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API Responds to President’s Remarks on Gas Prices, SPR and Domestic Production
https://www.api.org/news-policy-and-issues/news/2022/03/31/api-responds-to-president-remarks-on-gas-prices-spr-and-domestic-production
WASHINGTON, March 31, 2022 — Following remarks from President Biden today on energy prices and an announcement to release 180 million barrels of oil from the Strategic Petroleum Reserve (SPR), the American Petroleum Institute urged the administration to embrace a government-wide approach to energy security and signal that America is open for energy investment.
“There are many factors behind rising energy costs, from geopolitical volatility and supply chain constraints to policy uncertainty, and the American people deserve real solutions,” API President and CEO Mike Sommers said. “The SPR was put in place to reduce the impact of significant supply chain disruptions, and while today’s release may provide some short-term relief, it is far from a long-term solution to the economic pain Americans are feeling at the pump.”
Earlier this month, API sent a letter to the administration outlining several steps to ensure long-term American energy security, including fully restoring federal leasing and holding lease sales; implementing a new 5-year program for offshore leasing before the current program expires at the end of June; swiftly approving all LNG applications and ensuring a timely and efficient permitting system.
“The best thing the White House can do right now is to remove barriers to investment in American energy production and infrastructure,” Sommers said. “Unfortunately, today we heard more mixed signals about developing affordable, reliable and secure American natural gas and oil.”
API also responded to the administration’s continued misleading claims on “unused leases” and a proposal to “make companies pay fees on wells from their leases that they haven’t used.” In fact, companies already begin paying rent on leases to the federal government as soon as leases are granted.
“The administration once again has a fundamental misunderstanding of how leases work,” Sommers said. “The percentage of producing leases is at a two-decade high, with nearly two out of three leases producing natural gas and oil. With nearly 5,000 permits awaiting approval from the administration and thousands more tied up in litigation, we stand ready to work with the administration to expand domestic production and ensure the U.S. and our allies have access to the affordable, reliable energy that’s needed not only today but for years to come.”
New API analysis shows that in the first 14 months of the Obama administration, the Department of the Interior held 47 federal lease sales, while the Biden administration has held only a single lease sale since January 2021, which was later invalidated. Leases are issued prior to exploration, and not every permit on leased land has resources, despite substantial investments by developers. Recent reports show the US Bureau of Land Management approved 95 permits to drill in January 2022, compared with 643 in April 2021.
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Its nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.
American Petroleum Institute April 5th “Full” Video Interview with Fox News:
https://www.foxnews.com/media/oil-gas-biden-russia-energy-fossil-fuel
Very interesting video interview regarding (ESG) Environmental, Social, and Governance:
https://www.realclearenergy.org/video/2022/02/14/glenn_beck_addresses_how_esg_is_destroying_our_society_816374.html
Interesting Energy Articles:
https://www.heartland.org/news-opinion/news/saving-america-from-planet-threatening-fossil-fuels
https://www.forbes.com/sites/edhirs/2022/04/04/benefits-and-costs-of-the-secs-proposed-climate-related-disclosures-for-investors/?sh=3266028c22d5
https://www.foxbusiness.com/politics/republican-senators-sec-biden-climate-rule
Energy Policy Paper. Also interesting, but a little long:
http://www.dieterhelm.co.uk/assets/secure/documents/Energy-policy-30.03.2022.pdf
Mrs. Smith
US Total Oil and Gas Rig Count increased by 16 reflecting 689 rigs as of 4/8/2022. Offshore GOM Rig Count decreased by 2 from the previous week and is currently showing 11 rigs. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
Mrs. Smith
You are 99.9% correct on this one spec. Good points. Great post. Thank you.
“A little bird told me” there is already someone out there with 100 percent. /IJ
Mrs. Smith
Due to Delek Group’s protocol regarding replicating their financials, I will not be linking or inserting any of their information on the GSPE board.
