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WTI oil prices have given up nearly all their gains since Russia invaded Ukraine, falling roughly 9.5% over the course of the week amid fears oil demand is collapsing.
Some oil pundits are now claiming that the Biden administration has been fabricating low gasoline demand data in order to drag prices lower.
While Gasbuddy claims there was a 2% rise in gasoline demand last week, the EIA reported a 7.6% drop in demand.

WTI crude oil prices fell to their lowest point since early February on Thursday, giving up virtually all gains since Russia invaded Ukraine. WTI crude for September delivery tumbled -1.5% to close at $89.26/bbl while Brent crude for October delivery fell -2.1% to $94.71/bbl. WTI crude has lost ~9.5% over the course of the week, marking the largest one-week percentage decline since April amid growing fears that oil demand will collapse when western nations descend into a full-blown recession.

While oil producers are certainly beginning to feel the heat, it’s refiners like Valero Energy (NYSE: VLO), Marathon Petroleum Corp.(NYSE: MPC), and Phillips 66 (NYSE: PSX) who have been hardest hit by the pullback thanks to a sharp decline in their refining margins aka crack spreads.

For months, refiners have been enjoying historically high refining margins, with the profit from making a barrel of gasoil, the building block of diesel and jet kerosene, hitting a record $68.69 in June at a typical Singapore refinery. The margin later settled in the high 30s a few weeks later, a level still nearly four times higher than the $11.83 at the end of last year, and some 550% above the profit margin at the same time in 2021.

…click on the above link to read the rest of the article…

Hezbollah Threatens Israel With War Over Disputed Gas Field

August 2, 2022

Hezbollah Threatens Israel With War Over Disputed Gas Field

Lebanon’s armed Hezbollah group threatened Israel that drilling at the Karish gas field could result in war.
Israel and Lebanon are in a years-long dispute over the demarcation of their territorial waters in the Mediterranean.
Israel has already warned early on that any damage to the drilling rig in Karish will result in an immediate reaction.

Lebanon’s armed Hezbollah group warned Israel on Sunday against drilling at an offshore gas field, renewing a threat that it could escalate the offshore border demarcation dispute to a war.

Hezbollah, backed by Iran, aired a video on its Al-Manar television channel, showing drone footage of Israeli barges at the gas field and their coordinates. The video ends with footage of a rocket with the words “within range” in Arabic and Hebrew. The text on the video message opens with “Playing with time is useless,” also in both languages.

Israel and Lebanon, which do not have diplomatic relations, are in a years-long dispute over the demarcation of their territorial waters in the Mediterranean.

The dispute escalated this summer after UK’s Energean, which has been awarded the right to drill at the offshore Karish field, arrived on the site with a rig, prompting an immediate reaction from Beirut. The Lebanese president and the caretaker prime minister of the country accused Israel of violating Lebanon’s sovereignty.

Karish is the focus of the rift. According to Israel, Karish lies in its territorial waters. According to Lebanon, it falls within a triangle of contested waters because the two cannot agree where exactly the border passes.

Israel has already warned early on that any damage to the drilling rig in Karish—like attacks on any gas drilling rigs in its waters—will be construed as an attack on the state, implying there would be an immediate reaction.

…click on the above link to read the rest of the article…

Gas Levy Could Triple Household Heating Bills In Germany

July 30, 2022

Gas Levy Could Triple Household Heating Bills In Germany

Germany plans to introduce a levy for all its gas consumers beginning in October as the government looks to avoid a wave of collapsing gas-importing and gas-trading companies amid record-high natural gas prices, a new bill seen by Reuters showed on Thursday.

Russia is further reducing flows via Nord Stream this week, to just 20% of the pipeline’s capacity, days after restarting the link at 40% capacity after regular maintenance.

The German government has already intervened to rescue energy group Uniper, Russia’s single largest gas buyer in Germany. Uniper—and many other German gas traders and suppliers—have been reeling from reduced Russian supply and soaring prices of non-Russian gas. Germany and Uniper agreed last week on a $15 billion bailout package, including the German government taking a 30-percent stake in the company and making more liquidity and credit lines available to the group.

