In this week’s newsletter, we are going to take a fast have a look at a number of the critical figures and data within the energy markets.
We will then have a look at a number of the key market movers early in the week before providing you with the newest analysis of the highest news events happening within the global energy complex over the past few days. We hope you enjoy.
Drilling Cost Surge Curbs U.S. Supply Enthusiasm
- Cost inflation triggered by higher drilling demand and provide chain issues has seen the value of recent oil wells go up 16% year-on-year, in keeping with Platts.
- fuel costs and costs of steel piping have seen the foremost marked increases, though operator’s efficiencies like faster drilling techniques have offset almost half the negative impact of drilling costs.
- At the identical time, the assembly rates of latest rigs still decline across all major producing plays within the U.S., with well efficiency within the Permian falling 15% year-on-year to 1,078 b/d.
- per WoodMac, ultra-deepwater wells are set to suffer the foremost this year, with average floating rig rate costs edging higher by 26% compared to last year, almost double that of onshore cost inflation.
Market Movers
- U.S. oil major Chevron (NYSE:CVX) might very become a harbinger of an industry anti-ESG wave, with minority shareholder Strive Asset Management arguing that climate goals force “value-destroying limitations” on the corporate.
- Australia’s largest oil producer Santos (ASX:STO) has reportedly agreed to sell 5% within the Papua island project PNG LNG to the state-owned Kumul Petroleum for $1.1 billion.
- UK energy major Shell (LON:SHEL) has relinquished its stakes in two offshore wind projects in Ireland with a complete capacity of two.65 GW, but a year after it bought a 51% stake in them.
Things are still looking bearish for crude, with WTI still trading below the 80 per barrel mark, but variety of bullish catalysts could offer support. Hurricane Ian, was touted to become the following menace of production and refining within the U.S. Gulf of Mexico. As of Tuesday morning, two oil majors have decided to shut oil platforms in anticipation, and also the hurricane is now expected to form landfall in Florida. Hence, oil market bulls see OPEC+ as their ultimate line of defense against a meager macroeconomic background and a strengthening dollar, with all eyes on Russia, which is probably going to propose a serious production cut at the subsequent OPEC+ meeting on October 5th.
Gulf Platforms Shut prior Hurricane Ian. Oil majors BP (NYSE:BP) and Chevron (NYSE:CVX) have shut their oil platforms within the Gulf of Mexico, including the 250,000 b/d Thunder Horse and therefore the 60,000 b/d Petronius previous Hurricane Ian, with other facilities unlikely to be impacted by it.
Trading Majors Hijack LNG Trade. because the price of a median cargo of LNG grew tenfold year-on-year to 175-200 million, small-to-medium-sized players are being squeezed out of the market to the advantage of trading majors like Vitol or Shell, as they're unable to secure adequate credit lines.
Emirati LNG involves the Rescue. German utility RWE (ETR:RWE) signed an agreement with ADNOC for the availability of liquefied fossil fuel, with first cargoes already expected to arrive to Brunsbuettel in late 2022, a novelty for the UAE which has thus far never exported LNG into Europe.
Iran Brings the products to Venezuela. As Iran has ramped up its crude deliveries to Venezuela, another two tankers are set to discharge Iranian light crude and condensate at the most port of Jose, providing PDVSA with further diluents to convert heavy domestic crudes into exportable grades.
EU Gas Price Cap Still on the Table. Whilst it seemed that the thought of a gas price cap has been placed on the rear burner by Brussels, a gaggle of EU countries led by Italy and Poland are urging the EU to limit wholesale gas prices as soon as possible.
Saudi Arabia Launches Green Drive. Asian nation is ready to tender 3.3 GW of latest wind and solar capacity because the geographical area kingdom seeks to reduce its historically high crude burn rates for power generation, bringing renewables’ share in power to 50% by 2030.
Total Lands Another Qatari Deal. The French energy major TotalEnergies (NYSE:TTE) signed another accommodate QatarEnergy that might see it invest $1.5 billion into the North Field South (NFS) expansion project, the primary Western major to be unveiled as a NFS partner.
Nord Stream 2 Drops Out of the sport. German authorities have indicated a sudden call pressure within the scrapped Nord Stream 2 pipeline, saying it would be leaking in its subsea section, potentially creating another division line between Germany and Russia.
Always an honest Time to Strike in France. As of today, the CGT organisation has launched an unprecedented three-day strike in the least three of TotalEnergies’ (NYSE:TTE) refineries demanding higher salaries, with ExxonMobil’s (NYSE:XOM) Fos-Lavera refinery also debilitated by a strike.
Belgium Goes Down the German Way. Despite widespread protests across Belgium, Brussels said it'd continue with the decommissioning of its Doel 3 apparatus amidst fears of power blackouts this winter, with 2023 power prices trading slightly above €390 per MWh.
Copper Plummets As Slowdown Woes Hit Hard. because the impending slowdown in economic process worsens the prospects of copper demand in construction and electronics, LME copper prices have dropped to their lowest since July, trading slightly above 7,300 per tonne.
Gas is that the Undesired Savior of California. EIA data suggests that the California power system relied on gas for nearly half its electricity generation during recent heatwaves across the state, with maximum gas usage (60%) recorded during the height demand hours of 5 p.m. and 9 p.m.