Oil heading to $90, renewables in Japan & more

It's been a hectic few weeks in the energy markets over the course of which oil prices have acquired a bit of buoyancy. Its something they briefly lost last month following the OPEC+ meeting. Brent crude futures currently sit just a few dollars south of $90 per barrel level, having dropped below $80 in early June. 

While global crude demand permutations haven't materially altered, there is renewed optimism over lower interest rates in key markets. That and higher demand projections in Asian markets, especially India, appear to be supporting prices. This sets the stall for relatively higher crude prices as we enter the first month of the second half of the year. 

All things staying even, the Oilholic would argue there is now a near-term case for $90 Brent crude prices. However, defending price upticks beyond the level would prove tricky, given the fact that crude supplies, especially those of light sweet non-OPEC crude, remain on a solid footing.  

Away from the oil market, yours truly was interviewed by the BBC on Japan's and wider East Asia's renewable energy landscape. The Oilholic spoke about a call by the country's private sector to triple its renewables capacity by 2035. 

This kerfuffle over Japan's future energy mix has been going on since the Fukushima tragedy in 2011, and has been further complicated by readily available and competitively priced LNG. 

Japan continues to trail the G7 in terms of renewables. However, while still using coal as a power generation source, Japan is not expanding usage in the same way as India and China are. Overall, a renewables capacity target in excess of 360GW by 2035 looks very ambitious. However, never discount Japanese ingenuity for getting things done! 

Elsewhere, here is one of the Oilholic's missives from late June on why the world needs to nurture sustainable entrepreneurship for Forbes (click here), and another one on why green hydrogen's fate in a net zero economy hinges on upscaling for Energy Connects (click here).

Finally, on the eve of the UK's general election, here are this blogger's thoughts on how the outcome will impact the country's energy industry. Regardless of whoever wins, looks like UK Energy Inc may be stuck between a rock and hard place! That's all for the moment folks. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo: Gaurav Sharma on BBC World © BBC, June 25, 2024. 

Oil market's OPEC meeting tantrum & global LNG

On June 2nd, OPEC+ decided to adopt a pensive position rather than a defensive or offensive one and it promptly sent the oil market into a tizz. Quite frankly, it needn't have. According to data aggregators, OPEC+ members are currently cutting production by 5.86 million barrels per day (bpd). 

The figure includes 3.66 million bpd of group-wide cuts and "voluntary cuts" by eight members of 2.2 million bpd. They include Saudi Arabia, Russia and six others - Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates.

The latter cuts were due to expire at the end of June 2024 while the group-wide ones were due to end in December 2024. Following a part-online, part-physical meeting, OPEC+ extended the cuts of 3.66 million bpd until the end of 2025. But it only prolonged the cuts of 2.2 million bpd by three months until the end of September 2024. After which these voluntary cuts will be gradually phased out over the course of a year from October 2024 to September 2025.

As the markets opened for trading the following, a crude carnage ensued with Brent shattering its $80 per barrel floor and heading lower to $77. While the OPEC+ decision can be construed as bearish, it wasn't the only reason for the slide in prices. As this blogger told Reuters, a number of factors came into play and OPEC's mild surprise merely served as a catalyst. Economic uncertainties persist both in US and China - the world's two leading crude consumers. Neither country offered consistently positive data the month before. 

Both the IEA and OPEC have now revised their demand growth forecasts lower, albeit to varying degrees. The IEA's (at 1.1 million bpd) is half of what OPEC now predicts (2.2 million bpd). Traders looked at all that and went net short for the week.   

However, all things being equal, Brent under $80 did appear to be oversold, as yours truly wrote on Forbes. That's why merely a calendar week later, prices are back above $80 and about right too. What OPEC did (or didn't) matters, but only to a point.

And now from oil to LNG, where yours truly has been doing a deep dive into the state of affairs and the general direction of the global market. 

That's after the latest outages in Norway and Australia triggered yet another spike in prices. As the Oilholic said in a recent CGTN interview, only high levels of storage in Europe have stopped prices from overshooting. It all bottles down to Asia (the world's largest LNG importing region) regularly competing with Europe (the second-largest) for cargoes. This year, Dutch TTF gas prices have risen by 40% over the past three months to trade at around $11 per million British thermal units (mmbtu) levels. 

However, here's the Oilholic's latest market analysis via Forbes on why a change may be on the horizon. Overall, future Asian demand, pace of the energy transition and new supply coming onstream (in the US and Qatar) will likely influence a calmer direction of near-term travel as the end of the current decade approaches. (Full report here). 

That's a wrap for now. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo I: OPEC logo at its Secretariat in Vienna, Austria. © Gaurav Sharma 2018. Photo II: Gaurav Sharma on CGTN Europe for commentary on the natural gas market. © CGTN, June 2024. 

Range-bound crude prices & European majors' antics

After a fairly volatile April, a sense of relative calm has returned to the global oil markets in May. Since the start of the month, Brent futures have fluctuated between $82-84 per barrel with the global proxy benchmark's $85 support having been firmly breached last month. 

What was April's technical support level is proving to be this month's resistance level with oil struggling to cap $85 in a market still searching for a firm direction of travel.

It's doubtful if OPEC+ would be the one to provide direction. The Oilholic's reading of market sentiment is that a rollover of production cuts by the producers' group has been largely priced in by the market. 