Under the plans of the government, all consumers of gas, including households, will have to pay an additional levy, which will go to support Germany’s gas importing companies, which struggle with a lack of Russian gas and sky-high prices of non-Russian alternatives. The details of the bill are set to be announced next month.

Households and industrial consumers are expected to pay the levy through September 2024, according to the draft Reuters has seen.

“One doesn’t know exactly how much (gas) will cost in November, but the bitter news is that it’s definitely a few hundred euros per household,” German Economy Minister Robert Habeck was quoted by Reuters as saying on Thursday.

Marcel Fratzscher, president of DIW, the German Institute for Economic Research, told Düsseldorf’s Rheinischen Post newspaper that German households should prepare for at least tripled costs of heating on gas. The levy should be accompanied by a relief package for lower-income households, otherwise the new charge could lead to a “social catastrophe,” Fratzscher added.

IEA Chief: Europe Must Cut Gas Usage 20% To Survive Winter

July 22, 2022

IEA Chief: Europe Must Cut Gas Usage 20% To Survive Winter

After calling on all member states to reduce gas consumption by 15% in the face of the threat of a complete Russian gas cutoff, the IEA says the European Union will need to cut even more in order to get through the winter.

“Even if there is no single accident… #Europe still needs to reduce its gas consumption about 20% compared to today in order to have safe and normal winter months,” IEA chief Fatih Birol said, issuing what he called a “red alert” for energy markets.

The short-term issue with the Nord Stream 1 pipeline may have been resolved, Birol told CNN, but “it’s too early to be happy about this”.

The amount Europe is receiving now from Russia is only about one-third of what it was receiving prior to the force majeure, and the IEA chief warned that even that reduced flow “can be cut anytime”.

After a 10-day pause for regular maintenance, Russian gas flows via Nord Stream resumed on Thursday morning, with orders for gas set at around 40% of Nord Stream’s capacity, the level from before the maintenance after Russia slashed flows in mid-June. Flows early on Thursday were at around 21.5 GWh, compared to 30GWh prior to the start of maintenance on July 11th, and compared to 70 GWh before Russia reduced supplies by 60% on June 13th.

On Wednesday, the European Commission unveiled measures for the bloc to conserve gas to pre-empt a Russian cutoff, asking member states to reduce consumption by 15% until next spring.

According to Birol, this won’t be enough to ensure a smooth winter for Europe, and there is no alternative to consumption reductions.

…click on the above link to read the rest of the article…

Refinery Shuts Down Due To Lack Of Crude

July 19, 2022

Refinery Shuts Down Due To Lack Of Crude

A South African refinery has shut down operations and declared force majeure on the supply of petroleum products due to a delay in the shipment of crude, which highlights the fact that the physical market for crude is tight these days despite a slump in paper-traded oil futures.

Sasol, the biggest fuel producer in South Africa, was forced to declare force majeure on refined product deliveries because of delays in the crude oil supplied to its 108,000 barrels per day (bpd) refinery Natref, a company spokesperson told South Africa-based financial news outlet Fin24 on Saturday.

“These delays have impacted availability of crude oil feedstock for processing at Natref, which necessitates the shutdown of its Natref refinery,” the spokesperson said.

“In the circumstances, Sasol Oil will not be in a position to fully meet its commitments on the supply of all petroleum products from July 2022,” said the company, adding that it hopes the issue would be resolved soon and the refinery could resume production at full capacity by the end of this month.

The stoppage at Sasol’s Natref refinery now means that South Africa’s entire oil refining capacity is currently out of service, according to Bloomberg’s estimates. Other refineries have closed down production since COVID erupted, either because they would be converted to terminals or because of operational issues. Only Sasol’s synthetic fuel output using coal as a feedstock, of which South Africa has huge amounts, remains fully operational.

…click on the above link to read the rest of the article…

Is Saudi Arabia Exaggerating Its Oil Production Potential?

