Oil Futures Gain on Supply Cuts & Market Updates
Review this week's rise in oil prices, spurred by Saudi and Russian supply cuts, US rig count changes, and Chevron's capital investment plans in the Permian Basin.
On Today’s Energy Shots:
Weekly Energy Industry News Recap
Oil Futures Gain on Supply Cuts & Market Updates
Weekly Energy News Recap:
Chevron’s Australia LNG Strikes
Workers at Chevron’s Australian LNG facilities went on strike Friday after mediation talks ended without an agreement.
Chevron’s Australian plants produce roughly 5.1% of global LNG supplies, mainly exporting to Asian facilities in Japan, South Korea, China, and Taiwan.
Unions plan to escalate the strike, beginning with bans on overtime work and daily work stoppages. If a deal isn’t finalized within two weeks, union representatives say they will expand to a total strike.
Australia was the world’s largest exporter of LNG last year, with shipments of roughly 80.9 million metric tons (~4.18 billion mmBTUs).
Russia’s Gas Price Disparity
While the EU officially aims to ween off Russian fossil fuels by 2027, LNG imports are heading in the opposite direction.
In the first half of the year, Spain became the second-largest buyer of Russian LNG. July imports of Russian super-cooled fuel increased 65% YOY, pushing the total share of Russian gas to 28% of Spain’s overall imports for the same period.
EU countries have imported approximately 40% more Russian LNG in the first seven months of 2023 compared to the same period before the Ukraine conflict in 2021. This week, EU officials said the bloc has no short-term plans to ban Russian LNG over fears of disrupting markets.
On Friday, Bloomberg reported that Russia expects to sell pipeline natural gas to Europe at a 77% premium to its Chinese deliveries. Sales to European buyers for the next three years will average $481.7 per 1,000 cubic meters compared to $271.6 for China.
Last year, Russia sold pipeline natural gas at a steeper disparity of $983.8 per 1,000 cubic meters to Europe versus $277.1 to China.
German Parliament Passes Heating Reform
On Friday, Germany’s lower parliament passed reforms to phase out oil and gas heating systems.
The policy requires new installations of heating systems to use more than 65% renewable energy in areas that submit a binding municipal heating plan.
Binding heating plans are expected in 2026 for small districts and 2028 for larger ones.
Officials say the bill will cut approximately 40 million metric tons of carbon emissions by 2030
Australia Considers Delaying Largest Coal-Plant Closure
Australian officials are discussing plans to delay closing the nation’s largest coal-fired power plant over concerns that renewable electricity generation and storage capacity will fall short of growing energy demand.
Origin Energy Ltd.’s Eraring plant is scheduled to close in 2025 as subsidized solar and wind energy sources erode profitability.
Last month, the Australian Energy Market Operator cited energy reliability risks beginning in 2025 as a result of closing 62% of the coal-powered generation facilities that provide the majority of Australian electricity.
Oil Futures Gain on Supply Cuts & Market Updates
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