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 are going to 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.
Gas-to-Oil Switching Counteracts Recession Fears
- Despite the drop-off in European spot prices, the value of gas remains prohibitively high, paving the way for global gas-to-oil switching within the power generation industry.
- Refiners and energy-intensive industries are already adding some 350,000 b/d of incremental oil demand, coming from the burning of oil and other oil products (instead of gas).
- per Platts Analytics, further fuel switching could boost oil demand by another 300,000 b/d in Q1 2023 when gas prices are expected to peak amidst curtailed Russian supply.
- without delay, benchmark European and Asian LNG prices are five to 6 times on top of high sulphur oil values, meaning most power generation companies avoid using gas whenever possible.
Market Movers
- the biggest independent energy trader within the world, the Netherlands-headquartered Vitol Group has reportedly made $4.5 billion in profits over H1 2022, over within the entire (record) year of 2021.
- Leading US LNG exporter Cheniere (NYSEAMERICAN:LNG) will increase its share repurchase program by $4 billion for added three years, with 2022 EBITDA estimates moving up to $11.0-11.5 billion.
- In arguably the last divestment move before the Brazilian elections this October, Norway’s fertilizer giant Yara (OSL:YAR) is rumoured to shop for the fertilizer unit of Petrobras (NYSE:PBR) for an undisclosed sum.
Inflation is rearing its ugly head again, with U.S. consumer prices gaining 0.1% month-on-month in August, just when the analytical community and U.S. Fed alike expected a month-on-month dip. this can only bring grist to the mill of the Fed, meeting next week to debate further charge per unit hikes. With ICE Brent dropping to $93 per barrel after several consecutive daily increases, demand woes within the U.S. and China seem to be temporarily overpowering upside factors like continuously shrinking global inventories. But there the bullish sentiment should still be there with U.S. Secretary of State Anthony Blinken claiming the Iranian nuclear deal is unlikely within the near term (most probably a coded way of claiming until mid-term elections) which Iranian proposals were a step backward.
Iran Deal Fades as Europe Loses Faith. during a joint statement issued by three European countries aware about nuclear talks with Iran, the governments of France, Germany, and therefore the UK criticized Iran for not seizing the chance presented by the EU draft deal which there remain ‘serious doubts’ about Tehran’s intentions.
South Sudan to go away OPEC+. a primary sign of discontent within the ranks of OPEC+ members, South Sudan threatened to depart the oil group if it stands within the way of its ambitious production ramp-up that sees output increasing from 150,000 b/d now to 230,000 b/d by 2024.
India might have 28 GW of latest Coal Capacity. CEA, India’s advisory body to the facility ministry, claimed India might have up to twenty-eight GW of latest coal-fired capacity by 2032 to satisfy soaring power demand, expected to double up the upcoming 8 years from this 404 GW.
Diesel now not That Attractive. The U.S. and European diesel contracts have seen the most important selloff since early March, both totalling -8 million barrels and reversing three consecutive weeks of middle distillate purchases as fears of slowing growth sap confidence across the Atlantic.
U.S. Shale Growth may not Be That Stellar. With well costs edging up by 15% year-on-year and drilling costs up 10% y-o-y, Scott Sheffield, the top of Pioneer Natural Resources (NYSE:PXD), forecast U.S. oil output growth will only be 500,000 b/d this year, with 2023 increments maybe even under that.
Saudi Arabia Bets Big on Steel. in line with the Saudi industry minister Bandar bin Ibrahim al-Khorayef, the center Eastern country intends to make three steel plants at a value of $9.3 billion, with total assumed capacity at 6.2 million tons.
Norway Fervently Rejects EU Gas Price Cap. Norway’s prime minister Jonas Gahr Stoere has warned against a price cap on Norwegian gas sold to EU countries, saying that such steps would cause “unintended consequences” aggravating the EU’s access to energy.
U.S. Courts Poland to create Nuclear Plants. Poland has received a proposal from the U.S. energy firm Westinghouse to create six large-scale reactors within the land, trying to chase away French and South Korean competitors as Europe is gradually changing its perception of nuclear.
Nigeria Output Falls to Lowest Level on Record. For the primary time on record, Nigerian oil exports plunged below 1 million b/d, halving compared to pre-pandemic figures, as oil theft, unavoidable casualty events, and structural underinvestment still plague operations within the state.
Europe’s Green Credentials Marred by Coal Binge. Having set a number of the boldest green energy targets globally, the EU continent has struggled to shake off its coal dependence with imports rising 35% year-on-year to 57.3 million tons in January-August 2022, consistent with Kpler data.
New Battlefield Opening Between Ukraine and Russia. Ukraine’s state energy firm Naftogaz has initiated a replacement arbitration proceeding against Russian gas firm Gazprom (MCX:GAZP), reportedly for not paying gas transportation services, marking yet one more future bullish factor for European gas.
DOE to Incentivize Geothermal Power within the U.S. The U.S. Department of Energy unveiled a replacement arrange to cut the value of geothermal generation by 90% to 45 per MWh by 2035, arguing that the country has 5 TW of potential heat resources, of which only 3.7 GW are currently being exploited.