July 5, 2022

Is Saudi Arabia Exaggerating Its Oil Production Potential?

For years, Saudi Arabia has made some pretty hefty claims about its oil potential.
It is becoming increasingly clear, however, that the Kingdom may be stretching the truth a little too far.
Analysts are now beginning to doubt that Saudi Arabia even has the reserves it says it has.

For many years now, Saudi Arabia has been wildly exaggerating every metric connected to its oil business, from how much crude it can produce to its level of reserves and everything in between, as analyzed in depth in my first book on the oil sector in 2015 and the latest one in 2021. Why does it lie so much and so often about these figures? Because without the power it has in the world directly associated with its crude oil production, spare capacity, and reserves it has no real power at all, so enormously exaggerating each of these figures is geared towards puffing itself up in terms of its geopolitical importance. The problem Saudi Arabia has right now, however, is that the U.S. and all other developed market countries whose economies are suffering under the weight of ongoing high oil prices are pressuring Riyadh to deliver on these claims, in order to bring these oil prices down. If Saudi Arabia had not been lying all these years about the amount of oil it can produce then it will not have a problem, but it has been, so it does.

To the figures themselves, then, and firstly, Saudi Arabia’s crude oil reserves figures. At the beginning of 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels, but only a year later, and without the discovery of any major new oil fields, the official reserves estimate had somehow increased by 51.2 percent, to 257 billion barrels…

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France Sees Nuclear Energy Output Plummet At The Worst Possible Moment

July 3, 2022

France Sees Nuclear Energy Output Plummet At The Worst Possible Moment

France, the European Union’s leader in nuclear energy, is seeing a massive decline in output.
Though it has been relatively unfazed by the bloc’s ongoing energy crisis, declining nuclear production could pose a significant problem in the coming months.
The collapse of French nuclear power generation and Putin’s retaliatory cutback on energy exports to Europe could be disastrous for the continent.

France has long been one of the world’s greatest champions of nuclear energy. France leads the European Union in nuclear production, with the most productive reactors in the bloc, and relies on nuclear power for a larger share of its energy mix than any other country in the world. It makes sense that France should lead the charge for nuclear energy development as they have long been the global poster child for safe and reliable nuclear energy – until now.

A recent flurry of unexpected issues at the Électricité de France (EDF), the state nuclear power operator representing the largest nuclear fleet in Europe, has caused French nuclear energy output to tumble to its lowest levels in 30 years. Around half of the EDF’s massive nuclear fleet has been taken offline, delivering a massive blow to the EU’s energy independence and security in the midst of a worldwide energy crisis.

France has become increasingly reliant on nuclear power in recent years. French President Emmanuel Macron has given nuclear energy an even bigger boost in his time in office. Indeed, in February, before the Russian invasion of Ukraine, he announced a €52 billion plan to revitalize the country’s “nuclear adventure.” He has also fought for the inclusion of the emissions-free power source as a “green investment” in the nomenclature of the European Union as the continent moves toward establishing its green energy budget for the coming years.

…click on the above link to read the rest of the article…

Oil Likely To Hit $200: SEB Group

June 30, 2022

Oil Likely To Hit $200: SEB Group

Oil prices are likely to soar past $200 per barrel if G7 manages to cap the price of Russian crude oil, according to chief commodities analyst at Swedish bank SEB Group.

Bjarne Schieldrop, SEB analyst, said on Wednesday in no uncertain terms that the G7’s price capping proposal was a “recipe for disaster” given the current stress that the oil market is under.

The G7 leaders agreed on Tuesday to study ways to cap the price of Russian oil sold internationally and are seeking support among “like-minded” nations. It was one of the critical items to be discussed at this week’s G7 meeting as the group tries to find creative ways to lower energy prices for themselves and maintain adequate crude supplies from Russia—while simultaneously punishing Russia in what many see as an impossible task.

U.S. Treasury Secretary Janet Yellen continued to put pressure on European countries to support a price cap.

