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Predicting oil—or, apparently, gas—prices is a notoriously uncertain business
Over the longer term, predicting oil prices becomes even more challenging
But besides crazy bets on high oil prices in the near future, there are other signs that the demise of fossil fuels has been greatly exaggerated

In the mind of many a news consumer, oil is on its way out. So is coal. So is gas, although that one might stick around for a little longer. We are, after all, moving into a new era of clean energy, and while it will take us some time to get there, it’s our only option for a future. And fossil fuels have no place in that future.

The latest oil, gas, and coal price rally, therefore, must have come as a shock to that hypothetical news consumer. It turns out, this rally said, that news does not always reflect reality. Neither do oil and gas price forecasts. Remember when there was a gas glut, as recently as last year? Everyone said it would persist, keeping prices low. But it didn’t. The glut ended quite suddenly this year.

Predicting oil—or, apparently, gas—prices is a notoriously uncertain business. This, however, is not stopping hundreds if not thousands of people from doing it on a daily basis, with varying degrees of success. Right now, most forecasters seem to expect prices to continue rising because there are simply too many factors working to support them.

Over the longer term, predicting oil prices becomes even more challenging. Right now, it is especially challenging because few forecasters appear to have anticipated the current rally, and now a flurry of revisions are being made, according to a New York Times report…

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

Coal Generation In UK Jumps As Wind Speed Drops

October 17, 2021

Coal Generation In UK Jumps As Wind Speed Drops

Coal met some 3 percent of the UK’s electricity demand on Friday morning, reaching its highest level of Britain’s power generation in one month, amid lower wind speeds this week and an outage at a gas-powered plant, Bloomberg reports.

The last time the UK generated 3 percent of its electricity from coal was in early September when low wind generation reduced renewable power supply and triggered the massive spikes in UK wholesale electricity prices.

Utility Uniper fired up its coal-powered plant in Ratcliffe early on Friday, while the gas-fired plant in Pembroke, Wales, operated by RWE, suffered an unplanned outage.

Over the past week, gas has consistently accounted for the largest share of the UK’s electricity generation, according to data from National Grid ESO. For example, on Wednesday, gas produced 44.8 percent of Britain’s electricity, more than wind with 19.2 percent and nuclear with 12.6 percent.

Surging natural gas prices and warm and still weather in September forced the UK to fire up an old coal plant that was on standby in order to meet its electricity demand.

The UK has pledged to phase out coal-fired power generation by October 2024.

UK power company Drax could have its last two coal-fired plants in the country operating beyond the 2022 deadline it had set for closure if the UK government asks it to keep them operational amid the energy crisis in the country and the whole of Europe.

“If the government wants us to rethink our plans, we need to talk to them in the next few months,” Drax’s chief executive Will Gardiner told the Financial Times at the end of September.

Last week, the UK government committed to decarbonizing the country’s electricity system by 2035.

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

Putin: $100 Oil Is “Quite Possible”

October 14, 2021

Putin: $100 Oil Is “Quite Possible”

It is “quite possible” that the WTI Crude oil prices reach $100 per barrel in light of growing global demand for energy commodities, Russian President Vladimir Putin said on Wednesday
Putin: Russia and its allies in the OPEC+ oil producer group want a stable oil market without any shock spikes in prices

It is “quite possible” that the WTI Crude oil prices reach $100 per barrel in light of growing global demand for energy commodities, Russian President Vladimir Putin said on a CNBC panel at the Russian Energy Week on Wednesday.

Asked by CNBC’s Hadley Gamble whether the U.S. benchmark could hit $100 a barrel, Putin replied “That is quite possible.”

However, Russia and its allies in the OPEC+ oil producer group want a stable oil market without any shock spikes in prices, Putin said.

“Russia and our partners and OPEC + group, I would say we are doing everything possible to make sure the oil market stabilizes,” Putin said, according to a translation.

“We are trying not to allow any shock peaks in prices. We certainly do not want to have that — it is not in our interests,” the Russian president added.

The OPEC+ group decided last week to stick to their planned 400,000 barrels per day (bpd) increase in collective production in November, despite calls from oil importing nations to add more supply and despite an expected additional demand from a gas-to-oil switch due to record high natural gas prices in Europe and Asia.

Oil prices could hit $100 in case of a colder winter, some analysts and investment banks have said in recent weeks. Record-high natural gas prices are forcing some utilities to switch to oil derivatives instead, boosting demand for crude.

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

Is America Doomed To Replicate Europe’s Energy Crisis?

October 12, 2021

Is America Doomed To Replicate Europe’s Energy Crisis?