But from their annual financials released March 30, 2022, Delek devoted several pages to discussing North America, and more specifically the U.S. GOM. As of that date, Delek Group (Delek GOM Investments, LLC) continues to consider itself a 23.2% “owner” of Gulfslope Energy and a 75% “working interest partner” in the GOM Tau prospect.
In addition, as of April 1, 2022 the BOEM reports the two Tau leases as “active” and Delek and Gulfslope as it’s lessees.
At this time, ‘those’ fundamentals have not changed, so I am still “holding the bag” too.
Mrs. Smith
Well, if you do not believe in the company or the project, and I believe that you do not, then in my opinion, you will not believe in any explanation either. So why bother?
Mrs. Smith
27th OPEC and non-OPEC Ministerial Meeting March 31, 2022
https://www.opec.org/opec_web/en/press_room/6845.htm
Following the conclusion of the 27th OPEC and non-OPEC Ministerial Meeting, held via videoconference on March 31, it was noted that continuing oil market fundamentals and the consensus on the outlook pointed to a well-balanced market, and that current volatility is not caused by fundamentals, but by ongoing geopolitical developments.
The OPEC and participating non-OPEC oil-producing countries decided to:
1. Reaffirm the decision of the 10th OPEC and non-OPEC Ministerial Meeting on 12th April 2020 and further endorsed in subsequent meetings including the 19th OPEC and non-OPEC Ministerial Meeting on the 18th July 2021.
2. Reconfirm the baseline adjustment, the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC Ministerial Meeting and the decision to adjust upward the monthly overall production by 0.432 mb/d the month of May 2022, as per the attached schedule.
https://www.opec.org/opec_web/static_files_project/media/downloads/press_room/Production%20table%20-%2027th%20ONOMM.pdf
3. Reiterate the critical importance of adhering to full conformity and to the compensation mechanism taking advantage of the extension of the compensation period until the end of June 2022. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.
4. Hold the 28th OPEC and non-OPEC Ministerial Meeting on 5 May 2022.
Outcome of the Extraordinary 183rd Meeting of the OPEC Conference, March 31, 2022
At the Extraordinary 183rd Meeting of the OPEC Conference held via videoconference today, the Conference, in a short meeting, approved with immediate effect, the replacement of the International Energy Agency (IEA) with Wood Mackenzie and Rystad Energy as secondary sources used to assess OPEC Member Countries crude oil production.
Note: I found it interesting that OPEC decided to replace the IEA. I guess hostility towards fossil fuels only goes so far.
Encouraging news, top Democrats pressuring Biden to immediately push for increased drilling in the GOM.
Also, ‘PERSPECTIVE: Inconvenient truths about energy’
https://gazette.com/denver-gazette/perspective-inconvenient-truths-about-energy/article_8a0d6248-ab7e-11ec-aac7-8f4d81c93907.html
The energy transition is not happening. Or not nearly at the pace that everyone believes or wishes. At current rates the “transition” is set to finish in the mid-2600s. The U.N. Rio Convention and subsequent Kyoto Protocol launched the energy transition drive in 1992. Global energy consumption from hydrocarbons has grown massively since then, with market share only declining by four percentage points over the last 30 years from 87% in 1992 to 83% today. I am not celebrating this fact as I have spent years working on energy transition technologies.
The energy transition isn’t failing for lack of earnest effort. It is failing because energy is ‘hard, and 3 billion people living in energy poverty are desperate for reliable and scalable energy sources. Meanwhile, 1 billion energy-rich people are resistant to diminishing their standard of living with higher cost and an increasingly unreliable energy diet.
There is no “climate crisis” either. If there is a term more at odds with the exhaustive literature surveys of the Intergovernmental Panel on Climate Change (IPCC) than “climate crisis,” I have not heard it.
Climate change is a real global challenge that is extensively studied. Unfortunately, the facts and rational dialogue about the myriad tradeoffs aren’t reaching policy makers, the media, or activist groups. Or are they are simply ignoring these inconvenient truths?
