During the New York session on Wednesday (October 8), GMT+8 23:00, data released by the US EIA showed that as of the week of October 8th, the US commercial crude oil inventories excluding strategic reserves increased far more than expected, and refined oil inventories fell. Less than expected, gasoline inventories fell more than expected. After the release of the EIA data, US crude oil prices fell slightly by $0.2 in a short-term.
EIA crude oil inventories increased far more than expected, but gasoline inventories unexpectedly dropped
Specific data show that the US EIA crude oil inventory changes in the week ended October 8 actually announced an increase of 6.088 million barrels, which is expected to increase by 1.05 million barrels, and the previous value increased by 2.345 million barrels.
In addition, the United States actually announced a decrease of 1.958 million barrels of EIA gasoline inventories for the week ending October 8, and an expected increase of 1 million barrels, an increase of 3.256 million barrels from the previous value; the United States actually announced a decrease of 24,000 refined oil inventories for the week of October 8 Barrels, it is expected to decrease by 1 million barrels, and the previous value will decrease by 396,000 barrels.
The EIA report shows that US crude oil exports increased by 400,000 barrels per day to 2.514 million barrels per day last week. Last week, US domestic crude oil production increased by 100,000 barrels to 11.4 million barrels per day. The four-week average supply of US crude oil products was 20.734 million barrels per day, an increase of 12.5% over the same period last year.
The EIA report shows that, in addition to the strategic reserves of commercial crude oil, imported 5.994 million barrels per day last week, a decrease of 1.041 million barrels per day from the previous week. Commercial crude oil inventories excluding strategic reserves increased by 6.088 million barrels to 427 million barrels, an increase of 1.4%.
The EIA report shows that last week's U.S. crude oil inventories in the Cushing area fell to the lowest level since October 2018. US Midwest crude oil inventories fell last week to their lowest level since September 2018. The U.S. crude oil inventories in the Cushing region fell by 1.968 million barrels from the week to October 8, the highest since the week of June 11, 2021. The increase in EIA crude oil inventories from the United States to the week of October 8 recorded the largest increase since the week of March 5, 2021.
Analysts commented on U.S. EIA crude oil inventory data and pointed out that on September 29, the PBF refinery in Delaware closed a crude oil unit and a vacuum distillation unit for maintenance, resulting in a sharp drop in the utilization rate of the East Coast refinery to 76.4%. The lowest level since April.
U.S. crude oil price 5 minutes chart display
EIA says American heating costs will rise sharply this winter
The U.S. Energy Information Administration (EIA) warned that due to the global energy crisis and the temperature expected to be lower than normal this winter, Americans’ heating costs will rise sharply.
A new report released by EIA on Wednesday said that compared with the previous winter, expenditures on propane, household heating oil, natural gas and electric heating will increase by 54%, 43%, 30% and 6%, respectively. Home heating prices will rise across the country.
This forecast reflects the soaring energy costs, especially oil and natural gas. US WTI crude oil futures prices recently closed above US$80 per barrel, the first time since 2014. As the most commonly used fuel for household heating, natural gas prices have also soared to their highest point since 2008.
Steve Nalley, Acting Administrator of the U.S. Energy Information Administration, said in a statement: Since we have come out of the worst stage of the economic downturn caused by the epidemic, the increase in energy demand usually exceeds the increase in supply. These developments are pushing up global energy prices.
As the temperature this winter is expected to be lower than normal, the situation will become more serious. EIA pointed out that the US National Oceanic and Atmospheric Administration expects that this winter will be slightly colder than last year, which in turn will push up energy consumption.
The US Energy Information Administration stated in the report: If the weather is colder than expected, American households will spend more. According to data released by the US government on Wednesday, US energy prices have risen by nearly 25% in the past year, of which gasoline prices have risen by 42% and utility gas service prices have risen by 21%.
The IEA warns that current investment cannot meet future demand, and the energy market may face greater turbulence
Under the impact of the European energy crisis, global energy prices continue to rise. The International Energy Agency (IEA) warned in the "Global Energy Outlook 2021" report on Wednesday that the volatility of the global energy market will continue.
