By Tom Kool
With WTI trading above 80 per barrel, shale drillers in the US are increasingly likely to reduce capital discipline and use their recent cash windfall on new drilling rigs in 2022.
- The US Energy Information Administration (EIA) expects US shale output to increase in November, albeit by a mere 76,000 b/d m-o-m to a total of 8.3mbpd, although a more marked ramp-up is expected next year.
- In the meantime, well productivity in both the Bakken and Eagle Ford continues to fall as the sweetest spots are already drilled, with Bakken seeing the largest downward correction.
- At the same time, the number of drilled but uncompleted wells (DUCs) decreased again last month, down 241 to 5,385, the lowest in almost five years, marking the 15th consecutive month nationwide that DUCs declined.
As countries around prepare for winter weather, it appears that the energy crunch is only going to worsen and energy prices are going to rise.
– South Korean electronics firm Samsung (KRX:006400) and carmaker Stellantis (BIT:STLA) have teamed up to jointly produce EV batteries for the North American market, adding to Samsung’s plants in South Korea, China, and Hungary.
– US drilling services firm Halliburton (NYSE:HAL) posted a net profit of $248 million in Q3, bouncing back from a net loss year-on-year, as oil and gas producers ramped up drilling on the back of increasing crude prices,
– Europe’s largest hydrogen producer INEOS stated it would invest more than €2 billion on electrolysis plants, including but not limited to the Grangemouth Refinery that will run entirely on green hydrogen.
Tuesday, October 19, 2021
Oil prices remained elevated this week as several continents continue to suffer from a major energy crunch, with China still in the limelight as falling temperatures fortified concerns that the world’s largest energy consumer will not be able to meet domestic demand for heating. These energy crunches could also bring demand lower as high power prices and supply disruptions compel industrial players to curb production. Meanwhile, the ever-increasing trajectory of LNG prices across the globe is adding another layer of support for crude demand, with many Asian nations seeking ways to supplant gas usage. At the same time, the White House continues to push OPEC+ to address the oil supply issue, but the oil group appears to be unmoved by high gasoline prices in the US. Brent prices were trending around $85 per barrel as of Tuesday morning, with WTI narrowing the spread to the global benchmark and trading around $83 per barrel.
Iran Talks Remain Stalled as Pressure Mounts. Despite widespread speculation that Iran might be returning to the negotiating table, EU officials have stated that there are no scheduled talks coming up between JCPOA participants and that time is not on Teheran’s side.
US Crude Exports to Asia Rise. Incentivized by the wide Brent-WTI spread which has been around $3 per barrel since August, Asian buyers are reportedly snapping up November-loading US cargoes with at least 5 VLCCs heading to the Asia Pacific, most of them to South Korea.
India Urges Qatar to Provide Delayed LNG Cargoes. Facing the worst power crisis since early 2016, Indian companies, spearheaded by the top importer Petronet (NSE:PETRONET), are now urging Qatar – which has delayed the delivery of some 50 LNG cargoes this year due to maintenance – to deliver those cargoes as soon as possible.
Pandemic Hits Indonesian Oil Output. Indonesia has downgraded its oil and gas production targets for this year, cutting it to 665kbpd from an earlier target of 705kbpd, as the pandemic triggered a series of project delays and capital expenditures cuts.
Global Cement and Concrete Industry Pledges 2050 Decarbonization. The world’s leading cement and concrete firms, including the global top two of Holcim (SWX:HOLN)and CNBM (HKG:3323), have agreed to reach full decarbonization by 2050, with a provisional target of cutting CO2 emissions by 25% by 2030.
Nord Stream 2 First Line Ready for Exports. The operator of the Gazprom-led (MCX:GAZP) Nord Stream 2 gas pipeline stated the first line of the conduit is filled with gas and ready for exports, with 177 million cubic meters of technical gas pumped into the pipe.
Wind Eases Europe’s Power Price Surge. North Sea countries are expecting electricity generation from wind to more than double in the upcoming days on the back of stronger than normal winds. German and French day-ahead power futures fell below €150 per MWh on the news.
Sanctions Looming Again After Venezuelan Talks Collapse. Reconciliation talks between Venezuela’s Maduro administration and the US-backed opposition are on the verge of a meltdown after the US arrested a high-profile middleman on money-laundering charges and Caracas moved six former executives of Texas-based Citgo back into detention.
Shell Takes Over Big Chunk of UK Power Segment. Anglo-Dutch major Royal Dutch Shell (NYSE:RDS.A) will take over customers of three bankrupt utility providers (Pure Planet, Daligas, Colorado Energy) as the ongoing power crunch has claimed 12 UK energy firms already.
US Coal Generation Breaks the Cold Streak. Following 7 years of consecutive year-on-year declines, the EIA believes electricity generation from coal is poised to bounce back this year as skyrocketing gas prices and relatively stable coal prices have boosted the prospects of the latter.
Vitol Invests in European Biogas. Vitol, the world’s largest crude trading company, agreed to a preliminary supply deal with Waga Energy, Europe’s leading firm in methane recovery from landfill waste, and will acquire a minority stake in the company in its upcoming Paris Euronext exchange IPO.
Nornickel Launches Palladium Rethink Challenge. Russia’s Nornickel (MCX:GMKN), the world’s largest producer of palladium, launched the Palladium Challenge, a $350,000 competition that awards new ideas about the precious metals’ utilization in sustainable designs (80% of global palladium is used by the automotive industry currently).
Copper Supply Squeeze Puts Premium on Spot Trades. Spot copper prices have soared to an all-time high today at $11,300 per metric ton amidst extremely tight supply, just as the spread between cash and three-month futures surged beyond $1,000 per tonne, a premium not seen since 1994.