Energy Week

Goldman Sachs expects ‘all time high’ oil demand to spur large deficits, boosting priceshttps://www.cnbc.com/2023/07/24/goldman-sachs-expects-all-time-high-oil-demand-will-boost-prices.html- expect demand to rise by 2 million bpd from India and China- Is this coming from OPEC via China?- IEA says global demand will increase by 2.4 million bpd- Will Saudi Arabia increase production as a result?Oil markets are still volatile, U.S. energy chief says, calling for further supplieshttps://www.cnbc.com/2023/07/22/-we-want-oil-prices-to-come-down-says-us-energy-secretary-general-.html- Prices area actually surprising stable right now- Granholm says Biden wants prices to come down because people "can't afford the premium."Anticipation of Rate Cuts Could Lead Oil Prices Higherhttps://etfdb.com/leveraged-inverse-channel/rate-cut-anticipation-could-lead-oil-prices-higher/- If interest rates fall, companies will borrow more and expand causing demand to rise- If interest rates fall, oil companies might be able to borrow money and expand drilling IF banks are willing to lend to them- Can't depend on the Fed to start cutting interest rates while inflation is above 2%Oil prices rise as tight supply counters expected rate hikeshttps://www.reuters.com/markets/commodities/oil-rally-takes-breather-ahead-fed-ecb-rate-hikes-2023-07-24/Russia Defies Sanctions by Selling Oil Above Price Caphttps://www.wsj.com/articles/russia-defies-sanctions-by-selling-oil-above-price-cap-bae1c271- Brent is at $82/barrel. Spread gets too large for people to ignore going to Russia.- Does this mean that the system for selling and transporting Russia oil without touching western entities is well developed enough that the price cap can be totally evaded and it is meaningless? Or does it mean that the penalties for violating the price cap aren't being enforced or aren't strong enough?- Sanctions enforcement isn't immediate - it can take 3+ years to get evidence and apply fines- “The West has true pricing power,” he said, adding that the cap could be lowered to between $20 and $30 a barrel.- But if price cap is set too low, Russia will call the bluff and price oil at what the market is pricing its oil at, and buyers can take it or leave it.Global Hunt for Crude Sends Offshore Oil Stocks Soaringhttps://www.wsj.com/articles/global-hunt-for-crude-sends-offshore-oil-stocks-soaring-8e4f77a9- Exxon, Chevron stocks not doing well, but stocks of offshore exploration and service companies are booming. Noble, Transocean, etc. are booming with lots of offshore exploration. - Can take awhile to find what you need, but good for future, 2026, 2027, 2028Oil and Gas Companies to Face Stricter Regulations and Higher Royalty Rates for Drilling on Public Landshttps://www.energyportal.eu/news/new-rules-for-oil-and-gas-leasing-raise-rates-energy-companies-pay-to-drill-on-public-lands-8/84743/- The increased royalty rate is expected to remain in place until August 2032, with an estimated cost increase of $1.8 billion for oil and gas companies during that period.- The proposed rule, which raises royalty rates to 16.67% from the previous rate of 12.5%Link to Energy Infrastructure Webinar:https://zoom.us/webinar/register/WN_oyqmDS1aRRaqoUG0-gfVag#/registration This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil slides more than 1% as Chinese GDP dents demand hopeshttps://www.reuters.com/business/energy/oil-slips-after-libya-resumes-output-china-data-eyed-2023-07-17- GDP grew 6.3% year-on-year in the 2nd quarter, compared with analyst forecasts of 7.3%- what analysts were forecasting such high growth?- slow correction where expectations come back down to realityChina's June industrial output rises 4.4%, retail sales up 3.1%https://finance.yahoo.com/news/chinas-june-industrial-output-rises-020809002.html- China's industrial output grew 4.4% in June from a year earlier, unexpectedly accelerating from 3.5% seen in May- Retail sales grew 3.1% in June, slowing from a 12.7% jump in May. Analysts had expected growth of 3.2%.- Are the kind of okay numbers from China signals that the Chinese economy is actually much worse?Chinese Oil Demand Doesn’t Make Sensehttps://www.wsj.com/articles/chinese-oil-demand-doesnt-make-sense-cbc02a44- "Either China’s economy will accelerate rapidly in the second half—a prospect that currently looks unlikely—or oil demand will revert to more regular patterns, dragging global consumption and, potentially, prices down with it." *** Really???***- Could there be a mismatch between petroleum imports quotas and what they actually need.- "China doesn’t regularly publish petroleum inventory data as the U.S. does, so it is difficult to say for sure how much diesel might be sitting in storage somewhere."Oil Bulls are Getting it All Wrong, Wall Street Veteran Warnshttps://finance.yahoo.com/news/oil-bulls-getting-wrong-wall-101242402.html- “The bulls got it all wrong,” said Ed Morse, the bank’s veteran head of commodities research. “The world is still waiting for a real Chinese recovery, Europe is in recession and we still don’t know if the US will have a hard landing.”- Citi's call for oil's summer average was $83/barrel. More realistic that the $97/barrel calls. But it's still off from $78...Japan to Propose Global Natural Gas Reserve to Avoid Shortageshttps://finance.yahoo.com/news/japan-propose-global-natural-gas-040004888.html- Can see why indiv countries would want to do this, but will global natural gas supplies be helpful the same way global oil reserves are when natural gas isn't traded like oil is?- Also, higher nat gas prices make Permian wells more valuable- Regional natural gas storage frameworks make much more senseDirty and Sludgy Oil Runs Hot in Asia as Saudis Cut Supply Backhttps://finance.yahoo.com/news/dirty-sludgy-oil-runs-hot-051227587.html- Less light oil on the market from Saudi Arabia and UAE has made buyers look for heavy, sour crudes- Urals price is now up close to price cap price- Was this intentional by Saudis? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Biofuels are displacing petroleum-based distillate fuel oil consumption on the West Coasthttps://www.eia.gov/todayinenergy/detail.php?id=57040- renewable diesel = diesel made from - biodiesel used as well- petroleum distillate consumption down on west coast in 2022 but biodiesel consumption up- unique to west coastNATIONAL AVERAGE SEES LITTLE CHANGE, GASOLINE DEMAND PLUMMETS AFTER SURGING FOR JULY 4- Gasoline demand soared on July 4 but declined since then- Gasoline prices went down going into July 4 but have basically remained stable since then- "Implied gasoline demand, a proxy for retail demand, unsurprisingly jumped to 9.6 million barrels as motorists hit the road for July 4."- "gasoline inventories fell 2.5 million barrels" Oil dips on Chinese and U.S. data, but OPEC+ cuts limit fallhttps://www.reuters.com/markets/commodities/oil-eases-ahead-china-us-data-opec-cuts-support-market-2023-07-10/- Lots of Chinese data coming out later this week- Will the market tighten in H2 2023? China's economy will turn around at some point, but will it be this year? - China's trade with US and Europe is down but is Russia really a replacement? Depends who you ask.Iran Seizes Commercial Tanker in Persian Gulfhttps://www.voanews.com/a/iran-seizes-commercial-tanker-in-persian-gulf-/7170938.html- Military incident in Persian Gulf including US Navy firing on Iranian vessels did not cause oil market to jump at all- Do people not care about tanker security in the Persian Gulf anymore?Special Guest Kunal Patel from the Dallas FedQ2 Energy Surveyhttps://www.dallasfed.org/research/surveys/des/2023/2302- price forecasts of producers are different from other industries. Think price will be in $80s by end of year- credit conditions: 24% of small E&Ps said credit conditions are having a major impact. Large E&Ps have more sources of credit.