According to Schieldrop, the plan seems “neat on paper, but it sounds like a recipe for disaster right now,” given the strong demand for crude oil and low supplies that so far given Russia the upper hand in the market. Russia could, the analyst argued, choose not to sell the oil at a capped price—a decision that could lead to Russia’s production falling by as much as 2 million barrels per day.

Russia’s crude and condensate production rose in June by 5% to 10.7 million bpd, according to Kommersant sources—a figure that includes between 800,000 and 900,000 bpd of condensate, which is not included in the OPEC+ agreement. But Russia’s oil exports have slipped 3.3% in June with the rise of domestic refining demand.

Russian Deputy Prime Minister Alexander Novak said that Russia would raise its production again in July.

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

June 30, 2022

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

In the first quarter of next year, the countries of the European Union will have to cut their usage of natural gas by up to 30% in preparation for a complete stoppage of Russian gas flows, according to the International Energy Agency (IEA).

IEA Director Fatih Birol on Tuesday said that “a complete cut-off of Russian gas supplies to Europe could result in storage fill levels being well below average ahead of the winter, leaving the EU in a very vulnerable position.”

“In the current context, I wouldn’t exclude a complete cut-off of gas exports to Europe from Russia,” he stated.

Citing technical issues related to the Nord Stream pipeline, Russia earlier in June cut flows of gas to Germany by 60%.

Plans to boost natural gas storage filling in Europe would not withstand a full Russian cut-off if it were to happen between now and the fourth quarter of this year.

By the first of November, the European Union should have its gas storage filled to 90%; however, a complete Russian cut-off would reduce that significantly, leading to another surge in natural gas prices, which have already tripled year-on-year, according to Bloomberg, citing figures from the ICE Endex.

European natural gas prices remained steady from Monday to Tuesday, in part due to a resumption of the flow of Russian gas through the TurkStream pipeline, which was undergoing maintenance. The pipeline has a 31.5-billion-cubic-meter capacity, Bloomberg reports.

On Tuesday, Dutch front-month gas futures dropped 0.2% at the close.

Also steadying natural gas prices in Europe on Tuesday were new estimations for demand, which could see a drop due to sunnier weather that can better support solar energy.

…click on the above link to read the rest of the article…

IEA: Europe Should Prepare For Complete Russian Gas Shutdown

June 23, 2022

IEA: Europe Should Prepare For Complete Russian Gas Shutdown

IEA chief Birol said that Europe should prepare for a complete suspension of Russian gas supplies.
Birol advised European governments to keep nuclear power stations running and take other contingency measures.
Germany, Austria, and the Netherlands are restarting coal power plants.

Europe should prepare for a complete suspension of Russian natural gas deliveries, the head of the International Energy Agency told the Financial Times in an interview.

“Europe should be ready in case Russian gas is completely cut off,” Fatin Birol told the FT. “The nearer we are coming to winter, the more we understand Russia’s intentions,” he added. “I believe the cuts are geared towards avoiding Europe filling storage, and increasing Russia’s leverage in the winter months.”

As a means of countering the worst effects of such a scenario, Birol advised European governments to keep nuclear power stations running and take other contingency measures, too. These other contingency measures seem to focus on demand.

“I believe there will be more and deeper demand measures [taken by governments in Europe] as winter approaches,” Birol told the FT, adding gas rationing was a distinct possibility in case of further cuts to Russian gas supplies.

In the past three months, Russia has cut off supply to several European countries that refused to pay for gas in rubles. It has also substantially reduced the flow along the Nord Stream, effectively cutting off supply to France and reducing flows to Germany by some 60 percent.

Gazprom and its equipment maintenance service provider Siemens Energy have blamed the reduction on a turbine delivery delay resulting from new Canadian sanctions against Moscow. Germany has blamed Gazprom.

…click on the above link to read the rest of the article…

Record UK Gasoline Prices See Biggest Daily Surge In 17 Years

June 9, 2022

Record UK Gasoline Prices See Biggest Daily Surge In 17 Years

UK gasoline prices continue to set records, with the daily price jump between Monday and Tuesday at its highest in 17 years, RAC, the UK’s longest-serving motoring organization, says.