The IEA stated in the report that the world is currently underinvesting in meeting future energy needs, which may cause the transition to net zero emissions to become very unstable.
IEA Director General Fatih Birol said in a statement: The global energy market is facing greater risks of turbulence, and our investment is not enough to meet...Future energy demand, and uncertainty is the turbulent period in the future. Lay the foundation. The report pointed out that uncertainties in policies and demand, as well as other reasons, are important reasons for the current insufficient energy investment.
As the global economy continues to recover from the epidemic, the risk of imbalance between supply and demand in the energy market is emerging. With the reopening of businesses and the recovery of consumer activity, energy demand has risen sharply. However, because producers are unwilling to expand production, energy supply remains tight.
US crude oil futures prices have risen above US$80 this week, marking the first time since the end of 2014. Since the end of October last year, crude oil prices have soared by 125%. U.S. natural gas prices have more than doubled this year. European natural gas spot prices hit a record high this fall, and coal prices have also risen due to winter heating demand.
Higher fuel costs will be passed on to consumers and businesses, which may impact economic recovery. "As shown by these events in 2021, when (energy) prices rise sharply, consumers are vulnerable to injury," the IEA report stated. "During the transition to clean energy, volatility and price shocks cannot be ignored."
In all IEA scenario forecasts, global oil demand will eventually decline, although the time and speed of decline vary. The decline in demand for crude oil will in turn bring challenges to energy producers.
"If the supply side is ahead of the demand side and withdraws from oil or natural gas (fields), then the world may face a period of tension and volatility in the (energy) market." The report said, "Or, if the company misjudges the speed of transformation and overinvests, Then these assets will face the risk of underperforming or getting into trouble."
According to the IEA, in order to achieve net zero emissions by 2050, clean energy spending needs to reach US$4 trillion annually by 2030. Although this investment figure looks large, the report points out that if manufacturers use additional technologies, such as improving efficiency and restricting gas leakage, they can also reduce emissions by 40%.
However, the report pointed out that most (70%) of energy investment funds still need to come from private developers, consumers and Wall Street. The IEA report stated that large-scale investments have created "huge economic opportunities" for clean energy technologies. IEA said that by 2050, the total market size of these clean energy technologies will reach US$1 trillion per year, which is equivalent to the current crude oil market size.
The White House once again urges OPEC+ to increase crude oil production, high oil prices are not good for Biden’s administration
On Monday (11th) Eastern time, the media quoted a US government official and reported that the White House has once again urged OPEC+ to increase crude oil production. IHS Markit Vice Chairman Daniel Yergin said that high oil prices are not good for Biden’s administration, and the Biden administration does not have many means to deal with the current rising oil prices.
According to reports, a White House official told the media that the Biden administration reiterated its position that OPEC should “take more action” to resolve the energy crisis. US government officials have held high-level talks with OPEC member states on this situation.
For months, the United States has been calling on OPEC and its allies to take measures to stabilize the global market. In August, US National Security Adviser Jake Sullivan stated that OPEC+’s oil production growth rate was “not enough” at all. White House Press Secretary Jen Psaki said in September that the U.S. government will “continue to discuss the importance of market competition and price setting with international partners including OPEC, and take more measures to support economic recovery.”
"Biden knows that high oil prices are not good for the current president," IHS Markit vice chairman and oil historian Daniel Yergin said in a media interview on Monday. "We will definitely hear more from the (US) government. information."
Gasoline prices at US gas stations have risen sharply. According to data from the American Gasoline Association (AAA), the average gasoline price in the United States hit a seven-year high on Monday (11th), reaching $3.27 per gallon, an increase of 7 cents in the past week alone. Since the bottom in April 2020 to $1.77 per gallon, US gasoline prices have almost doubled.
Rising oil prices have made the White House unable to sit still. US White House officials said on Monday that they are closely monitoring oil and natural gas prices and are using all means to resolve anti-competitive behavior in the US and global energy markets.