- costs in the oilfield: the larger the firm you are, the more pricing power you have, both with services and materials- larger firms can take advantage to get lower costs but smaller E&Ps are still facing higher costs- potential decreases in cost in H2- Contracts with rigs and suppliers are the issue - if firms locked in contracts in 2022 then prices are higher even if prices are going down now. When the contracts were signed is driving the costs- Oil producers in the US think that global oil consumption has slightly underperformed this year what they expected at the start of the year. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil falls amid China growth uncertaintieshttps://www.reuters.com/business/energy/oil-prices-come-off-earlier-gains-banks-cut-china-growth-forecasts-2023-06-19/- the issue is headwinds, but is China's economy really that bad- the real issue is that expectations for China's great economic reopening haven't materialized. - China's demand growth was baked in and now that it's coming in below expectations- at the same time...China's refineries processed second most oil in May on recordColumn: China stored massive volume of crude oil in May, giving it optionshttps://www.reuters.com/markets/commodities/china-stored-massive-volume-crude-oil-may-giving-it-options-russell-2023-06-19/- China added to crude oil stockpiles at the fastest rate in nearly three years in May, as robust imports outweighed near-record refinery processing.Toyota unveils sweeping plans for new battery tech, EV innovationhttps://www.reuters.com/business/autos-transportation/toyota-market-next-gen-battery-evs-2026-built-by-new-ev-unit-2023-06-13/- Solid-state batteries can hold more energy than current liquid electrolyte batteries- Toyota said it aims to launch next-generation lithium-ion batteries from 2026 offering longer ranges and quicker charging.- This could be much better for the modern model of driving.- While the range would be longer and the charging time faster and more palatable, but the weight might still be an issueNew Land Grab by Oil Giants Is Deep Undergroundhttps://www.wsj.com/articles/new-land-grab-by-oil-giants-is-deep-underground-34cd5e97Welcome Back Dr. Dean Foreman, Chief Economist for Texas Oil and Gas Association! www.txoga.org- Are we heading towards 13 million barrels per day of oil production from the US? It's not getting there.- Many states don't have the same activity levels as they did pre-pandemic- Texas is more important than ever for oil production - natural decline rates in Texas are less than in other places- Market is structurally tight, esp when you look at inventory levels- Why is OPEC cutting? Each time, Fed Reserve contemplates a rate hike, economic uncertainty results.-  Going back to the OPEC cuts last year was to offset monetary policy from Fed.- The China factor? China's economy is coming back but slowly over the course of the year.- Natural gas production is at all time highs- How much is flowing into global markets? Storage levels of natural gas are high in Europe and the U.S.- Seasonal and regional markets for natural gas remain.- Permian Basin most of the natural gas is associated- How to incentivize natural gas drilling when prices are so low- Appalachian region is constrained by pipelines- Record level of natural gas exports, but really strong production and really strong consumption. Productivity levels have held this up. - US is sitting at under $3 per mbtu, Europe is $9/$10 per mbtu- Hot summer could pressure the LNG situation. But also a comeback in China's economy could pressure the LNG situation. China gave up many cargoes of LNG that it had contracted for to Europe because they were willing to pay super high prices This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Commodities Slide as Investors Bet on Economic Slowdownhttps://www.wsj.com/articles/commodities-slide-as-investors-bet-on-economic-slowdown-233a6d3- if prices trend down to the $60s or $50s by October then Shale producers might curb production plansSaudi Arabia Springs 1 Million b/d Cut in Opec Megadealhttps://www.energyintel.com/00000188-857f-d6e7-a9ba-efffca560000- will Aramco take oil from storage if customers want more oil than they have available from production?Saudi Arabia Cuts Oil Output After OPEC Members Clash Over Quotashttps://www.wsj.com/articles/saudi-arabia-some-opec-members-clash-over-oil-production-quotas-87f43f0c- Angola vs. Saudi Arabia over a reduction in baseline quotas- 2024 new baseline quotas that more accurately reflect capacityWhat oil production cuts were agreed at OPEC+ meeting?https://www.reuters.com/business/energy/how-opec-deal-cuts-oil-supply-until-end-2024-2023-06-05/#:~:text=The%20OPEC%2B%20alliance%20on%20Sunday,a%20combined%2040.46%20million%20bpd- Does OPEC know something about China's demand that the rest of the market doesn't?China is drilling a 10,000-meter-deep hole into the Earthhttps://www.mining.com/web/china-is-drilling-a-10000-meter-deep-hole-into-the-earth/- "The project will provide data on the Earth’s internal structure, while also testing deep underground drilling technologies, according to China National Petroleum Corp., which is spearheading the project."- Is this REALLY just a scientific and technical venture? Or is it cover for something military?- How much oil and gas would they have to get out of 457 days of drilling?- could it be for rare earths like lithium?An Inflexible EPA Rule Will Hamper Goals to Reduce Methane Emissionshttps://themessenger.com/opinion/an-inflexible-epa-rule-will-hamper-goals-to-reduce-methane-emissions This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Ford to charge up EV drive with flurry of battery dealshttps://www.reuters.com/business/autos-transportation/ford-announce-new-battery-material-deals-investor-event-2023-05-22/- doubts about Ford's ability to actually hit their EV production targets- But do people even WANT to buy F-150?- Ford says its electric vehicle unit is on track to lose $3 billion this year.NATIONAL AVERAGE PRICE OF GASOLINE HITS PAUSE AS MEMORIAL DAY LOOMS- gasoline price are not as high as people thought they were- is this a silver lining on the inflation talk?- Distillate stocks are 1% higher than this week last year- "Implied gasoline demand, a proxy for retail gasoline consumption, fell 395,000bpd to 8.91 million barrels."