What is happening in Europe—including the UK, by the way, one of the most active energy transitioners—right now is a cautionary tale of magnificent proportions.
Europe was in no particular rush to top up its gas reserves at the time, and neither was Asia.
The quick deterioration in the energy situation in Europe should make anyone planning major energy system overhauls think twice before following the exact same scenario that Europe did.

For weeks now, there has been virtually no other news but the energy crunch that surprised Europe in September and has since then gone on to roil every market and industry and spur fears of blackouts, astronomical utility bills, and rising food prices.

The official version of events is that rising energy demand coincided with tight energy supply. The unofficial version has to do with Europe’s energy transition agenda and the possibility it may have rushed to it without enough long-term planning. And now, the U.S. has basically an identical agenda, focusing on boosting wind and solar power generation capacity, reduce demand for oil and gas, and encourage people to buy EVs instead of cars with internal combustion engines.

David Blackmon wrote earlier this week for Forbes that “The energy crisis in Western Europe this summer has been brought on by premature retirements of hundreds of coal and natural gas power plants in favor of massive over-reliance on wind power and, to a lesser extent, solar.”

He went on to note that, “Ironically, this crisis is taking place just as House Speaker Nancy Pelosi and congressional Democrats attempt to ram through their massive $3.5 “budget reconciliation” bill that is in large part designed to recreate the European model in the United States.”

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

Oil Prices Rebound As U.S. Walks Back Plan To Tap Strategic Petroleum Reserve

October 10, 2021

Oil Prices Rebound As U.S. Walks Back Plan To Tap Strategic Petroleum Reserve

The U.S. Department of Energy is walking back previous comments that it was considering a release of the Strategic Petroleum Reserve and a ban on crude oil exports
The DoE isn’t considering tapping the SPR “at this time”
Goldman Sachs: SPR release would have limited impact on crude prices

The U.S. Department of Energy is walking back previous comments that it was considering a release of the Strategic Petroleum Reserve and a ban on crude oil exports, Bloomberg’s Javier Blas reported on Twitter.

According to Blas, the DoE isn’t considering tapping the SPR “at this time”.

The news comes shortly after Goldman Sachs estimated that if the DoE released oil from the SPR, it would likely be limited to just 60 million barrels—posing a $3 downside risk to its year-end $90 barrel Brent forecast.

A White House press briefing took a similar no-SPR tone.

The Biden Administration will not make any predictions about releasing the SPR to alleviate high gasoline prices, Press Secretary Jen Psaki said at the daily briefing on Wednesday.

Psaki instead focused on the climate crisis, commenting on the fact that the matter was so urgent that it could not wait any longer.

“I’m not going to make any prediction of that from here.”

The press secretary noted that the Administration took steps in the aftermath of Hurricane Ida, including by authorizing exchanges from the SPR with oil and refining firms.

“We’ve also taken steps into — including engaging with members of OPEC,” Psaki said.

“But I’m not going to make any other predictions at this point in time. We’re continuously monitoring. We’ll look to take additional steps as needed,” she added.

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

One Of Wall Street’s Biggest Oil Bears Sees Higher Crude Prices On The Horizon

October 8, 2021

One Of Wall Street’s Biggest Oil Bears Sees Higher Crude Prices On The Horizon

Standard Chartered Global Research has maintained its somewhat bearish oil price outlook during the last couple of months, but last week, the investment bank suddenly turned bullish
Standard Chartered raised its 2021 average Brent price forecast by USD 6/bbl to USD 71/bbl, and its 2022 forecast by USD 8/bbl to USD 67/bbl

There has been a major dichotomy on Wall Street regarding the oil price trajectory, with some viewing the massive oil and gas rally as being temporary and transitory while the bulls have been saying this rally still has legs to run.

Standard Chartered Global Research has been providing regular commodities updates, and made waves in August when they declared that a Brent price of $65/bbl or lower was more likely than $75/bbl or higher. Stanchart said its bearish view was informed by the fact that “…a significant amount of money has already entered the market in the Wall Street-generated belief (mistaken according to our analysis) that the balances are much tighter and justify USD 80-100/bbl.”

More recently, Stanchart maintained its bearish tone, saying that the oil price rally is not fully justified, and that the fundamental case for USD 80/bbl is not any stronger today than it was a few months ago.

Well, the energy bull market has continued defying all bearish expectations, and has forced Stanchart to do a 180 and join the bull camp.