For example, we hear endlessly about the rise in frequency and intensity of extreme weather. This narrative is highly effective at scaring people and driving political action. It is also false. The reality is detailed in countless publications and summarized in the IPCC reports. Deaths from extreme weather have plunged over the last century, reaching new all-time lows last year, an outcome to be celebrated. This is not because extreme weather has declined. In fact, extreme weather shows no meaningful trend at all. Deaths from extreme weather events have declined because highly energized, wealthier societies are much better prepared to survive nature’s wrath.
Recognizing reality
You are not supposed to say out loud that there is no climate crisis or that the energy transition is proceeding at a glacial pace. These are unfashionable and, to many, offensive facts. But let’s be honest. Energy transition ambitions must recognize reality. Otherwise, poor investment decisions and regulatory frameworks will lead to surging global-energy and food prices. This is exactly what is happening. We are here today in large part because energy transition efforts that previously encompassed solely aggressive support of alternative energy policies, economics be damned, have recently supplemented this strategy with growing efforts to obstruct fossil fuel development. Fossil fuels make the modern world possible.
The real crisis today is an energy crisis. It began to reveal itself last fall with a severe shortage in globally traded Liquified Natural Gas (LNG). The LNG crisis has not abated and it gives Russia’s Vladimir Putin tremendous leverage over Europe. Without Russian gas, the lights in Europe go out. Amid war, public outrage, and intense sanctions, Russian gas flows to Europe remain unchanged. Russian oil exports have continued with minimal interruption. The world can talk tough about sanctioning Russian energy exports, but those exports are vitally needed; hence they continue. Energy security equals national security.
The world energy system, critical to human wellbeing, requires meaningful spare capacity to handle inevitable bumps in the road. In the electricity sector, which represents only 20% of global energy but 40% in wealthy countries, this is called reserve capacity. In the oil market, spare production capacity today is shrinking and concentrated in OPEC nations like Saudi Arabia and the United Arab Emirates. Also, there is a massive global storage network in both surface tanks and underground caverns. In natural gas markets, there are both extensive underground storage reservoirs and typically spare export capacity through pipelines and large industrial LNG export and import facilities.
The last several years have seen this spare capacity whittled away due partly to lower commodity prices and poor corporate returns shrinking the appetite to invest. Excess capacity has also shrunk due to regulatory blockage of critical energy infrastructure like pipelines and export terminals. Roadblocks for well permitting and leasing on federal lands, together with a mass public miseducation campaign on energy and climate alarmism, are also stymieing hydrocarbon development. Investment capital is further constrained by a corporate Environment, Social and Governance (ESG) movement, and divestment campaigns. These factors are shrinking hydrocarbon investment below what it otherwise would be in response to price signals and outlook for supply and demand. The net result is a constrained supply of oil, natural gas, and coal, which means higher prices and greater risk of market dislocations like the one unfolding today.
High energy and food price inflation is the cruelest form of tax on the poor. After a few specific examples, I’ll return to what we should do now to reverse these damaging and deeply inequitable trends.
In denial about demand
Why does the world today suffer from a severe shortage of LNG? Demand for natural gas has been growing strongly for decades. It provides a much cleaner substitute for coal in electricity production, home heating, and a myriad of industrial and petrochemical uses. Rising displacement of coal by natural gas has been the largest source of GHG emission reductions. Unfortunately, the aforementioned factors have prevented supply from keeping pace with rising demand. Energy shortages drive rapid prices rises and have cascading impacts on everything else. Energy is foundational to everything humans do. Everything.
Perhaps the most critical use of natural gas is nitrogen fertilizer production. Roughly a century ago, two German chemists, both subsequently awarded Nobel Prizes, developed a process to produce nitrogen fertilizer on an industrial scale. Before the Haber-Bosch process innovation, nitrogen content in soil was a major constraint on crop productivity. Existing nitrogen sources from bird guano, manure, and rotating cultivation of pea crops were limited. Today, elimination of natural gas-synthesized nitrogen fertilizer would cut global food production in half.