- Work from home, even just a few days a week, has permanently removed demand- will we see depressed gasoline consumption over the summer driving season despite lower gasoline pricesCourt rejects challenges to FERC approval of Alaska Gasline planhttps://www.ogj.com/general-interest/government/article/14293993/court-rejects-challenges-to-ferc-approval-of-alaska-gasline-plan- FERC approved the plan in 2020- 800 mile natural gas pipeline to bring gas from North Slope, liquefy it and ship it to Asian customers- The environmental groups objected, among other things, to FERC’s failure to calculate greenhouse gas emissions that would occur when customers burned the natural gas.European Gas Prices Drop as Goldman Sees Fuel-Switching Floorhttps://financialpost.com/pmn/business-pmn/european-gas-prices-drop-as-goldman-sees-fuel-switching-floor- "Mild weather and a steady flow of liquefied natural gas have contributed to the decline as Europe recovers from its energy crisis amid severely curtailed pipeline flows from Russia. Stockpiles on the continent are now almost 66% full, well above the seasonal average"- But Goldman could be wrong. Hydropower is still down from last year's drought. Chevron Doubles Down on Shale With $6.3 Billion Dealhttps://www.wsj.com/articles/chevron-to-buy-pdc-energy-in-6-3-billion-stock-swap-d8835eee- Chevron getting acreage in Colorado but perhaps it can more effectively navigate regulations than smaller PDC This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Big Oil Has $150 Billion in Cash and Investors Want a Sharehttps://www.wsj.com/articles/big-oil-has-150-billion-in-cash-and-investors-want-a-share-b5cdea35- oil companies sitting on cash now, but they may need that cash for when prices are lower- should they return all this cash to shareholders now or keep it to pay out in dividends throughout the next cycle?- what about needing cash to account for uncertainty in regulations?Oil’s sharp slide has surprised markets. But some traders now see a bottom for priceshttps://www.cnbc.com/2023/05/08/oils-sharp-slide-has-surprised-markets-but-some-traders-now-see-a-bottom-for-prices.html- analysts have "feelings" that oil prices have seen their bottom- what are the signs? expectation that US gasoline demand will be strong this summer? strong jet fuel demand? inventories? industry? Diesel demand? Chinese manufacturing data? Fed is done raising interest rates?- OPEC is a big uncertainty. Will OPEC take action to cut production at its June meeting or keep production stable?- Will OPEC members adhere to their voluntary cuts?- Diesel numbers aren't good for demand- Could hit summer driving season and demand goes up but then OPEC would need to hold production steady- If Russia doesn't actually cut then oil prices could go lower when evidence hits marketOil climbs almost 3% as recession fears begin to fadehttps://www.reuters.com/markets/commodities/oil-prices-inch-up-recession-fears-begin-fade-2023-05-08/- The fears aren't fading, they just aren't as bad as they seemed before.- Was the price slide in oil really overdone?- OPEC to release monthly oil report on Thursday?No more gas stoves? New York is first state to ban gas in new buildingshttps://www.csmonitor.com/Environment/2023/0505/No-more-gas-stoves-New-York-is-first-state-to-ban-gas-in-new-buildings- "It’s part of a larger state plan to reach net-zero energy emissions by 2050" but the power plants will probably still be permitted to use natural gas- "By 2026, most new buildings under seven stories will have to use electric heat pumps for controlling air temperatures and for hot water. Larger buildings will have to comply by 2029. Some businesses that require extreme high heat to operate are exempt."- Heat pumps don't work that well. What will cities like Buffalo do?- "The state’s energy cushion could narrow beginning in 2025 as some generators are deactivated and demand grows" according to New York's grid operator. Probably will not take older generators out of commission in order to continue to provide electricity.Special Guest Kunal Patel from Dallas Fed - Q1 Surveyhttps://www.dallasfed.org/research/surveys/des/2023/2301- 200 firms in 11th district registered- data collected March 15-23- Data suggest expansion in upstream over the last 2 years is stalling- supply chain delays eased- employment growth continuing but not as fast as before- executives are not optimistic- expect crude oil to end year at $80/barrel- WTI at $73/barrel but breakeven is around $62/barrel: range of averages from $56 to $66. But that includes different regions, Eagle Ford, Permian, etc. - most firms can profitably drill at current prices but last year breakeven was lower ($56/barrel). Large firms (10,000bpd or more) need $55/ barrel while smaller firms need less).- Generally if executives think the price is currently in a good range they predict that oil will end the year at the same price. Last year they thought prices would come down. Now they think prices will go up.- Question: What West Texas Intermediate (WTI) oil price does your firm need to cover operating expenses for existing wells? AVerage across sample is up by 10% from last year. Suggests increase in cost just to manage existing wells. - Price to complete a DUC has to be between operating expenses and price to put well into production. Completion cost is generally 2/3 of the cost of the well.- $70 oil but $2 gas -- is this an issue? Natural gas and natural gas liquids are seen mostly as an additional uplift. Cost of natural gas mostly impacts the just natural gas drillers.- Push to reduce emissions by moving to electric power is impacting the area. Using electric powered turbines in fracing, for example. More wells mean more electricity needed but often they are away from civilization and its hard to get electricity.- Anger towards BLM - especially regarding permitting rules. Even renewables are having trouble getting permits from BLM. Length of time to get permits is increasing.- Costs continued to rise, but supply chain issues easing. Why? Activity was flat, so maybe supply chain caught up? no, equipment that was ordered a long time ago was finally delivered. Could costs be in labor?Next report coming out June 22!Check out energy indicators and energy slide show! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

China’s mixed economic data fuels concerns about recoveryhttps://www.japantimes.co.jp/news/2023/05/01/business/china-economic-recovery-concerns/#- Is this something that China can deal with domestically? Or is it the fault of the global economy which isn't ordering as much stuff from China?- China's consumer demand is doing ok, but the industrial side of China is patchy.- Is this just pent up consumer demand and the consumer economy will drop off to match the poor industrial recovery?- "The manufacturing PMI index fell to 49.2 from 51.9 in March — the first time since December it was below the 50 mark, which signals a contraction. Sub-indexes for new orders, new export orders and manufacturing employment were all below 50." - Will the consumer numbers decline once the post-Covid bump is over? If so...oil prices are heading lower.GasBuddy: Decline in retail gasoline prices gaining momentumhttps://www.upi.com/Top_News/US/2023/05/01/gasoline-dehaan-aaa-gasbuddy-oil/5411682948788/- gasoline prices are going down and will go down even more.- result of oil prices declining and wholesale gasoline prices declining and retailers are passing on the savings to consumers.- diesel prices also declining. Is this due to slowing economy, or is it just coming back down after being so high due to Ukraine/Russia issues? Seems like the issue is the economy.First shipment of Russian oil to Pakistan brokered by China scheduled for Mayhttps://economictimes.indiatimes.com/news/international/business/first-shipment-of-russian-oil-to-pakistan-brokered-by-china-scheduled-for-may/articleshow/99879550.cms?from=mdr- "The USA may also have given tacit support to this deal as crisis-hit Pakistan remains a key arms supplier to Kiev, ET has further learnt."- Sanctions, etc. give US a way to control who gets what oil based on foreign policy goals.How trading oil in another currency besides the dollar might play outhttps://www.thenationalnews.com/business/comment/2023/05/01/how-trading-oil-in-another-currency-besides-the-dollar-might-play-out/- Saudi Arabia's currency is pegged to the dollar and they can't de-peg it because there would be huge inflation. Can't sell too much oil in currency in non-dollars because yuan, etc. can be devalued.