Have crude oil prices bottomed out?
On one hand:
- Recession is a hot topic in the US and demand seems to be falling - the Chinese economy seems to be sputtering
- Fire in major US refinery impacts short-term demand for crude
While on the other:
- US Strategic Reserves have fallen 27% since the 2021 end
- Supply constraints still holds
- OPEC+ has resisted increasing production
27% decline in US Strategic Petroleum Reserve Stocks since Biden issued order for its use last November.— Fla_Buckeye (@fla_buckeye) August 26, 2022
Next update on Aug 31st. #Biden #GasPrices #Gas #Oil #oilandgas pic.twitter.com/OJLFF0q7FS
Are the US domestic natural gas prices going to rise further?
As US domestic natural gas prices hover around $9/MMBtu, the key question is - are the US domestic natural gas prices going to rise further?
More #NatGas #LNG will be needed in Europe. Delays in the restart of several of #EDF #Nuclear power reactors in FR to at least mid-Nov delaying in an adjustment of outage schedules, further delaying 5.2 GW of #Electricity capacity. Thx @forrest_crellin @EckertVera #OOTT pic.twitter.com/x9CPJP3dbO— Dan Tsubouchi (@Energy_Tidbits) August 25, 2022
One one hand:
- The LNG export opportunity continues to be lucrative
- Supply pressures in EU increase with erratic Russian supplies - Heatwaves are increasing the demand for cooling and in turn gas powered generation
- Drought and drop in river water levels brings down hydro generation
- There has been a delay in the re-start of nuclear generators (tentatively November)
- The EU needs to plan for a harsh winter while Russia might completely shut down gas supplies
While on the other hand:
- Countries such as Germany are reaching their natural gas reserve targets for the coming winter (they are 80% there)
- Recession continues to impact demand
- US LNG export facilities facing a delayed start post Freeport fire
Read more at: Natural Gas
Geopolitics and War
Russia and Iran to create a Natural Gas OPEC
Last month, Gazprom and the National Iranian Oil Company (NIOC) signed a $40 billion Memorandum of Understanding (MoU). The MoU has been hailed as a move that will enable Iran and Russia to implement their long-standing plan of becoming the major players in a global cartel for gas suppliers, similar to the Organization of the Petroleum Exporting Countries (OPEC) for oil suppliers.
Russia and Iran, the number one and two world's largest gas reserves, are best placed to coordinate the reserves and control prices.
Russia has around 48 trillion cubic meters of gas reserves, while Iran possesses 38 trillion cubic meters.
The Russia-Iran partnership aims to have as much control as possible over the two main elements in the global supply chain matrix – over-the-land gas supply via pipeline and maritime supplies via ships in LNG.
EU is making an emergency intervention in its electricity markets
The EU is preparing for an emergency intervention into its electricity markets which will provide necessary structural reforms which can assist with getting a hold on tearaway electricity prices.
In the UK, an 80% hike in power price caps was announced. According to an analyst, over half of the British population plunged into fuel poverty in a month's time. The scenario in EU countries is not very different.
British households face soaring energy bills this winter, as regulator Ofgem announced a price-cap hike of 80%. Like elsewhere in Europe, it threatens to push many into fuel poverty https://t.co/RJUTDZ78Ll pic.twitter.com/yS1HT3v9OV— Reuters (@Reuters) August 26, 2022
US Army Veterans object to new LNG facilities in the US Gulf region
US Army veterans have joined local politicians in objecting to setting up LNG export facilities in the US Gulf region citing that the region is battered by incessant and destructive hurricanes.
The #Army #Veteran joined local #leaders and #activists to demand that state and #federal #leaders halt the #construction of more #liquified #naturalgas (LNG) #export terminals in the #Gulf region which is being repeatedly battered by #destructive #hurricanes.— Salina Reddy (@ReddySalina) August 25, 2022
Supply and Demand
Russia surpasses Saudi to become India's second-largest oil supplier
Since the start of the Ukraine war, Russia has surpassed Saudi to become India's second-largest oil supplier.
This move has received severe criticism from several sources citing this as "blood oil", which continues to provide Russia with revenue that can be spent on its war supplies.
Other factions, of course including India's own, have refuted this, citing that India is still quite low in the ranking of oil and natural gas importers from Russia, and the leaders in this list continue to include EU countries and the US, despite the ongoing sanctions against Russia; and stating the argument that India is only doing this for its own energy security and is fully justified in doing so.
#Indian imports of #Russian oil by type of oil (heavy vs light crude). #oott#spx #forex $eurusd $spx pic.twitter.com/BIyJJImh7n— KeyEventRisk℠ (@keyeventrisk) August 31, 2022
Japan reverts to nuclear-generated power
Japan had put a halt to nuclear power generation post the Fukushima disaster. But now it has no option but to revert to nuclear power, as global fuel prices soar.
👇🇯🇵 "Japan turns back to nuclear power in significant policy shift as fuel prices soar" #EnergyCrunch #OilAndGas #NuclearPower #Japan https://t.co/YaOmDFmqz5— 𝑪𝒉𝒓𝒊𝒔 𝑻𝒉𝒐𝒓𝒏𝒆® (@thorchrs) August 25, 2022
Weather and Climate Change
Iran's nuclear program hits climate change snag
The latest challenge to Iran's controversial nuclear program is not world geopolitics, but climate change
Global Warming has led to a rise in water temperatures in the Persian Gulf, water that is used as a coolant for nuclear reactor cores
So ironically, though climate change increases the demand for power, has also led to a practical challenge in nuclear power generation
The latest challenge to #Iran's controversial #nuclear program isn't politics — it's #GlobalWarming. Rising #Gulf #watertemperatures cut #power output, official says. #Water is used to cool #nuclearreactors in a critical part of their operation.https://t.co/dQ25N4U6jX @business— Catherine Hughes (@Cmh176Hughes) August 31, 2022
Devastating floods in Pakistan contrast to droughts elsewhere
Pakistan has been inundated with devastating record-breaking floods.
The floods have led to widespread damage, a third of the country is submerged, as well as human losses, and the death toll has surpassed 1,000 figures. Rescue operations are underway.
The floods come as a new shock to an already economically stressed country and populace, which is now exposed to further escalation in food prices and supply shortages.
Global aid arrives as these cataclysmic floods overwhelm Pakistan.
Pakistan's floods could be seen as an urgent call to action for the world to invest in Climate Change adaptation.
Global aid arriving as cataclysmic floods overwhelm Pakistan https://t.co/4SKaCnbzAz pic.twitter.com/mrLvrh4zNb— Reuters (@Reuters) August 31, 2022
Pakistan's catastrophic floods— Press TV (@PressTV) August 31, 2022
Water fills the streets and houses in the Pakistani city of Jaffarabad after relentless monsoon rains have submerged a third of the country, claiming at least 1,160 lives since June. pic.twitter.com/f14F9tgAea