If China's data remains positive overall, and the second reading of the US Q1 GDP is similarly so, perhaps an uptick in prices may be expected in the second half of the year. However, for now Brent remains in technical backwardation, i.e. the current contract is trading higher compared to one six months or more out. For example, Jan 2025 Brent is just north of $81 at the time of writing this blog. 

The oil price isn't too high and it isn't too low at the moment. So if you were OPEC+ why would you make any headline moves on production quotas? Much rather focus on soothing internal tensions for the common cause. Well their common cause, obviously not the consumers'! 

Away from crude prices, the European oil and gas majors sang from the same hymn sheet in recent weeks at the release of their quarterly results - offer shareholders higher dividends and announce multi-billion share buybacks. BP, Shell and TotalEnergies were all at it, but the latter two went one step further by professing their love for a primary US-listing in search of a higher valuation. 

Here are this blogger's musings on their antics and reasons via Forbes, and Chevron calling time on 55 years of oil and gas exploration in the North Sea. That's a wrap. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo: Oil pump jack model at the AVEVA World 2023 Conference, Moscone Center, San Francisco, US. © Gaurav Sharma October 2023. 

All missives from OPTIMIZE24

With OPTIMIZE24, organised by AspenTech, drawing to a close last week, the Oilholic marked a fascinating and engaging week with a number of pieces for Forbes as well as daily blog posts. 

Here are the Forbes pieces:

• AspenTech ‘Uniquely Positioned’ As An Optimization Enabler For Global Industries, Says CEO, April 30, 2024.
• Net Zero Goals Intertwine With A Viable Circular Economy, Says Sustainability Tech Expert, May 6, 2024.

And here are all the blog entries for OPTIMIZE24:

• 'Crude' carnage, a crazy April & arriving in H-Town, April 29, 2024.
• Kick-off at OPTIMIZE24 & delving into 'bio-optimization', April 30, 2024.
• 'Partnering for the future' at OPTIMIZE24, May 1, 2024. 

That's a wrap. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

To follow The Oilholic on Motley Fool click here.

To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024.

'Partnering for the future' at OPTIMIZE24

The second and final day of the main conference program at OPTIMIZE24 has now concluded. It started with an early morning primer on the energy transition challenge from geologist, documentary filmmaker and founder of the Switch Energy Alliance Scott Tinker. 

This set attendees up for an insightful panel discussion on navigating net zero hosted by AspenTech's Chief Product & Sustainability Officer Rasha Hasaneen. She was joined by fellow panellists Andre Argenton, Chief Sustainability Officer at Dow, Suresh Kotha, Chief Information Officer at SMUD,  Darryl Willis, Corporate Vice President, Energy & Resources Industry at Microsoft, Zhanna Golodryga, Executive Vice President, Emerging Energy and Sustainability at Phillips 66, Aqil Jamal, Chief Technologist, Carbon Management Research Division at Aramco, and Mike Train, Chief Sustainability Officer at Emerson. 

The hour-long discussion that followed dwelt on how digitization and collaboration in the energy and industrial complex remain crucial to navigating net zero challenges and achieving a just energy transition by tackling the energy trilemma (of sustainability, security and affordability). 

Summing up, Hasaneen noted that existing digitalization tools may hold many of the answers, while innovations - like artificial intelligence (AI) and quantum computing - may enable a more consistent adoption across both traditional and emerging energy sectors. 

Ultimately, as the AspenTech sustainability head noted: "Technologies do exist to make the world greener and cleaner, willpower and collaboration is what's needed." Or in other words - all parties need to "partner for the future."

Elsewhere, over the course of the day, this blogger heard interesting sessions touching on cybersecurity best practices for operational technology, how AspenTech solutions are being deployed for automating well production, flaring and downtime reduction in the Permian basin, performance engineering for petrochemicals and the company's solutions for supporting the wider hydrogen industry. 

Away from it all, the Oilholic was delighted to host thought leadership videos for AspenTech at OPTIMIZE24 with several of the company's key movers and shakers including Hasaneen (pictured above). The software company's strategic partners and clients also participated in the exercise.

They included senior executives from EY, Accenture, Wood, Microsoft, Amazon Web Services, Westlake, TenneT and SMUD. The videos will be posted soon on AspenTech's and their partners' commercial and social channels. So watch this space folks!

And finally, the Oilholic shares with you a glimpse of the event's really cool "smart" lanyard. How so? Well the mini device attached to the strap, carried yours truly's event sessions preferences, and flashed a reminder each time they were due to start. Not only that, touching / syncing it with a fellow attendee's lanyard exchanged mutual contact details! All very, very handy and innovative! And that alas is it for the latest edition of OPTIMIZE. 

All that remains is to thank the wonderful Team AspenTech for putting on a fabulous and insightful event in Houston, and for their warm hospitality. Here's to the next installment in the very near future. More musings to follow soon after the flight home to London. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

To follow The Oilholic on Motley Fool click here.

To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo I: 'Navigating net zero' panel at AspenTech's OPTIMIZE24 on May 1, 2024 in Houston, Texas, US. © Gaurav Sharma 2024. Photo II: Gaurav Sharma recording an AspenTech thought leadership video with Rasha Hasaneen, the company's Chief Product & Sustainability Officer on May 1, 2024. © Pete Yagmin /AspenTech 2024. Photo III: OPTIMIZE24's smart lanyard. © Gaurav Sharma 2024.