- "Any diminution of the dollar’s global role in favour of the yuan or another currency will be gradual, and will lead, not follow, the oil market."- Saudi Arabia may be willing to accept yuan for oil, but they will likely insist on a set yuan to dollar rate.Biden administration could delay electric vehicles biofuel program decisionhttps://www.reuters.com/world/us/biden-administration-could-delay-electric-vehicles-biofuel-program-decision-2023-05-01/- If EV manufactures use renewable "fuels" (energy?) they might get awarded RINs they can sell to gasoline refineries that can't use enough Ethanol? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Biden admin preparing major crackdown on power plants that fuel nation's gridhttps://www.foxnews.com/politics/biden-admin-preparing-major-crackdown-power-plants-fuel-nations-grid- EPA planning to issue regulation that would limit emissions from fossil fuel power plants. Basically would require plants to shut down or install costly carbon capture facilities.- Would drive up prices- Is this being done in order to run on it in the next election?China’s EV Love Affair Spells Doom for Gasolinehttps://www.bloomberg.com/news/newsletters/2023-04-21/china-s-ev-shift-spells-doom-for-oil- Can China's "leek futuristic roadsters with hologram wheels" EVs and SUVs that promise "a range of 1,000 kilometers (620 miles) on a single charge" spell the end of gasoline?- Can China maintain baseload energy for all these EVs? Does it want to control people's ability to charge their vehicle?- Just because someone saw lots of sleek EVs at the Shanghai auto show doesn't mean that everyone is buying and using an EV and that the combustion engine is dead in China.- Would think the same about America's auto industry if you watched the commercials from the Super Bowl, where every vehicle advertised was an EV.Column: Oil buying slows amid renewed concerns about economyhttps://www.reuters.com/markets/commodities/oil-buying-slows-amid-renewed-concerns-about-economy-2023-04-24/- OPEC has been wrong before, but they aren't ALWAYS wrong.- "But they remain more cautious on refined products owing to continued uncertainty about the outlook for the global economy and petroleum consumption."- Will there be a global economic slowdown? Still could be.- OPEC shocked the market with a cut last month but oil prices are only in the low $80s.Exxon Mobil Eyes Potential Megadeal With Shale Driller Pioneerhttps://www.wsj.com/articles/exxon-mobil-eyes-potential-mega-deal-with-shale-driller-pioneer-c48a4747- "held preliminary talks with Pioneer Natural Resources Co. about a possible acquisition of the U.S. fracking giant, as the oil major hunts for a blockbuster deal in the shale patch, according to people familiar with the matter."- Pioneer really understands the permian- XOM might be better at managing oil to gas ratio that has caused problems for Pioneer- "Pioneer has some of the best assets in the Permian, according to analysts"-"Pioneer, which only has operations in the Permian, produced an average of about 650,000 barrels of oil equivalent a day there in 2022"Exxon Mobil Corporation (NYSE:XOM) insiders sold US$3.0m worth of stock suggesting impending weakness.https://finance.yahoo.com/news/exxon-mobil-corporation-nyse-xom-130046709.html This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russia forecasts stable oil output to 2025, to set up stockpileshttps://www.reuters.com/business/energy/russia-forecasts-stable-oil-output-2025-set-up-stockpiles-2023-04-17/- Russia wants to build their stockpiles. Are they taking 500,000bpd off the market and putting it in storage or are they going to cut production in order to keep that oil in the ground and that's storage?- Russia could be planning to not actually cut production but keep those sales on the down lowOpec Chief Pushes Back on IEA's Criticism of Cutshttps://www.energyintel.com/00000187-8e37-dc4f-a7e7-9fb7a32e0000- "First of all, this is not the first time the IEA has criticized Opec and Opec-plus. Unfortunately, it has become like a broken record, yet time and time again, market fundamentals prevail, and Opec’s more accurate forecasts and decisions prove to be the correct ones."- IEA pushes energy transition and then expresses frustration when OPEC cuts oil production- What does the west really WANT from OPEC?- Key differences between IEA and OPEC April Monthly Oil Market Forecasts: "Opec revised its forecast [for China's oil demand growth] upward this month by about 50,000 b/d reaching 760,000 b/d, while the IEA revised it upward by almost 200,000 b/d reaching 1.2 million b/d."OPEC doesn't think China's oil demand growth will be nearly as high as the IEA thinks.Russia’s oil exports are back to pre-war levelshttps://www.cnn.com/2023/04/14/energy/russia-oil-exports-iea-report/index.html- according to IEA, "Moscow’s exports of crude oil and oil products rose in March to their highest level since April 2020, jumping by 600,000 barrels a day"- Russia's overall income plunged nearly 21% compared with the same period in 2022 according to Reuters.Stopping America’s LNG exports would hurt producers and send Beijing to Russia’s doorstephttps://thehill.com/opinion/energy-environment/3933453-stopping-americas-lng-exports-would-hurt-producers-and-send-beijing-to-russias-doorstep/- we should encourage economic relations with China because it has improved diplomacy.- Can't be a free-market and say you want to ban exports to certain placesEurope’s Largest Nuclear Reactor Launches as Continent Splits Over Atomic Energyhttps://www.wsj.com/articles/europes-largest-nuclear-reactor-launches-as-continent-splits-over-atomic-energy-373d6bd4- Divide between European countries that want more nuclear and those that are shutting it down in their countries.- "public support for nuclear power has grown in Finland, with roughly 60% of Finns in favor"- “Finland has a very strong culture of trust in authorities and experts,” said Mr. Tulkki, the nuclear scientist. Public confidence that nuclear waste can be disposed of safely “has enabled people to accept nuclear power,” he said.Check out new column on water futures trading: https://www.investing.com/analysis/saudi-arabia-takes-aim-at-oil-bears-what-traders-should-know-200636964 This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

