Power Up: Oil and gas get a dose of the Blahs
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Aug 29 -By Gavin Maguire, Global Energy Transition Columnist
Hello Power Up readers!Both crude oil and natural gas markets continue to languish near recent lows, underwhelmed by demand while facing abundant supplies in the U.S., China and other key markets. Even an oil blockade by Libya over the Israel-Gaza conflict, and more hot weather forecasts for the U.S., failed to stir up much bullish enthusiasm in either the crude or power arenas.
Beyond those markets, tech giants are vying with bitcoin miners for critical electricity supplies, imports of used cooking oil from China are set to hit a record, and more planned offshore wind projects have bitten the dust. More on all that below...
Downbeat oil & gas
Concerns over China's crude and fuel demand, a smaller-than-expected draw on U.S. oil stockpiles, and above-normal natural gas inventories for this time of year have conspired to pressure U.S. crude and gas prices towards recent lows this week.
And that downward pressure persists despite a number of potentially bullish factors in both markets.
In crude, Libya's oil blockade widened this week with eastern leaders demanding western authorities back down over the replacement of the central bank governor, a key position in a state where control over oil revenue is the biggest prize for all factions.
And inventories of U.S. crude and gasoline both fell last week as demand picked up ahead of the Labor Day holiday and the end of the summer driving season.
Despite these upbeat elements, oil investors have stayed resolutely bearish, remaining net sellers in futures and options markets in six of the last seven weeks.
In the natural gas arena, U.S. futures remain mired below $2.20 per million British thermal units (mmBtu) despite hot weather forecasts which should trigger greater demand for power-hungry air conditioning. One factor capping gains is the unexpected shutdown of a U.S. LNG plant export plant this week, which has reduced demand for gas to be shipped overseas.
Another issue is that gas inventories across the U.S. remain around 12% above normal for this time of year, and so may still be bloated come winter, when heating demand peaks.
Essential reading
U.S. technology companies are pursuing energy assetsheld by bitcoin miners as they race to secure a shrinking supply of electricity for their rapidly expanding artificial intelligence and cloud computing data centers.
U.S. miners and battery recyclers are rushing to close government loans worth billions of dollars before January out of concern that former President Donald Trump would, if reelected, block funding needed to boost American output of critical minerals for the energy transition.
Global electricity generation from solar farms has exceeded generation from wind farms since May, marking the longest ever stretch when solar power has been the top source of utility-scale renewable electricity worldwide.
Jobs in the U.S. clean energy industry in 2023 grew at more than double the rate of the country's overall jobs, and unionization in clean energy surpassed for the first time the rate in the wider energy industry, the Energy Department said on Wednesday.
U.S. imports of used cooking oil(UCO) from China are set to hit a record in the months ahead, even as regulatory uncertainty casts doubts over longer-term prospects of a trade that boomed last year, according to market participants.
Norwegian energy company Equinorhas cancelled its offshore-wind projects in Spain and Portugal, in addition to its previously announced exit from Vietnam, and could withdraw from more countries to rein in spending, an executive told Reuters on Wednesday.
CNPC, Asia's top oil producer, is reviewing its global strategy as it looks to revive dealmaking, eyeing gas liquefaction and deep-sea drilling as well as building on its record of producing more from aging wells, the head of its research arm said.
Indian solar panels face U.S. scrutiny: U.S. Customs and Border Protection has detained nearly $43 million in shipments of electronics equipment from India since October under a 2022 law banning goods made with forced labor, according to agency data, representing a new focus for the trade enforcement agency.
China has boosted domestic coal production and imports to record highs, even as surging power from hydro dams and solar farms has trimmed thermal generation during a summer heatwave.
U.S. demand for power and electricity is on track to hit a record in 2024, but likely already peaked during July after power generation needs declined slightly so far in August.
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Editing by Marguerita Choy
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