In its latest commodity update, coming shortly after the October 4th OPEC+ meeting, Stanchart analysts say:

“We think the market has concluded that OPEC+ does not see USD 80 per barrel (bbl) as a ceiling, and that it is unlikely to cool prices in the short term…

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

Europe Turns To Russia For More Coal As Energy Prices Skyrocket

October 6, 2021

Europe Turns To Russia For More Coal As Energy Prices Skyrocket

Europe is facing a perfect storm of increasing demand for energy in the wake of the COVID-19 pandemic, and a dwindling supply of natural gas used to produce electricity.
As Europe’s struggling energy markets look to import any form of affordable energy they can, power producers have resorted to asking for Russian coal as well.
Europe is competing with Asia for limited energy resources as both continents surge back to life as pandemic restrictions ease.

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Energy prices are through the roof across Europe as demand surges and supplies tighten in the wake of the novel coronavirus pandemic. Over the course of the global economic shutdown, energy production has decreased considerably as industries shut down, people stayed inside, and demand for electricity and fuel plummeted. Now, as the world returns to work and gets back to the ‘new normal’, energy demand is back with a vengeance, but the energy supply simply isn’t there.

Europe’s leading natural gas benchmark, the Dutch Title Transfer Facility, reports that prices have skyrocketed from €16 per megawatt-hour at the beginning of this year to €75 by mid-September, representing an increase of more than 360%. Italian officials have warned their citizens to expect a 40% increase in their bills in the coming weeks and months. Spain has agreed to send €100 payments to over 5.8 million low-income households and sent a letter to Brussels pleading with the European Union (EU) to take sweeping action.

And then there’s Russia. Nearly half of all-natural gas imports in the EU come from the great white north, making Europe highly dependent on the Kremlin for its energy security. This dependence is a big part of the reason that Europe is now entering into an energy crisis, because as demand for natural gas has surged, Russia has not increased its exports to the EU…

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The Harsh Truth Behind Europe’s Energy Crisis

September 27, 2021

The Harsh Truth Behind Europe’s Energy Crisis

Europe’s energy crunch is continuing, as gas storage volumes have shrunk to 10-year lows. A possible harsh winter could lead to severe energy shortages and possible shutdowns of large parts of the economy.

While the main discussion is currently focused on the potential role of Russia in the energy crisis, a new narrative could soon make the headlines. In a surprise move, the Dutch government has indicated that in a severe supply crunch situation, the Groningen gas field, Europe’s largest onshore gas field, could partially and temporarily be reopened. It seems that the term Dutch Disease could get a new meaning, from being the paradox of a rentier state suffering from plentiful resources to a show of Europe’s lack of realism when it comes to energy transition risks and current market powers. Dutch Minister Stef Blok has indicated that he is considering the potential reopening of the Groningen field, in particular five wells, especially the one at Slochteren, as indicated by Johan Attema, director of the Nederlandse Aardolie Maatschappij (NAM), the operator of the Groningen field. The reopening of the field, even in the case of an emergency or an energy crisis, is politically controversial.

Until recently, the plan was that Groningen would be closed completely by 2023, ending the large-scale gas production and export by the Netherlands with a bang.

The Dutch media is speculating that minister Blok will be asking for a possible reopening of the Groningen field, a decision that must be made before October 1. If the Minister decides to change the current shutdown plans, the whole Groningen debacle, as some see it, will be prolonged. It is clear, looking at the current deplorable situation of the European energy sector, that Groningen is still needed…

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

Gazprom: We’re Not Withholding Gas To Europe

September 26, 2021

Gazprom: We’re Not Withholding Gas To Europe

Russian gas giant Gazprom dismisses speculation and accusations that it is not supplying enough natural gas via pipeline to Europe, a senior official at Gazprom Export says.

So far in 2021, Gazprom’s gas deliveries to Europe have reached historic highs, Sergey Komlev, Head of the Contract Structuring and Pricing Directorate at Gazprom Export, wrote in an article for Gazprom’s corporate magazine, as carried by Russian news agency TASS.

Germany, Turkey, and Italy—some of Gazprom’s largest customers—all boosted imports of Russian gas in the first half of 2021, the manager said.

Gazprom’s exports to European countries rose by 23.2 percent between January and July, Komlev added.

“These figures prove the absurdity of accusing Gazprom of supply shortage,” the executive noted.

Europe is grappling with soaring natural gas and electricity prices ahead of the winter heating season due to tight gas supplies, very low gas inventories, and low wind power generation amid still weather.

More than 40 members of the European Parliament from all political groups have reportedly urged the European Commission to launch an investigation into Gazprom over alleged market manipulation that could have contributed to the record-high natural gas prices in Europe.

During the summer, even with the strong rebound in European natural gas demand and surging prices, Gazprom did not book additional entry capacity to Europe via Ukraine.