OPEC+ announces surprise oil output cutshttps://www.reuters.com/business/energy/sarabia-other-opec-producers-announce-voluntary-oil-output-cuts-2023-04-02/- Does OPEC think that China's oil demand isn't coming back strong?- Russia retaliating against price cap from West- Want to defend $80 or higher oil- Could it be about speculation? Speculators LOVE big price jumps.- Reaction to lack of price support from demand side (US SPR buys that didn't happen when WTI went beflow $70)https://www.woodmac.com/horizons/china-reopening-means-for-global-energy-markets/- global implications if China's economy getting red hot and sucking up all the oil- Could Saudi Arabia and OPEC be trying to cool off the Chinese economy by raising prices?- LNG imports in China fell by 22% in 2022, only expected to recover 9% in 2023Goldman Sachs raises Brent oil price forecasts after OPEC+ output cutshttps://www.reuters.com/business/energy/goldman-sachs-raises-brent-oil-price-forecasts-after-opecs-surprise-output-cuts-2023-04-02/Special Guest - James Hill MCF Energyhttps://www.mcfenergy.com/corporate- publicly traded company on Canadian exchange exploring for oil and gas in Europe- Europe sees natural gas as transition fuel- Europe has been drunk on Russian gas for decades now, allowed themselves to ignore resources within their own borders.- Russian gas was cheap so they didn't have to drill- Drilled well within 6 months in Austria. Regulatory environment is still strict but permitting process has been much streamlined- Pipeline infrastructure is actually very close to wells that are drilling now or considering drilling.- Not fracking wells, proven wells. Ability to flow without much stimulation.- engaging with the local community to engage concerns, haven't found much negative  sentiment from local communities. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Saudi Arabia and U.A.E. Clash Over Oil, Yemen as Rift Growshttps://www.wsj.com/articles/saudi-arabia-and-u-a-e-clash-over-oil-yemen-as-rift-grows-ff286ff9- "Once close friends, the two biggest Arab economies are increasingly competing for money and power"- Will the UAE leave OPEC? - Doubtful because UAE benefits more by staying in OPEC- They like people to think that they are talking about leaving- UAE has spare capacityForget Peak Oil Demand: A Thirst for Barrels Puts $100 in Viewhttps://finance.yahoo.com/news/forget-peak-oil-demand-thirst-110000334.html- Will China's demand push oil to $100?- Amin Nasser of Aramco says demand will outstrip supply soon-ish (maybe H2)?- Recession in the West and not in the East?- Is a recession really coming? Mixed indicators.- It isn't in OPEC's interest to have a recession or runaway oil prices. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russia to cut oil output by 500,000 bpd in Marchhttps://www.reuters.com/business/energy/russia-cut-oil-output-by-500000-bpd-march-2023-02-10/-"As of today, we are fully selling the entire volume of oil produced, however, as stated earlier, we will not sell oil to those who directly or indirectly adhere to the principles of the 'price cap'," Novak said- Are they cutting to see who will pay above $60 and who will adhere to price cap?- Oil isn't up that much- Could be also to push customers to use all Russian servicesOil prices rise over 2% on Russian plan to cut outputhttps://finance.yahoo.com/news/oil-dips-heads-weekly-gain-015302054.html- Goldman cut its oil forecast by $6/barrel- Waiting for Chinese demand to surge in order for crude oil to "break out"- What about rising tensions with China? Shouldn't that increase oil prices?Natural Gas: Fasten Your Seat Beltshttps://www.wsj.com/articles/natural-gas-fasten-your-seat-belts-5c0fcdf4- volatility is much more extreme in 2022 than in any other year- How much of that is due to Russia and the fact that we are WAY more dependent on natural gas than ever before?- We should be concerned about 2023/2024 winterSpecial Guest Ademiju Allen from Rystad to discuss the North American natural gas production and infrastructure.- Gas markets analysts on North American gas team with Rystad- Gas constraints in North AMerica. Appalachia largest resource in America, maybe in world? But not enough takeaway capacity. Atlantic Coast Pipeline cancellation was supposed to help but it was cancelled. Mountain Valley Pipeline also a problem- If gas can't get to where it needs to go, you will have a problem if temperatures are lower than average- Fortunately for weather in Northeast, seasonally mild winter and haven't seen structural impacts to gas consumption in region - Production has remained flat- Is next winter a concern? Storage is seasonally high, comparatively. Broken down regionally it's higher in south-central.- Lack of production wasn't just lack of takeaway but also supply chain issues.- May through September is the period we have to go through and see how much gas is going into storage to see how prices will react to milder or aggressive temperatures. Really hard to say what will happen next winter.- Natural gas prices on a basis. Situation in California is the opposite - they were elevated this winter for different reasons than northeast. - Cold snap over Christmas: utilities/independent system operators always SAY they are well prepared but every storm/event is different. PGM experienced issues with how freezing temps impacted equipment.- The Permian has two things going for it that Appalachia doesn't: proximity to export facilities and that it is mostly associated gas.- Minimal growth coming out of Appalachia year on year basis. Permian and Haynesville has potential for huge growth.- Permian will grow at pace that oil production economics and takeaway capacity allows them to grow.- Permian is producing record levels of gas, but takeaway for gas needs to be able to keep up and right now it's tight.- Is lack of takeaway capacity for gas impacting oil production growth due to regulations that prevent flaring? No evidence for that. Flaring mandates are being following by public operators but not private operators.- Private operators just pay the penalty on flaring.For more visit https://www.rystadenergy.com/North America Natural Gas SolutionGlobal Gas & LNG Solution This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

No OPEC ministerial meeting, but the Saudi oil minister gets his 2-cents inSaudi energy minister cautious on oil production, warns on investment outlook and geopoliticshttps://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/020423-saudi-energy-minister-cautious-on-oil-production-warns-on-investment-outlook-and-geopolitics- ABS says: "With all due respect, forecasters are good forecasters. They do their best but not necessarily what they forecast happens as a reality. So, if people can adapt it to my other mode, which is, 'I will believe it when I see it, and then take action' -- it's a much more profound, self-assuring, cautious approach,"- OPEC no longer meeting monthly- According to AbS, the market should trust the OPEC+ alliance's stewardship of the market- AbS: "All of these so-called sanctions, embargoes, lack of investments…will all convolute into one thing and one thing only -- lack of energy supplies of all kinds when it is most needed. That is my worry, and that is something I don't want to be responsible for." - He may not want to be blamed for it, but you can be sure that he will be.Saudi Arabia unexpectedly raises oil prices for Marchhttps://financialpost.com/commodities/energy/oil-gas/saudi-arabia-raises-oil-prices-marchRough start to the week for global oil suppliesNorway's Sverdrup oil production suffers outagehttps://www.reuters.com/business/energy/norways-sverdrup-oil-production-suffers-outage-2023-02-06- The outage is expected to last for 2-3 days, with a preliminary restart set for mid-day on Feb. 8Turkey halts oil exports after earthquakes: https://www.argusmedia.com/en/news/2416752-turkey-halts-oil-exports-after-earthquakes-update- about 1 million bpd is exported from Ceyhan port which is now offline.- don't know how long it will take to come back online. Will Northern Iraqi oil go south or will they hold off?Special Guest Prof. James Coleman @EnergyLawProfPresentation here:https://www.energylawprof.com/wp-content/uploads/2022/09/StrategicEnergyReserve.pdf- For the first time in 50 years our SPR is half empty. We are less prepared for an oil disruption than any time in the past- Basically we are trying to move our entire economy and civilization to dependence on source of energy were we have NO strategic reserve whatsoever.