Zero Hedge commented that in the past, the White House's propaganda could still lower oil prices, but now it clearly doesn't work. OPEC may no longer care about the demands of the Biden administration.
Citigroup recently stated that due to the shift in natural gas demand to oil, oil consumption has increased by as much as 1 million barrels per day. Oil prices are expected to reach $90 per barrel this winter, and inventories may fall to record lows by the end of the year.
Although OPEC currently insists on its plan to increase production by 400,000 barrels per day, Citi expects that under pressure from major oil-consuming countries such as the United States and India, OPEC+ may choose to increase production by 800,000 barrels per day.
The sharp increase in shale oil production in the largest oil-producing region in the United States may limit the rise in oil prices
Oil prices of around US$80 per barrel have once again stimulated shale drilling activities in the Permian Basin, the largest oil-producing region in the United States, and oil production in this oil-producing region is expected to return to its pre-epidemic high within a few weeks.
Only this time, private oil producers, not listed companies, are driving the surge in production. Increased financing channels and strong oil demand have created opportunities for private producers to increase oil production in West Texas and southeastern New Mexico. Most of these producers are backed by private equity or family funds.
However, according to media reports, as oil production in other major shale basins in the United States has remained stable or is declining, the rapid increase in oil production in the Permian Basin is unlikely to disturb OPEC as it did during the previous boom in the US shale oil industry. Or it may cause the price of crude oil to fall (at least not yet).
Raoul LeBlanc, an analyst at IHS Markit, said: “This is a victory for private producers, not a loss to the oil market. Most importantly, the production growth driven by private producers will not ruin the current situation. The oil market."
All U.S. oil growth comes from Texas and New Mexico. All U.S. oil growth comes from Texas and New Mexico. This is a fragile balance, and if oil prices continue to rise, this balance may change quickly. In the past 10 years, the U.S. oil production has grown so strongly and has taken so much market share from OPEC+ that OPEC+ is willing to conduct a full-scale supply war in 2014 and 2020. Since then, with the surge in global oil demand (especially in Europe and Asia), oil prices have fallen, alleviating some competitive pressures among oil suppliers.
This market dynamic is the signal that private drilling companies have been waiting for. The startup Trigo Oil & Gas LLC has just drilled the first two wells in Reeves County, Texas, near the border with New Mexico, Texas, and the third well is in preparation. The company’s chief executive officer Travis Wheat said that after failing to successfully finance the oil well during most of the epidemic, the company agreed with Oklahoma City in August this year before the lease was about to expire. Two investors in Homer City reached a deal.
Due to its low break-even costs and high productivity, the Permian Basin is a particularly attractive area for increasing production. Rystad Energy predicts that as private producers promote a surge in production, oil production in the Permian Basin may reach the high level of 4.9 million barrels per day before the epidemic as early as this month, and will continue to rise steadily in 2022.
Private producers are now one of the most active oil drillers in the United States. Private producers are now one of the most active oil drillers in the United States.
The new production austerity strategy of listed shale oil companies means that they now seem to have reduced investment risks. Three of the four major forecasting agencies surveyed by the media stated that because these companies use cheap credit to repay debts rather than invest in new exploration, the total U.S. shale oil production will not reach the pre-epidemic level until 2023. Only Enverus predicts that shale oil production will return to the highest level before the epidemic by December next year.
To be sure, shale oil production is notoriously unpredictable. If oil prices rise as rapidly as the recent natural gas, producers may develop more oil wells within a few months. However, due to supply chain bottlenecks and inflation, the cost of drilling and completion in shale blocks continues to rise, which may also change the current situation.
If more listed shale oil companies acquire private producers, as Pioneer Natural Resources acquired DoublePoint Energy LLC for $6.4 billion earlier this year, listed shale oil companies may restrict exploration activities. According to data compiled by the media, as investors expect more integration, there have been 159 mergers and acquisitions in the U.S. oil and gas industry so far this year, more than in 2020.