The now six-months-long LNG crisis translates into a worldwide food crisis as skyrocketing fertilizer prices are cascading into much higher food prices. Wheat prices are already at a record high and will likely head higher as spring plantings suffer from under fertilization.
Global LNG markets are tight because rising demand has outrun the growth in LNG export capacity in the United States, now the largest LNG exporter. We have an abundance of natural gas in the United States. Unfortunately, we have a shortage of pipelines to transport this gas and LNG export terminals, preventing us from relieving the energy crisis in Europe and around the world. These pipeline and export terminal shortages are due in large part to regulatory blockage. The result is that natural gas prices in the United States and Canada are five to ten times lower than in Asia and Europe. This deeply disadvantages consumers and factories (like fertilizer factories) in Europe and Asia that rely on LNG imports to fulfill their needs.
Failed energy policies
Russia’s invasion of Ukraine did not cause today’s energy crisis. Quite the reverse. Today’s energy crisis is likely an important factor in why Russia chose to invade Ukraine now. Europe’s energy situation is both tenuous and highly dependent on Russian imports. Russia is the second-largest oil and natural gas producer after the United States. Russia is the largest exporter of natural gas, supplying over 40% of Europe’s total demand. Additionally, Russia is the largest source of imported oil and coal to Europe. Europe put itself in this unenviable position by pursuing unrealistic, politically-driven policies attempting to rapidly transition its energy sources to combat climate change. Europe’s energy pivot has been a massive failure on all fronts: higher energy costs, grave energy insecurity, and negligible climate impacts.
Germany is the poster child of this failure. In 2000, Germany set out to decarbonize its energy system, spending hundreds of billions of dollars on this effort over the last 20 years. Germany only marginally reduced its dependence on hydrocarbons from 84% in 2000 to 78% today. The United States matched this 6% decline in hydrocarbon market share from 86% in 2000 to 80% today. Unlike in the US, Germany more than doubled its electricity prices — before the recent massive additional price increases — by creating a second electric grid. This second grid is comprised of massive wind and solar electric generating sources that only deliver 20% of nameplate capacity on average, and often less than 5% for days at a time. The sun doesn’t always shine and the wind doesn’t always blow. Hence, Germany could only shrink legacy coal, gas and nuclear capacity by 15%. It now must pay to maintain both grids. The legacy grid must always be flexing up and down in a wildly inefficient manner to keep the lights on, hospitals functioning, homes heated, and factories powered. Outside of the electricity sector, Germany’s energy system is largely unchanged. It has long had high taxes on gasoline and diesel for transportation, and lower energy taxes on industry. Germany subsidizes industrial energy prices attempting to avoid the near-complete deindustrialization that the UK has suffered due to expensive energy policies across the board.
Over the last 20 years, the United States has seen two shale revolutions, first in natural gas and then in oil. The net result has been the U.S. producing greater total energy than consumed in 2019 and 2020 for the first time since the 1950s. The U.S. went from the largest importer of natural gas to the second-largest exporter in less than fifteen years, all with private capital and innovation. The shale revolution lowered domestic and global energy prices due to surging growth in U.S. production. Surging US propane exports are reducing the cost and raising the availability of clean cooking and heating fuels for those in dire energy poverty still burning wood, dung, and agricultural waste to cook their daily meals. U.S. GHG emissions also plunged to the lowest level on a per capita basis since 1960. Imagine the world's energy situation today with the American shale revolution.
We are starting to hamstring and squander the enormous benefits of the shale revolution. The same misinformed anti-hydrocarbon crusade that impoverished Europe and made it heavily dependent on Russia is now sweeping the US. California and New England had already adopted European-style energy policies driving up electricity prices, reducing grid reliability, and driving manufacturing and other energy-intensive, blue-collar jobs out of their states. Colorado is not far behind.
California, a state with a plentitude of blessings, managed to create the highest adjusted poverty rate in the nation with an expensive, unstable power grid increasingly reliant on coal-powered electricity imports from Nevada and Utah.