- We basically have 30 minutes of electricity storage- Argument: if we want to move to more dependence on these sources we need to ramp up our ability to provide strategic reserves of it. e.g. reserves of natural gas to make sure that our power plants can always have a source of electricity. - much easier to store natgas- bulk of our storage is hydro- can do gravity storage basically by pushing rocks up a mountain.- companies won't be incentivized to put in storage and transportation for natural gas stores needed because financially it doesn't make sense for them to invest in decades of infrastructure for a return that will only come when/if there's a big storm maybe every 5 years. - heat pumps work to save electricity when temperatures are moderate but when temps drop below 40F its not effective and you end up getting getting heat that uses twice as much energy to produce- in some places it's easier to have the hydro storageNote: Ellen will be speaking at the Atlantic Council event "Improving  sanctions enforcement against Russia: The challenge of 2023"Register here: https://www.atlanticcouncil.org/event/improving-sanctions-enforcement-against-russia/ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Worst London air pollution in six years as home fires burnhttps://www.theguardian.com/environment/2023/jan/27/worst-london-air-pollution-in-six-years-as-home-fires-burn- wood is a really dirty burning fuel- its expensive to pay for heating, people turning to fires, but this is actually a really high emission fuelNatural Gas Shortages Hit China as Temperatures Plungehttps://www.nytimes.com/2023/01/25/business/china-natural-gas-shortages.html- gas shortages mean that people only get a few hours of heat a day because the utilities just turn it off- this happens in the US too! People don't realize that don't have a guarantee of service despite paying their bills- propane tank/generators can be a backupWhy gas prices are surging this monthhttps://www.cnn.com/2023/01/27/business/gas-prices-increase-inflation/index.html-  "Colorado’s sole refinery, the Suncor refinery outside of Denver, was disrupted by freezing temperatures. When the refinery tried to restart, it suffered a fire and equipment got damaged."- Only having 1 refirey is a problem- no longer receiving massive injections of emergency oil from the Strategic Petroleum Reserve.- inventories for winter are low- EU doesn't have good inventories and this will hurt Northeast because they usually get a lot of products from Europe.- $4 gasoline could come by March instead of May.- Will consumers continue to spend or will they pull back with gasoline prices high?- but how much would demand actually be impacted by recession?New York Gasoline Shortage Brews on Fallout From EU’s Russia Banhttps://www.bnnbloomberg.ca/new-york-gasoline-shortage-brews-on-fallout-from-eu-s-russia-ban-1.1876743German industry to pay 40% more for energy than pre-crisis - study sayshttps://www.reuters.com/business/energy/german-industry-pay-40-more-energy-than-pre-crisis-study-says-2023-01-30/- "German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia's invasion of Ukraine, a study by Allianz Trade"- The price increases will hit corporate profits across Europe by 1-1.5% and lead to lower investment- who is suffering more due to the Russia/Ukraine war - average consumer-wise. Are consumers in Russia or in the US suffering more inflationary impacts from the war?Analysis: India's rapid take-up of electric vehicles prompts rethink about long-term fuel needshttps://www.reuters.com/world/india/indias-ev-dawn-fans-expectations-fuel-demand-may-peak-early-2023-01-27/- question whether a rapid uptake in EVs initially is going to persist and going to translate to lower petroleum demand- also, the petroleum products tax - where will India get that revenue is everyone converts to EVs? will they transition it to power? how will they satisfy the demand for electricity. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Russian oil trade remains in ship-shape as the EU price cap has failed to stem Moscow's freight and insurance income, analyst sayshttps://markets.businessinsider.com/news/commodities/russian-oil-india-china-not-cheap-shipping-fees-kpler-analyst-2023-1- "Debunking number one, no one really knows the price of Russian oil"- Urals blend may be priced at $38/barrel (less than half price of Brent) but now Russia is selling all these other services to go along with it like insurance, shipping, etc. so they could be making $60+/barrel with all the other services rolled in.Yellen says setting price caps on Russian refined oil products 'complicated'https://www.reuters.com/business/energy/yellen-says-setting-price-caps-russian-refined-oil-products-complicated-2023-01-21/- "Western countries are working to structure price caps on Russian refined petroleum products to ensure continued flow of Russian diesel, but the markets are complicated and there is a chance things do not go to plan" - Multiple different products make it harder to implement a price cap, apparently- European Union diesel ban comes into effect Feb 5- Yellen thinks crude oil price cap is successful so far because price for Russian crude oil dropped and Russia says its revenue is down -- but is it really?- There are so many ways to get around the price cap.U.S. energy head warns Republicans oil bill would lift pump priceshttps://www.reuters.com/world/us/us-energy-chief-warns-republicans-that-oil-bill-would-raise-pump-prices-2023-01-18/- Is this bill even a threat? This is posturing. Biden will just veto the bill and Republicans don't have veto-proof majority to override it.- Doesn't make sense to put SPR releases under purview of Congress. Congress would be a terrible body to have approval authority over SPR releases.- President should have authority to make these decisionsWhite House Aims to Reflect the Environment in Economic Datahttps://www.nytimes.com/2023/01/20/business/economy/economic-statistics-climate-nature.html- Idea put forth at the WEF by John Kerry, so it's unlikely to go anywhereDr. Dean Foreman from API: Monthly Statistical Report AND Quarterly Industry Report- US consumed 25 million bpd of petroleum- Part going into materials and petrochemicals was up- EIA growth estimate up to 1 million bpd but IEA now estimating 1.9 million bpd of demand growth: different expectations for China's growth. Europeans anticipating shortage of natural gas and expectation they will replace this with diesel- EIA estimates growth from US primarily. But API says growth flatlining. No tailwind coming from DUCs. How will we get 1million bpd growth? ANd where is growth from other non-OPEC countries? Less clear when this oil will come online.- Less international drilling, more investment but costs are up. Despite weaker economic forecasts, oil demand is still strong- API data focused on why production has been held back. Comparison with natural gas. Nat gas production is at all time high, exceeding pre-pandemic levels. Why? Gas has been led by Louisnana and Texas, which are conducive to gas drilling. Oil has more headwinds. Colorado stifling, New Mexico, Wyoming, North Dakota - drilling is all weak compared to pre-pandemic. Federal moratorium is a big issue for NM, WY, ND. Inability to build intrastate pipelines is hitting oil production.- Appalachia should be the largest source of natgas in US but can't get Mountain Valley pipeline online even though it's mostly built! Finishing the pipeline would totally.- Marcellus area natgas is prices nearly a dollar less than Henry Hub for next year. Why? This is big discount and is impacting the economics of natgas development.