U.S. oil production is expected to grow strongly, but not enough to upset OPEC. U.S. oil production is expected to increase strongly, but not enough to upset OPEC.
However, for now, private producers seem to have found an unimpeded path, and OPEC or major oil-producing countries have hardly taken measures to slow their production. Travis Whitt said: "Capital is so difficult to obtain. But fortunately, we got a little blessing from destiny on the way forward."
Concerns about the global new crown epidemic have eased, favorable risk appetite supports oil prices
According to the WHO, the number of new deaths from new coronary pneumonia worldwide has dropped to the lowest level in nearly a year. On the 13th local time, WHO held a routine press conference for new coronary pneumonia.
WHO Director-General Tedros Adhanom Ghebreyesus said that the number of new deaths from new coronary pneumonia in a single week in the world has continued to decline and has fallen to the lowest level in nearly a year. However, according to WHO statistics, there are still nearly 50,000 deaths from new coronary pneumonia every week in the world. Pneumonia, the actual number is definitely higher. With the exception of Europe, the number of new deaths from new coronary pneumonia in all regions is declining.
Tan Desai pointed out that among the countries and populations that have received the least vaccines, the death rate of new coronary pneumonia is the highest. At present, 56 countries and regions in the world have failed to vaccinate 10% of their population, most of which are in Africa. By the end of this year, more countries may not be able to achieve the goal of vaccinating 40% of the population.
Tan Desai emphasized that countries and companies that control global vaccine supply should give priority to providing vaccines to the "New Coronary Pneumonia Vaccine Implementation Plan."
Fuel shortage continues, many European countries sound energy crisis alert
Recently, the successive anomalies in the energy markets of many European countries have sounded the alarm of the energy crisis. In the United Kingdom, many gas stations in London and other places still have "no fuel to fill", and the "fuel shortage" caused by the lack of truck drivers is still severe.
In terms of natural gas, European natural gas futures prices soared 22%, setting a new high in the past ten years. In addition to natural gas, electricity prices in some European countries have also continued to rise. In September this year, electricity prices in Germany and Spain have reached three or four times the average electricity price in the past two years.
In the UK, fuel shortages and labor shortages caused by the lack of truck drivers have affected the UK recently and have spread to the supply of daily necessities.
The latest data released by the National Bureau of Statistics on the 8th showed that in the past two weeks, about one-sixth of the population of the United Kingdom, that is, about 8 million people, could not buy the necessities of life. Another nearly a quarter of the British people said that non-essential goods are also very difficult to buy.
At present, the UK is affected by the "Brexit" crisis and the new crown pneumonia epidemic, which has caused a severe labor shortage and a large number of daily necessities in supermarkets. According to statistics, there are 1 million job vacancies in the UK between June and August.
In August, some restaurants, bars and supermarkets had to close some stores due to shortages of manpower, fewer truck drivers, and failure to deliver food materials.
Even more serious is that the UK is also facing a power supply crisis. On the 7th, the British "Guardian" quoted a report from the British National Power Company that the risk of power outages in British factories and homes this winter has increased. The report said that although the power system has sufficient reserves, the current situation is worse than predicted in July, partly due to a fire on a submarine high-voltage cable imported from France.
It is estimated that the power supply via the cable will be restored by at most half by March next year. The Guardian also reported that since the beginning of this year, 12 power suppliers have closed down, and it is expected that more suppliers will be in desperation by the end of the year.
Recently, due to the emergence of energy shortages, the price of natural gas in the UK has hit a record high. The British energy regulator warned on the 8th that in the spring of next year, Britain's energy prices will once again "substantially rise." At the same time, some energy companies accused the British government of "strangling" energy companies.
In addition to the United Kingdom, EU natural gas prices have also climbed for several consecutive months. Recently, natural gas contracts have set new highs in Europe. Futures prices have soared 22%, setting a new high in the past ten years.
According to data from the European Natural Gas Infrastructure Association, at present, the European regional natural gas inventory is only 74.7% of the full-load level, which is the lowest level in more than a decade, and the winter energy reserve needs to be replenished urgently.