New England’s proximity to Pennsylvania’s clean low-cost natural gas resources was a stroke of luck. But it refused to expand the natural gas pipelines running from Pennsylvania, leaving it chronically short of natural gas, its largest source of electricity and cleanest option for home heating. Instead, it remains heavily reliant on fuel oil for home heating and occasionally imports LNG from Russia to keep the lights on. Last winter New England burned copious amounts of fuel oil to produce electricity which went out of fashion in the 1970s elsewhere in the US.
Texas has not been immune from energy illiteracy and collateral damage. Texas’ poorly designed electric grid, structured to encourage investment in renewables, led to hundreds dying last year in the Uri cold spell. No one would pay the same price for an Uber that showed up whenever convenient for the driver and dropped you off wherever they desired. But that is what Texas does with electricity: paying the same price for reliable electricity that balances the grid as they do for unreliable, unpredictable electricity. No wonder the reliability of the Texas grid has declined and is headed for more trouble.
Misplaced faith
The common thread in these cases is unrealistic beliefs in how rapidly new energy systems can replace demand for hydrocarbons, currently at all-time highs. Political intervention and miscalculation have led to over-investment in unreliable energy sources and, far worse, under-investment in reliable energy sources and infrastructure. The full costs of this colossal malinvestment have been somewhat hidden from view as spare capacity in the global energy network has mostly kept the train on the tracks. Now that excess capacity has shrunk to a critically low level, more impacts are hitting home.
Like the disease itself, the cure takes years to run its course. But that longer time frame is no excuse not to act now in a thoughtful fashion to begin rectifying historical blunders. Steel, cement, plastics and fertilizer are the four building blocks of the modern world and all are highly reliant on hydrocarbons.
Most critically this means removing the growing myriad obstacles to hydrocarbon development, justified in the name of fighting climate change. This is nonsense. Overly cumbersome hurdles to hydrocarbon development in the U.S. do nothing to change oil and gas demand. They simply displace U.S. production overseas where production practices are less stringent and less ethical. Resulting in increased GHG emissions and other air pollutants, reduced economic opportunities for Americans, and increased geopolitical leverage of Russia and OPEC — see the invasion of Ukraine.
Climate change is a long-term problem best addressed with technologies cost-effective today like natural gas, energy efficiency, and nuclear. The solution requires combining today’s commercial low-carbon energy sources with research and technology development in carbon sequestration, next-generation geothermal, and economical energy storage to make solar and wind more viable.
Today the price mechanism must destroy energy demand to bring it in line with short-term supply. This reduces the quality of living, especially for low-income families. The price mechanism will also incent new supply to the extent possible in the face of growing regulatory hurdles, infrastructure shortages, and capital starvation. A revaluation of all three of these factors is urgently needed. Is the overarching goal “energy transition” at all costs? Or is it humane policies that better human lives and expand opportunities for all? We need to replace the former mindset with the latter.
US Total Oil and Gas Rig Count increased by 3 reflecting 673 rigs as of 4/1/2022. Offshore GOM Rig Count remained unchanged from the previous week and is currently showing 14 rigs. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $99.24/bbl - April Contract, 12:24 pm CDT 4/1/2022: https://oilprice.com/oil-price-charts/45
Wholesale Spot Petroleum Prices, 3/31/2022 Close
Crude Oil ($/barrel) Percent Change
WTI $100.53 -6.8
Brent $107.29 -7.2
Louisiana Light $102.58 -6
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
Oil inventories decreased by 3.4 million barrels - EIA Weekly Petroleum Status Report, Release Date: March 30, 2022
Note: Probably a few of us /IJ
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $107.06/bbl - April Contract, 12:53 pm CDT 3/30/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 3/25/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending March 25, 2022 which was 35,000 barrels per day more than the previous week’s average. Refineries operated at 92.1% of their operable capacity last week. Gasoline production decreased last week, averaging 9.1 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.