- DUC issue is indicative of workforce limitations. limited completion crews so people making decision to keep completion crews on rigs that are operating because they might lose it?- DUCs are theoretically the cheapest way to get product to market. News from Permian - changing how they are drilling, reshuffling. Is it economic?- Distillate stocks increased for 3rd straight month. Are we in the clear? Concerns aren't totally alleviated but we are 33 days of supply as a nation (was 25 in October). Real question is how to get distillate to Northeast. Relatively warm winter has helped because more time to get diesel by rain and truck from midwest to northeast. Especially since imports from Europe are down.- US net exports (crude oil and refined products) record for December - EIA projections for exports think that US will have surplus in Q1 2023 despite huge exports every month in 2022. How does this work?- Fundamentally, the market is tight. US products are in demand, let's make sure we are supporting US production in ways that are consistent with the promises we've made to our allies.https://www.api.org/ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

China’s corn-based ethanol fuel threatens food security while crowding the market, state commentary warnshttps://www.scmp.com/economy/china-economy/article/3207013/chinas-corn-based-ethanol-fuel-threatens-food-security-while-crowding-market-state-commentary-warns#Echobox=1673879264- China can't feed its own people, and they are using corn for fuel- The US puts ethanol in gasoline to replace MBTE (found to cause cancer) but now puts more in its gasoline to replace petroleum - policy started during Bush Admin- What is going on in China? Why don't they just reduce the amount of ethanol in their gasoline?On gas stoves:- see for a good explanation - for a quick run down: Biden agenda, lithium mine, tribes, greens collide in Nevadahttps://www.nbc4i.com/news/politics/ap-politics/ap-bidens-agenda-lithium-mine-tribes-greens-collide-in-reno/- What's really green or not?- $700 million loan guarantee offered by Biden admin for this mine even though permits are being challenged in judicial systemSpecial Guest Kunal Patel from the Dallas Fed on the Q4 2022 Energy SurveyEllen's Investing.com Columnhttps://www.dallasfed.org/research/surveys/des/2022/2204#tab-report~ 200 oil and gas firms in 11th district (152 responses to survey)Main takeaways: - expansion of activity solid- costs continued to increase but some moderation in increases- supply chain delays continue to persist- employment demand in the field- uncertainty up amongst executives- Most executives think price of oil at end of 2023 will be in the $80 range (average $84/barrel)Capital expenditures: 2022 vs. 2023- firms are looking to increase capital expenditures- BUT there's also cost inflation, so much of the capital expenditure increases could just be due to cost inflation- expect small increase in activity, nothing too significant, but spending will go up.https://www.dallasfed.org/research/surveys/des/2022/2204#tab-questions- Will cost inflation be higher than last year? thinking is that is won't be as much of an increase.- How does this fit with the EIA forecast? Activity will increase. More firms are saying they are increasing production not declining but the increase is declining. Slower growth is the key word here.- EIA says 12.6 million bpd by end of 2023. Can the Permian hit that? On an annual basis we will produce more, but on a month to month basis we won't hit as high production levels (13 million bpd in 2019).- "Slowing growth" is the word for 2023?- But maybe slower growth isn't a bad thing? Activity will be higher in 2023 than in 2022. How long will our resources last? - Cost inflation makes it hard for firms to know how much they are going to spend this year. Supply chain disruptions are still having a major impact. Even if firms wanted to increase activity they couldn't because they don't have the parts.- Maturing asset base is listed as number 2 reason why growth isn't happening as fast. Are US assets closer to end of life cycle?- price volatility mentioned in comments "The volatility in commodity prices is creating bid–ask spreads to blow out on transactions. Fewer deals are to be had in this style of environment."- regulatory environment listed less this quarter- could there be a recession? this came up a lot- CEOs prediction for the price of oil at the end of the year is most impacted by what the price of oil was at the time they were asked for the prediction.- What price are you using for your budget question gets a much more conservative answer though CEOs are moving up the underlying price for their budgets.- "Leasing has increased and new drilling has increased."Q1 2023 Survey will be out at the end of March! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Oil rises on demand optimism as China borders reopenhttps://www.reuters.com/business/energy/oil-nudges-higher-after-china-opens-borders-lifts-fuel-demand-outlook-2023-01-09/- we are seeing back and forth with whether CHina's demand is going to surge or not- Saudi Arabia cuts its OSP to Asia - indicates they think that demand in China is soft- China issued a second batch of 2023 crude import quotas, Reuters says this makes the total for this year by 20% from the same time last year.- Likely to see a slow climb upwards in demandSaudi Arabia cuts oil prices for main market as demand slowshttps://gulfbusiness.com/saudi-arabia-cuts-oil-prices-for-main-market-as-demand-slows/Taliban and China firm agree Afghanistan oil extraction dealhttps://www.bbc.com/news/business-64183083- Amu Darya basin apparently has 87 million barrels. CHinese company will invest $150 million a year to extract it- Could be a tit for tat situation in which China develops oil for Taliban and then Taliban lets Chinese companies mine their rare earths which are actually more valuableEOG eyes flat Permian activity, tighter global oil supply in 2023https://www.reuters.com/business/energy/eog-resources-eyes-flat-permian-activity-2023-tighter-global-oil-supply-2023-01-06/- EOG CEO says that global oil supply will likely tighten this year- flat production, prices difficult to predict- Sheffield says that Saudi won't let Brent stay at $75 and they will cut to get prices higher. Oil prices: Predictions for 2023https://finance.yahoo.com/news/oil-prices-predictions-for-2023-164454199.htmlCiti: Brent $80, WTI $75JPMorgan: Brent $90OPIS: Brent $95-96, WTI $90Infrastructure Capital Advisors: $80-$100/barrelPioneer NR (Sheffiel) - base around $90 for Brent with highs up to $150Natural Gas Prices Are Coming Down. What to Expect for Energy Stocks. https://www.barrons.com/articles/natural-gas-prices-energy-stocks-51673027117- “The warmer-than-expected winter pulled forward the expected decline in natural gas price. Stocks could fall an additional 20% to 30% until they find a bottom,” Matt Portillo, head of research at Tudor, Pickering, Holt, told Barron’sUsing Up America’s Oil Reserve Was Easy. Refilling It Won’t Be.https://www.wsj.com/articles/using-up-americas-oil-reserve-was-easy-refilling-it-wont-be-11673220972- DOE wants to wait until WTI is below $70/barrel on a "consistent basis"- "A good buying window might be approaching if the administration wants to take it: WTI crude is trading around $74 a barrel today. Waiting around to sign future delivery contracts at the $70-a-barrel range could prove trickier."-"A DOE spokeswoman confirmed that the agency won’t be buying for the February delivery window."