Europe is "short of gas", but the United States still demands sanctions on "Beixi-2"
In continental Europe, natural gas prices continue to rise, and Europeans are ushering in a cold and expensive winter. Once the newly completed Russian "Beixi-2" natural gas pipeline project is put into operation, it is expected to alleviate the energy crisis in Europe.
However, there are still US congressmen seeking to impose new sanctions on Russia’s "Beixi-2" project in recent days-European Parliament member Maximilian Krall from Germany’s "Choice Party" stated on the 10th that such behavior in the United States is completely It only cares about its own hegemony, regardless of the life and death of Europe.
Member of the European Parliament Maximilian Kra: Western Europe and Russia have reached a deeper level of cooperation in economic exchanges and energy supply, and Europe has ushered in new development opportunities. Europe is no longer completely dependent on the United States, so the United States has begun to play with geopolitics in an attempt to maintain its global hegemony. The United States does not care about European consumer prices and energy security at all. They only think about their hegemony. The United States wants to sanction the "Beixi-2" project for no reasonable reason. It is not because of Russia's actions or economic interests. The US government's "anti-Russia" is for geopolitical purposes.
The "Beixi-2" natural gas pipeline runs from Russia to Germany through the Baltic Sea bottom. The project pipeline consists of two branch lines. The designed annual gas transmission capacity is about 55 billion cubic meters. It can bypass Ukraine and transport Russian natural gas to Germany and other European countries. .
Gazprom announced last month that the construction of the "Beixi-2" natural gas pipeline has been completed and plans to be put into operation before the end of this year.
On the 4th of this month, the "Beixi-2" project operating company issued a statement saying that it has begun to inject gas into the first branch of "Beixi-2" to achieve the required gas volume and pressure for technical testing.
The United States has long opposed the "Beixi-2" project, calling it a Russian geostrategic project, while Germany and Russia said the project is a commercial project. The Russian government accused the United States of obstructing this project to squeeze its share of the Russian energy market and attempt to sell more American natural gas to Europe at high prices.
The energy crisis has spread, and many Asian countries have also launched panic buying
The global energy crisis has intensified. Following crude oil and coal, natural gas prices have also risen sharply. Recently, JKM, an important indicator of Asian LNG prices, has even refreshed its highest value since statistics. Affected by this, South Korea has begun to plan to increase urban natural gas prices.
With the spread of the energy crisis, South Korea, Japan and other countries have also set off a wave of natural gas purchases. On the 6th of this month, the price of JKM, an important indicator of Asian LNG prices, reached US$56.326, an increase of 42% from the previous day, the largest increase in 12 years. It is mainly due to the sharp increase in seasonal demand and the continuous increase in European natural gas prices, which has led to panic purchases by buyers from many countries and pushed up the price of LNG.
The price of LNG directly affects the price of natural gas in cities. All the liquefied natural gas used in South Korea is imported by the Korea Gas Corporation and then supplied to power generation companies and natural gas companies. Although most of Korea Gas Corporation's LNG is purchased at long-term contract prices, the spot price will not rise immediately, but if the price of LNG continues to rise, the long-term contract price will also face an increase, which will affect the price of urban natural gas.
South Korea has frozen urban natural gas prices for 15 consecutive months since July last year. Affected by operating pressures, South Korea’s energy department recently planned to raise the price of natural gas in cities in November, and the Ministry of Finance decided to freeze natural gas prices until the end of this year. However, considering the continued spread of the global energy crisis, the energy sector said it would continue to negotiate. At present, South Korea's consumer index has risen by more than 2% for six consecutive months. In the process of a multi-sectoral stalemate, South Korean people worry that rising natural gas prices will drive up animal prices. The winter heating season is approaching, and the burden of living will increase again.