U.S. crude oil imports averaged 6.3 million barrels per day last week, down by 227,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 11.9% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 656,000 barrels per day, and distillate fuel imports averaged 155,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week. At 409.9 million barrels, U.S. crude oil inventories are about 14% below the five year average for this time of year. Total motor gasoline inventories increased by 0.8 million barrels last week and are about 0% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 1.4 million barrels last week and are about 16% below the five year average for this time of year. Propane/propylene inventories increased by 0.1 million barrels last week and are about 23% below the five year average for this time of year. Total commercial petroleum inventories increased by 1.8 million barrels last week.
Total products supplied over the last four-week period averaged 20.7 million barrels a day, up by 8.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, up by 1.1% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels a day over the past four weeks, up by 2.4% from the same period last year. Jet fuel product supplied was up 39.1% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $116.20 per barrel on March 25, 2022, $11.51 above last week’s price and $55.27 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.318 per gallon, $0.185 more than last week’s price and $1.393 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $4.045 per gallon, $0.411 above last week’s price and $2.400 over a year ago.
The national average retail regular gasoline price decreased to $4.231 per gallon on March 28, 2022, $0.008 below last week’s price but $1.379 over a year ago. The national average retail diesel fuel price increased to $5.185 per gallon, $0.051 per gallon more than last week’s price and $2.024 higher than a year ago.
Dallas Fed Energy Survey, First Quarter | March 23, 2022
Oil and Gas Expansion Accelerates as Outlooks Improve Significantly
Data were collected March 9–17, and 141 energy firms responded. Of the respondents, 91 were exploration and production firms and 50 were oilfield services firms. (The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District.)
Price Forecasts:https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-forecastcharts
Business Indicators: https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-results
Charts on Questions: https://dallasfed.frswebservices.org/research/surveys/des/2022/2201.aspx#tab-questions
What’s New This Quarter
Special questions this quarter include an annual update on breakeven prices by basin, expected firm growth in crude oil production, anticipated changes in employee head counts for 2022, the oil price needed to return publicly traded producers to growth mode, and the primary reason publicly traded producers are restraining production growth despite high oil prices.
Activity in the oil and gas sector accelerated in first quarter 2022, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—jumped from 42.6 in the fourth quarter to 56.0, reaching its highest reading in the survey’s six-year history.
Oil production increased at a faster pace, according to executives at exploration and production (E&P) firms. The oil production index rose sharply from 19.1 in the fourth quarter to 45.0 in the first quarter. Similarly, the natural gas production index advanced 14 points to 40.0.
Costs increased for a fifth straight quarter. Among oilfield services firms, the index for input costs increased from 69.8 to 77.1—a record high. Only one of the 50 responding oilfield services firms reported lower input costs this quarter. Among E&P firms, the index for finding and development costs advanced from 44.9 in the fourth quarter to 56.0 in the first. Additionally, the index for lease operating expenses also increased, from 42.0 to 58.9. Both indexes reached highs for the survey’s six-year history.
Oilfield services firms reported improvement across all indicators. The equipment utilization index remained elevated but edged down from 51.1 in the fourth quarter to 50.0 in the first. The operating margin index advanced from 11.6 to 21.3. The index of prices received for services jumped from 30.3 to 53.2, a record high.
All labor market indexes in the first quarter reached record highs, pointing to strong growth in employment, hours and wages. The aggregate employment index posted a fifth consecutive positive reading and increased from 11.9 to 28.0. The aggregate employee hours index jumped from 18.0 to 36.0. The aggregate wages and benefits index also rose, from 36.6 to 54.0.
Six-month outlooks improved significantly, with the index climbing from 53.2 last quarter to 76.3, a record high. The outlook uncertainty index also jumped from -1.5 to 31.9, suggesting uncertainty became much more pronounced this quarter.
On average, respondents expect a West Texas Intermediate (WTI) oil price of $93 per barrel by year-end 2022; responses ranged from $50 to $200 per barrel. Survey participants expect Henry Hub natural gas prices of $4.57 per million British thermal units (MMBtu) at year-end. For reference, WTI spot prices averaged $103.07 per barrel during the survey collection period, and Henry Hub spot prices averaged $4.65 per MMBtu.