Analysts say that this could have been an opportunistic move from the Russian giant to drive up Europe’s gas prices further and take advantage of the very high prices. Other analysts think that Gazprom’s effective reduction in supplies would force Europe to recognize that gas customers on the continent need the controversial Nord Stream 2 pipeline to Germany bypassing Ukraine.

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

The European Energy Crisis Is About To Go Global

September 24, 2021

The European Energy Crisis Is About To Go Global

It was only a matter of time, really. In a globalized world, energy crunches can hardly remain regionally contained for very long, especially in a context of damaged supply chains and a rush to cut investment in fossil fuels. The energy crunch that began in Europe earlier this month may now be on its way to America. For now, all is well with one of the world’s top gas producers. U.S. gas exporters have enjoyed a solid increase in demand from Asia and Europe as the recovery in economic activity pushed demand for electricity higher. According to a recent Financial Times report, there is a veritable bidding war for U.S. cargos of liquefied natural gas between Asian and European buyers—and the Asians are winning.

Coal exports are on the rise, too, and have been for a while now, especially after a political spat had China shun Australian coal. But supply is tightening, Argus reported earlier this month. In July, according to the report, U.S. coking coal exports dropped by as much as 20.3 percent from June. The report noted supply was constrained by producers’ limited access to funding and a labor shortage that has plagued many industries amid the pandemic.

All this should be good news for U.S. producers of fossil fuels. But it may easily become bad news as winter approaches. The Wall Street Journal’s Jinjoo Lee wrote earlier this week high energy prices could be the next hot import for the United States. Lee cited data showing gas inventory replenishment was running below average rates for this season, and gas in storage in early September was 7.4 percent below the five-year average.

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

America’s Infrastructure Crisis Is Growing Increasingly Dire

September 21, 2021

America’s Infrastructure Crisis Is Growing Increasingly Dire

Despite promises of improved infrastructure and better disaster preparedness, governments and energy giants are failing to provide backup energy provisions to areas hit hard by extreme weather conditions again and again. As these events are becoming more frequent and stronger, how will the energy industry prepare for the future of energy provision?

The ongoing discussion over energy infrastructure resilience which is brought up year after year peaked in February in the U.S. as Texas battled against a severe winter storm that saw the electrical grid shut down and thousands of buildings lose power. Many across the state had to rely on generators to heat their houses to escape freezing temperatures for up to a week.

A significant proportion of energy production in the U.S.’s biggest oil state came to a halt following the storm, having a knock-on effect on energy output levels for the rest of the spring. Oil production is thought to have dropped by around 1.2 million bpd due to freezing pipelines and a lack of electricity to key infrastructure.

But could all of this be avoided had the U.S. government and big oil invested in its aging infrastructure long ago? Earlier this year, the American Society of Civil Engineers gave America’s energy infrastructure a C-rating score, suggesting the need for significant improvement to prevent future production cuts and potential disasters.

Since his inauguration, President Biden has pointed towards his $2 trillion infrastructure plan as the answer to the problem. As well as fixing tens of thousands of roads and bridges, enhancing the country’s transportation links, the plan also intends to improve energy infrastructure and water pipelines across the U.S. over a timescale of eight years.

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

The U.S. Desperately Needs To Rethink Its Middle East Strategy

September 20, 2021

The U.S. Desperately Needs To Rethink Its Middle East Strategy

Is the Middle East still important? This is a seemingly absurd question, yet some are asking this in Washington. The Middle East is the source of massive reserves in oil and gas. Much of the fuel to produce goods and trade from Asia and the EU comes from the Middle East. Much of the world economy relies on Middle East energy. The region has strategic chokepoints like the Strait of Hormuz, The Suez Canal, and The Bab al Mandab. It is a source of some of the more significant threats in the world, such as from ISIS, Al Qaeda, and other groups. It contains some of the most important security connections in the world. Consider the neighbors of the Middle East and not just the Middle East. The Middle East is a crossroads for energy and security. It also could be one of the generators of change and improvement, if it is allowed and supported to do so. However, as the U.S. becomes more focused on “The Great Powers Conflict” in Asia, especially with China, it is becoming clearer that the U.S. is losing the plot in the Middle East. Consider the slow to no reaction to the shipping of Iranian fuel with the help of Hezbollah and Syria to Lebanon.

The U.S. could have done many different things to help the Lebanese with this without handing a massive public relations and political victory to its adversaries. But, in some ways, Washington’s sanctions have painted it into a corner on such issues. Consider how the U.S. took the anti-missile batteries from Saudi Arabia as the Houthis are still attacking Saudi Arabia with missiles…

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

Skyrocketing Energy Prices Could Cripple Europe’s Economy

September 20, 2021

Skyrocketing Energy Prices Could Cripple Europe’s Economy

Surging energy prices in Europe are hurting more than just consumers. The price spikes have started to hit industrial activities, threatening to deal a blow to the post-COVID recovery in European economies with a triple whammy of reduced consumer purchasing power, lower industrial production, and higher operating costs.

