil Price)
Has China Already Won The Clean Energy Race? (1 November 2022): By Haley Zaremba - More than a decade ago, back in 2010, Scientific American asked, “Is the U.S. Falling Behind in the Clean Energy Race?” In the twelve years following, that question has been answered: unequivocally, yes. While other countries around the world have been developing renewable energy technology as their best hope at energy independence and security, the United States has been enjoying a flood of cheap domestic shale oil and gas. The shale revolution allowed the country to be energy independent for the first time since 1957, and turning its back on shale in favor of nascent and pricey technologies seemed unthinkable. But then renewables got cheap. And as solar and wind have taken over and transformed the energy industry, The United States has found itself holding on to an anachronistic energy infrastructure that has become decreasingly relevant on the global stage. Now, while solar and wind are expanding across the globe, including in the United States, the U.S. lacks the infrastructure and the know-how to gain any serious foothold in renewable energy supply chains. (Source: Oil Price)