Next release: June 22, 2022
Energy Implications of Limiting Interstate Natural Gas Pipelines | SlideShow | Released 3/30/2022
https://www.eia.gov/outlooks/aeo/IIF_pipeline/pdf/AEO2022_IIF_pipelines.pdf
Mrs. Smith
API issued “new analysis” on the ramifications of postponing the DOI 5-year program for leasing in the GOM.
Link to the fact sheet: https://www.api.org/~/media/Files/News/2022/03/API-Factsheet-Offshore-Leasing-5-Year%20Program-Report
Link to the slideshow:https://www.api.org/~/media/Files/News/2022/03/EIAP-5-year-Program-Leasing-Delay-Report-03-24-22
WASHINGTON, March 29, 2022 – The American Petroleum Institute (API) and the National Ocean Industries Association (NOIA) today released new analysis outlining the potential economic consequences of delaying the Department of the Interior’s (DOI) 5-year program for leasing in the Gulf of Mexico. The next 5-year offshore leasing program must be in place by July 1, 2022, but is well behind schedule, and no offshore lease sales can be held unless DOI implements a new program. The report, which was prepared by Energy and Industrial Advisory Partners (EIAP), warns how a delay in the program could jeopardize American energy security and cost thousands of U.S. jobs and billions in government revenue.
“Now more than ever, U.S. oil and natural gas development is critical for the nation’s long-term energy security and our national security, and offshore production plays a key role,” API Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola said. “Policymakers should be doing everything they can to encourage the development of our nation’s vast energy resources and acting on the 5-year program is a commonsense step the administration could take right now to support global energy security now and in the future.”
“At a time of geopolitical uncertainty and rapidly rising energy prices, Gulf of Mexico oil and gas production is more important than ever,” NOIA President Erik Milito said. “Promoting opportunities for increased U.S. oil and gas production will help fortify our national security, alleviate inflationary energy prices, reduce our dependence on foreign sources of energy, and secure our energy from highly-regulated and lower emissions production sources here at home. The longer we go without being able to explore and develop new leases offshore, the longer we weaken a key, proven national strategic energy asset in the U.S. Gulf of Mexico.”
“Offshore energy is the primary economic generator for the Lafourche Parish community, supporting not just jobs, but also substantially funding the government services provided by the Parish, like after school programs, economic development assistance, public works and emergency preparedness. Offshore activity serves as an economic base for our levee and water districts as well. In our daily lives, where we live, work, raise families, go to school, recreate – offshore energy production is vital to all of it, and that is the case in any community across the country that supports energy activity,” Greater Lafourche Port Commission Executive Director Chett Chiasson said.
“Danos has supported the energy industry in South Louisiana for over 75 years where we employ nearly 2,500 people. Ending or reducing lease sales in the Gulf of Mexico will increase carbon emissions, send jobs overseas, increase the cost of energy for Americans, and take away the largest source of funding to restore and protect our Louisiana coast,” Danos Owner and CEO Paul Danos said.
Since 1980, DOI has been required to prepare a 5-year offshore leasing program to best meet national energy needs for the 5-year period, including a schedule of oil and gas lease sales and details on the size, timing and location of proposed leasing activity. Despite their legal obligation to maintain an offshore leasing program, DOI is well-behind schedule in this multi-year regulatory process and has yet to initiate the third comment period required for completion.
Alapse in a 5-Year Program could jeopardize American energy security, cost thousands of jobs and billions in lost state and local revenues.
* With a 5-year offshore leasing program, the Gulf of Mexico is projected to produce an average of 2.6 million barrels per day of oil and natural gas from 2022 – 2040. A delay in the program could mean nearly 500,000 barrels per day less over that time period.
* In 2036, the lost Gulf of Mexico production could mean 885,000 fewer barrels of oil and natural gas per day – a 33% decrease from where we’d be with a 5-year offshore leasing program in place.
* 370,000 American jobs are supported by Gulf of Mexico offshore production. Nearly 60,000 of those could be lost without a 5-year offshore leasing program. Direct jobs supporting the offshore oil and gas industry pay on average $69,650. That’s 29% higher than the national average salary.