At the same time, South Korean experts believe that the trend of LNG price increases will not change in a short time. In the context of the global promotion of carbon neutrality, countries are looking for energy with low carbon emissions. The supply of renewable energy such as wind and solar energy is not sufficient. At this stage, the easiest way to achieve carbon neutrality is liquefied natural gas. At present, South Korea is also accelerating its energy transition. By 2034, it plans to abandon 30 coal-fired power generating units and add 24 LNG power generating units at the same time.
Russian President Vladimir Putin said oil prices may rise to $100
The global energy crisis still shows no signs of abating. Russian President Vladimir Putin said on Wednesday (13th) that as global demand for oil continues to soar and supply continues to be tight, oil prices may reach US$100 per barrel. This means that global inflation may continue to increase.
When asked about the price prospects of West Texas Intermediate (WTI) crude oil during a panel discussion during the Russian Energy Week on Wednesday, Putin said that it is very likely that the oil price will rise to $100.
Oil prices have soared by more than 50% this year, and WTI crude oil futures prices exceeded US$80/barrel this week, marking the first time since 2014 to break through the barrier. Putin said on Wednesday that as one of the world's largest oil producers, Russia is doing its best to stabilize oil prices.
He said, I would like to say that Russia, our partners and OPEC+ organization, we are doing everything possible to ensure the stability of the oil market. We are working hard to prevent any shock peaks in prices. Of course we don't want this-it's not in our interest.
Putin said that for the energy market, with rising natural gas prices, soaring coal and carbon costs, and low wind power generation, oil prices will likely return to $100.
Inflationary pressures in the United States continue. After two consecutive months of slowing growth, the CPI in September rose by 5.4% year-on-year, exceeding market expectations.
It is worth noting that, from the perspective of the US CPI breakdown, the price of public services such as fuel oil and natural gas dominated the monthly increase in the US CPI in September-gasoline prices rose again by 1.2% in September, a year-on-year increase of 42.1%; Fuel oil prices rose by 3.9%, a 42.6% increase over the same period last year. If oil prices continue to soar, inflationary pressures in the United States may further intensify.
Last Monday (October 4), the OPEC+ oil-producing countries alliance led by Saudi Arabia and Russia stated that it will increase production by 400,000 barrels per day in November as originally planned, that is, it will not increase production excessively to alleviate the supply shortage. This exacerbated concerns about energy supply shortages and pushed oil prices to continue to soar.
Goldman Sachs recently stated that Brent crude oil futures prices are expected to remain at around US$90 per barrel by the end of December. Bank of America analysts previously predicted that international oil prices may further climb to US$100 per barrel before the end of this year.
Putin denied on Wednesday that Russia uses energy as a “weapon” in geopolitics. He believes that the United States has only exacerbated the European energy crisis. We did not use any weapons. Putin stated that even in the most difficult period of the Cold War, Russia was regularly fulfilling its contractual obligations and supplying natural gas to Europe.
Putin said that the European gas crisis is largely its own fault, and other suppliers, including the United States, have also reduced their supply to the region.
Citi predicts oil prices this winter may reach US$90
Citigroup said on Monday that due to the shift in natural gas demand to oil, oil consumption has increased by as much as 1 million barrels per day. Oil prices are expected to reach $90 per barrel this winter, and inventories may fall to record lows by the end of the year. The bank raised its forecast for Brent crude oil prices in the fourth quarter to $85 per barrel, saying that inventories may fall to record lows before the end of the year.
At the same time, due to soaring energy prices, consumers switched from natural gas to oil-based products, and daily consumption increased by up to 1 million barrels;
The current trading price of Brent crude oil is close to US$85 per barrel, while the US West Texas Intermediate Crude Oil (WTI) has reached its highest level since 2014. In the context of the global energy crisis, traders are preparing for higher consumption levels. At the same time, the Organization of Petroleum Exporting Countries (OPEC) and its allies are only slowly restoring supplies to the market.
Citigroup stated that although OPEC and its allies still insist on plans to increase the supply of crude oil by 400,000 barrels per day per month, under pressure from major consumer countries such as the United States, China and India, they may start to choose to double the rate of increase in production. To 800,000 barrels per day.
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