- "The idea is to use the fixed-price contracts as a carrot for U.S. oil producers to invest in production." -- is this incentive for any producer?- If a CEO agreed to this now, Ellen thinks it would be grounds to remove them.Tune in next week for Special Guest Kunal Patel from the Dallas Fed to discuss the latest Energy Survey This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to the newsletter WTI higher or lower than $73, Brent higher or lower than $77?Ellen-HigherRyan-says Lower (but really thinks higher)Biden adviser calls investor refusal to ramp up shale drilling ‘un-American’https://thehill.com/policy/energy-environment/3771025-biden-adviser-calls-investor-refusal-to-ramp-up-shale-drilling-un-american/“I think that the idea that financiers would tell companies in the United States not to increase production and to buy back shares and increase dividends when the profits are at all-time highs is outrageous,” Hochstein told the British newspaper.“It is not only un-American, it is so unfair to the American public,” he added. “You want to pay dividends, pay dividends. You want to pay shareholders, pay shareholders. You want to get bonuses, do that, too. You could do all of that and still invest more. We are asking you to increase production and seize the moment.” Real issues shale drillers face are higher costs for materials, products, labor, etc. unavailability of necessary things like steel parts. Is inflation un-American?Biden admin beating up on Exxon, Trump admin also beat up on oil companies. Depend on public ignorance. Saudi energy minister sees no clear results yet from Russia price caphttps://www.reuters.com/business/energy/saudi-energy-min-all-opec-members-participate-decision-making-2022-12-11/- curious timing between Russian oil sanctions and end of Zero-Covid policies in China. Is there a correlation between more Russian oil becoming available and demand rising in China- is is a national security issue for China to buy too much Russian oil? Probably not. National security is protecting CCP- Saudi oil minister is looking with caution at global economy following implementation of sanctions and price cap policy.- Also, "The impact on China's economy from easing Covid restrictions still "needs time",Federal data: Kansas oil spill biggest in Keystone historyhttps://apnews.com/article/oil-spills-business-texas-kansas-us-environmental-protection-agency-eda391fc0924b34a08ff840615a7bc58Rush to electric vehicles may be an expensive mistake, say climate strategistshttps://www.cbc.ca/news/business/ev-transition-column-don-pittis-1.6667698Special Guest Patrick DeHaan, aka @GasBuddyGuy, Head of Petroleum Analysis at GasBuddyWhat's going on with diesel prices? - Has been the laggard this year. - Myriad of challenges this year combined with Russia/Ukraine challenges have made it problematic- Diesel prices soared in October when inventories were low, finally under $5/gallon now.- Diesel prices have eclipsed drop in gasoline prices per gallon- Both on the supply side and the demand side- Refineries had extensive turnaround this autumn. Mid-Sept through Mid-Nov when refineries do maintenance.- Coincided with Europe trying to build diesel storage, made for a tight situation though not as bad as the media played it.- Refinery utilization has been very high - unseasonably high numbers.- 25 days of distillate has jumped to 31 days meaning now we have $4.89/gallon- Cold spell coming up in US. CPC predicting colder than normal weather - pressure on heating oil. As a result of anticipated cold weather, wholesale price of diesel is going up. That will justify refiners keeping utilization high. Will help keep gasoline production up.- Refineries will continue to have above normal utilization but only in low 90s, probably- Europe has lost 6% of its refining capacity due to Covid. US only lost 5%. Market for U.S. products in Europe is good. - "The door is wide open for US refiners to fill that void."- Northeast has a population 10 times that of the Rockies but has the same refining capacity as the Rockies.- This why US needs more refining capacity. There is a huge need for refining capacity. - Closure of Philadelphia refinery was huge. It produced 1/3 of a million barrels a day. - Governments trying to incentivize bio-diesel. Tremendous incentives from government to convert but capacity is lower than traditional petroleum products. Conversions are happening at a bad time. Refining hasn't been lucrative until this year.Check out https://open.substack.com/pub/gasbuddyguy/p/gas-price-decline-hits-five-weeks? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com

Subscribe to the newsletterOil prices rose as much as 2% on hopes of China’s reopening and as OPEC+ maintains output cut targetshttps://www.cnbc.com/2022/12/05/oil-prices-rise-as-much-as-2percent-on-signs-of-china-covid-easing.html- OPEC decided production quotas from Oct 5 continued through end of 2023, next meeting June 4, 2023- Meetings of JMMC only 2 months- OPEC might feel like oil market is more stable? Or that it will take at least 2 months for market to figure out how its going to work post-Russia oil sanctions- Does Saudi Arabia have an idea of what's to come in China for next several months, Covid-wise? Perhaps they have a band of oil consumption that they are relying on with upper and lower limits.- https://www.opec.org/opec_web/en/press_room/7060.htmChina set to ease COVID curbs further as markets cheer change of tackhttps://www.reuters.com/world/china/covid-confusion-china-authorities-row-back-curbs-2022-12-05/- The West isn't used to be able to protests in China. They are actually far more frequent than we realize. It's really more like a negotiation between local labor "union" and CCP. This happens a lot and the protests we see might not really be about Covid lockdowns and this could be a front.- according to some sources, "a new set of nationwide rules is due to be announced soon."- how will this impact oil demand? OPEC doesn't seem think so, or its happy to just let Russia fill that demand?India to continue buying Russian oil, ministry source sayshttps://www.reuters.com/business/energy/india-continue-buying-russian-oil-ministry-source-says-2022-12-02/- "There is a lot of opacity in term of what the rules of the game are... There are always options to buy Russian oil,"- India used to not buy ANY Russian oil. Now it is a huge customer. India loves the discounts.Ghana paying for oil in Gold because then its not impacted by exchange rateshttps://www.reuters.com/markets/commodities/ghana-working-plan-buy-oil-with-gold-rather-than-usd-vp-2022-11-24/G7 price cap on Russian oil kicks in, Russia will only sell at market pricehttps://www.reuters.com/business/energy/g7-price-cap-russian-oil-kicks-russia-will-only-sell-market-price-2022-12-05/- sales to Europe going down, but that oil will go elsewhere- Russian might not make as money but it will Russia’s European Crude Sales Collapse Ahead of Sanctionshttps://www.bnnbloomberg.ca/russia-s-european-crude-sales-collapse-ahead-of-sanctions-1.1855011Venezuela and Chevron sign oil contract in Caracashttps://www.cnn.com/2022/12/02/americas/venezuela-chevron-oil-intl-latam/index.html- 6 month lease for Chevron to export Venezuelan oil to the US to recoup its profits- this signing was just an official allowing of Chevron to come back to Venezuela - doesn't signify more investmentCheck out this podcast about Washington Ivy Advisors - new energy advocacy firm. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com