Giant European firms, from chemicals and mining to the food sector, say sky-high gas and electricity prices are hitting their profit margins and forcing some of them to curtail operations.

Some factories have shut down because of record natural gas prices. More idling of industrial activity across Europe is likely in the coming weeks, analysts say.

Meanwhile, the record European natural gas prices are sending Asian spot prices of liquefied natural gas (LNG) to record levels for this time of the year—between peak summer demand and ahead of the winter heating season.

Europe’s tight gas market, low wind speeds, abnormally low gas inventories, and record carbon prices have combined in recent weeks to send benchmark gas prices on the continent and power prices in the largest economies to record highs. Almost daily, gas and power prices in Europe surge to fresh records, putting pressure on governments as consumers protest against soaring power bills.

It’s not only consumers that struggle with the record energy prices. Industries are starting to feel the heat, too.

CF Industries, a manufacturer of hydrogen and nitrogen products, said this week it was halting operations at both its Billingham and Ince manufacturing complexes in the UK due to high natural gas prices.

“The Company does not have an estimate for when production will resume at the facilities,” CF Industries said.

Norway-based Yara, one of the world’s top ammonia producers, is curtailing production due to the record-high gas prices.

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

The Battle For Control Of East Mediterranean Energy

September 18, 2021

The Battle For Control Of East Mediterranean Energy

The history of oil and natural gas is marred by instability and conflict. The rise of the Eastern Mediterranean as a prolific energy region has increased existing tensions between certain littoral states while strengthening cooperation between others. The ratification of the charter concerning the Eastern Mediterranean Gas Forum (EMGF) further cements the importance of gas exporting countries in general and Egypt in particular.

In a political and economic sense, Cairo has succeeded in strengthening the country’s position as a major producer and exporter of gas while highlighting its role as an energy hub. Egypt’s large domestic market, significant production capacity, and strategic location make it an ideal candidate to host the EMGF’s headquarters in Cairo.

Besides the economic logic, Egypt’s growing population requires ever-larger volumes of raw materials to satisfy demand. Therefore, liquidity and access to additional sources are important to improve energy security. Cairo learned a lesson from the developments of 2014/2015 when domestically produced natural gas for export purposes was diverted to satisfy the exploding Egyptian demand. After becoming a net importer in 2015, the country’s two liquefaction facilities in Idku en Damietta were reconfigured for the regasification process of LNG.

The EMGF seeks to bring together the energy-rich countries of the Eastern Mediterranean through dialogue, layout policies, ensure safety and reliability to increase investments, and support growth. The charter is signed and ratified by the founding members Egypt, Cyprus, Greece, Israel, Italy, Jordan, Palestine, and France. The U.S. and the EU are observers. Noticeably, Turkey has been sidelined while two European countries who are geographically not part of the region, Italy and France, are members. It show’s the hard geopolitical reality of Ankara’s isolation.

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

Record-Breaking Energy Prices Could Soar Even Higher In Europe

September 12, 2021

Record-Breaking Energy Prices Could Soar Even Higher In Europe

The European electricity market is in crisis as a perfect storm is driving up prices to ever greater heights. The timing couldn’t have been worse as countries across the continent are reopening and energy demand is rising. Most signs point towards the likely continuation of the current situation while there is a chance that things could get worse. There is an opportunity to balance the electricity market towards ‘normal prices’, but that means geopolitical concessions which not everyone is willing to make.

Rising costs are a consequence of bad luck when it comes to the weather, geopolitical developments, and ambitious decarbonization policies. According to Julien Hoarau, head of EnergyScan, the analytics unit of French utility Engie, “the problem hasn’t even started yet. Europe will face a very tight winter.”

Unusually cold weather during the last heating season increased demand for natural gas that is supplied by domestic production, imports, and underground gas storage. Under normal circumstances, these storages are filled in the summer period when demand is low and prices favorable. This year’s buying season is interrupted as there is less natural gas on the market. As usual, East Asia is willing to pay a premium that draws LNG cargoes to the Far East. Russia, on the other hand, doesn’t seem to be willing to fill the gap this time.

Furthermore, Scandinavia’s electricity export capacity is drastically less than usual as drought has hit the region this summer. Several submerged cables connect hydropower-rich countries such as Norway and Sweden with the Netherlands, Denmark, and Germany. However, water levels are unusually low, meaning there is less cheap electricity to export to the south.

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

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