“The average price of petrol endured its biggest daily jump in 17 years by going more than 2p (2.23p) a litre on Tuesday (7 June), taking it to nearly 181p a litre (180.73p),” RAC fuel spokesperson Simon Williams said as carried by Auto Express.

Gasoline prices were at a record high of $2.27 (£1.81) per liter, or around $8.60 per U.S. gallon, on Tuesday, according to data from RAC Fuel Watch, which expects prices to continue rising in the near term.

“These are unprecedented times in terms of the accelerating cost of forecourt fuel. Sadly, it seems we are still some way from the peak,” RAC’s Williams said.

A full tank of gasoline for a typical family car has now jumped to $125 (£99.40), up from $120 (£95.16) at the start of last week. The £100 per full tank mark could be reached as soon as on Thursday, analysts say.

“With analysts predicting that oil will average $135 a barrel for the rest of this year drivers need to brace themselves for average fuel prices rocketing to £2 a litre which would mean a fill-up would rise to an unbelievable £110,” RAC said earlier this week.

The new record highs in gasoline prices add to the cost-of-living crisis in the UK where energy bills are set to surge this autumn.

Gasoline prices are soaring in the United States, too. The average gasoline price in America was $4.955 a gallon on June 8, up by a massive $0.30 jump in one week.

Gasoline prices set a new record for the 10th straight day and Americans are now spending over $700 million more per day on gasoline versus a year ago, Patrick De Haan, head of petroleum analysis for fuel-savings app GasBuddy, said on Wednesday.

BofA: Sharp Decline In Russian Exports Could Send Oil Above $150

May 31, 2022

BofA: Sharp Decline In Russian Exports Could Send Oil Above $150

Analysts: Asian buyers are unlikely to be able to absorb all the Russian oil unwanted in the West.
There is a distinct possibility of a sharp drop in Russian oil exports.
BofA: A sharp contraction in Russian oil exports could push Brent well past $150/bbl.

Brent Crude prices could jump to well above $150 per barrel if Russia’s oil exports fall off a cliff in the coming months, according to Bank of America.

“With our $120/bbl Brent target now in sight, we believe that a sharp contraction in Russian oil exports could …. push Brent well past $150/bbl,” analysts at Bank of America (BofA) Global Research wrote in a research note on Friday carried by Reuters.

In a base-case scenario, Bank of America expects Brent Crude prices to average $104.48 a barrel this year and $100 a barrel in 2023.

Early on Friday, Brent Crude was trading at over $117 per barrel, the highest in two months, amid tight fuel supplies globally and bullish prospects of demand with the U.S. driving season beginning with the Memorial Day holiday weekend and Shanghai in China set for gradual reopening from June 1st.

There is a distinct possibility of a sharp drop in Russian oil exports as the EU continues to seek consensus and persuade Hungary to drop its opposition to a Russian oil embargo. Reports have it that some EU member states are inclined to accept a temporary exemption of Russian pipeline supply to central Europe via the Druzhba pipeline from the embargo as a bargaining chip to convince Hungary to agree to a ban on imports of Russian seaborne oil.

…click on the above link to read the rest of the article…

Summer Heat Could Wreak Havoc On Texas’ Grid

May 26, 2022

Summer Heat Could Wreak Havoc On Texas’ Grid

Experts warn that Texans should be prepared for another massive grid failure.
While Texas has made some progress in increasing surplus energy flow to the grid, high demand may overwhelm embattled ERCOT.
Despite warnings, ERCOT remains confident that it can manage the increase in energy demand this summer.

Texans need to be prepared for the grid to fail. Again. A new bombshell report from the North American Electric Reliability Corporation (NERC) shows that while Texas has made some progress in increasing surplus energy flow to the grid for times of heightened demand, power is going to be extremely tight this summer, and Texans should prepare to expect rolling blackouts during the hottest months of the year.

The recently released 2022 Summer Reliability Assessment found that Texas, along with parts of California and the Southwest, are in an “elevated risk category of energy emergencies.” The extra pressure on the grid comes from a combination of abnormally high temperatures and doubt conditions, poor upkeep and maintenance of generators across Texas, persistent supply chain issues, and increasing demand. NERC also sighted cyber threats, wildfires, and a shortage of coal generation inputs as major issues that they will be monitoring as the days grow hotter and sufficient energy supply to the grid becomes more vulnerable.

While Texas still lacks the energy capacity necessary to meet demand at its highest points during extreme weather conditions, NERC acknowledges that Texas has made concerted efforts to mitigate the issue. The Lone Star State has increased its anticipated reserve margins, largely thanks to the increased installation of solar and wind power capacity. Overall, Texas’ renewable energy capacity is 4,100 megawatts higher than last year. This increase in solar and wind capacity does not come without its own challenges, however…

…click on the above link to read the rest of the article…

Citi: Soaring Energy Bills Raise Chances Of Windfall Taxes In Europe

May 24, 2022

Citi: Soaring Energy Bills Raise Chances Of Windfall Taxes In Europe

Gas and electricity bills in Europe could jump to 4.5 percent of household disposable income in 2023.
Rising utility bills raise pressure on politicians to implement windfall tax.
Rising energy commodity prices weigh most on Eastern European countries.

The higher the energy bills in Europe become, the higher the chances are for a windfall tax on energy companies and utilities, as governments will be forced to ease the growing pressure on household finances, Citigroup says.

Europe as a whole could see a utility bill rise of over 3 percent of gross domestic product (GDP) through 2024, Citigroup Global Markets analysts Piotr Dzieciolowski, Jenny Ping, and Antonella Bianchessi wrote in a note on Monday carried by Bloomberg.

Gas and electricity bills in Europe could jump to 4.5 percent of household disposable income in 2023, up from 3.5 percent in 2021. The utility bills could further rise to 4.8 percent of household disposable income in 2024, according to Citi analysts.

In countries in Eastern Europe, where the prices of commodities account for a larger share of bills, the disposable income is likely to shrink the most, the investment bank says.

Per a Citi survey, one-quarter of respondents across Europe aged 18 to 29 say they would not be able to pay their bills on time if bills rose by one-tenth.

Bills have been surging in Europe since the autumn of 2021 when the natural gas shortage led to higher gas and electricity prices. The Russian invasion of Ukraine further strained household income as utility bills surged with the skyrocketing commodity prices.

Spain and Portugal set a cap on the price of gas used for generating electricity, after the EU allowed them to do so, acknowledging their exceptional energy requirements.

…click on the above link to read the rest of the article…

Russia’s Oil Output Is Plummeting, And It May Never Recover

May 6, 2022

Russia’s Oil Output Is Plummeting, And It May Never Recover

Russia’s oil output is plummeting, and the decline is expected to worsen in May.
OPEC recently warned that markets could see the loss of more than 7 million barrels per day of Russian oil and other liquids exports.
With many global producers constrained in their capacity to boost production fast, oil prices are likely to remain elevated for the foreseeable future.

Russian oil production is falling. In March, it shed half a million bpd, which by the end of April reached a full 1 million bpd, according to BP’s CEO, Bernard Looney. And this may well grow to 2 million bpd this month. These barrels may not be returning to the market any time soon. As the European Union targeted a barrage of sanctions on Moscow, oil was excluded as a direct target but financial and maritime sanctions affected the industry. Now, the EU is proposing a full oil embargo, save for a handful of member states too dependent on Russian oil to comply, and this will mean a further loss of barrels at a time when the global oil market is already stretched thin.

“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions,” the secretary-general of OPEC, Mohammed Barkindo, told the European Union last month.

This does not appear to have made any lasting impression on the decision-makers in Brussels, who are moving full steam ahead with the oil embargo. Meanwhile, alternative suppliers would struggle to fill the void left by Russian oil.

…click on the above link to read the rest of the article…

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