* On average, $1.5 billion per year in government revenue could be lost with reduced offshore production. That’s revenue that could be used for public education, infrastructure, conservation projects, coastal restoration and hurricane protection programs.
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.
United States and European Commission Announce Task Force to Reduce Europe’s Dependence on Russian Fossil Fuels
March 25, 2022 White House Press Release: https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/25/fact-sheet-united-states-and-european-commission-announce-task-force-to-reduce-europes-dependence-on-russian-fossil-fuels/
STATEMENTS AND RELEASES
Today, President Joe Biden and European Commission President Ursula von der Leyen announced a joint Task Force to reduce Europe’s dependence on Russian fossil fuels and strengthen European energy security as President Putin wages his war of choice against Ukraine.
This Task Force for Energy Security will be chaired by a representative from the White House and a representative of the President of the European Commission. It will work to ensure energy security for Ukraine and the EU in preparation for next winter and the following one while supporting the EU’s goal to end its dependence on Russian fossil fuels.
The Task Force will organize its efforts around two primary goals: (1) Diversifying liquefied natural gas (LNG) supplies in alignment with climate objectives; (2) Reducing demand for natural gas.
Diversifying LNG Supplies in Alignment with Climate Objectives
* The United States will work with international partners and strive to ensure additional LNG volumes for the EU market of at least 15 bcm in 2022, with expected increases going forward.
* The United States and the European Commission will undertake efforts to reduce the greenhouse gas intensity of all new LNG infrastructure and associated pipelines, including through using clean energy to power onsite operations, reducing methane leakage, and building clean and renewable hydrogen-ready infrastructure.
* The European Commission will prepare an upgraded regulatory framework for energy security of supply and storage, as well as working with EU Member States to accelerate regulatory procedures to review and determine approvals for LNG import infrastructure. The United States will maintain its regulatory environment with an emphasis on supporting this emergency energy security objective and the REPowerEU goals.
* The European Commission will work with EU Member States toward the goal of ensuring, until at least 2030, demand for approximately 50 bcm/year of additional U.S. LNG that is consistent with our shared net-zero goals. This also will be done on the understanding that prices should reflect long-term market fundamentals and stability of supply and demand.
Reducing Demand for Natural Gas
* The United States and the European Commission will engage key stakeholders, including the private sector, and deploy immediate recommendations to reduce overall gas demand by accelerating market deployment of clean energy measures.
* Immediate reductions in gas demand can be achieved through energy efficiency solutions such as ramping up demand response devices, including smart thermostats, and deployment of heat pumps. The REPowerEU plan estimates that reductions through energy savings in homes can replace 15.5 bcm this year and that accelerating wind and solar deployment can replace 20 bcm this year, and through EU’s existing plans such as “Fit for 55” contribute to the EU goal of saving 170 bcm/year by 2030.
* As global leaders in renewable energy, the United States and the European Commission will work to expedite planning and approval for renewable energy projects and strategic energy cooperation, including on technologies where we both excel such as offshore wind.
* We will continue to collaborate to advance the production and use of clean and renewable hydrogen to displace unabated fossil fuels and cut greenhouse gas emissions, which will include both technology and supporting infrastructure.
Offshore GOM Rig Count increased by 2 from the previous week and is currently showing 14 rigs. US Total Oil and Gas Rig Count increased by 7 reflecting 670 rigs as of 3/25/2022. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $113.60/bbl - April Contract, 14:02 pm CDT 3/25/2022: https://oilprice.com/oil-price-charts/45
Wholesale Spot Petroleum Prices, 3/24/2022 Close
Crude Oil ($/barrel) Percent Change
WTI $114.20 -0.6
Louisiana Light $114.70 -1.
https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
Oil inventories decreased by 2.5 million barrels - EIA Weekly Petroleum Status Report, Release Date: 3/23/2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $113.51/bbl April Contract, 09:31 am CDT 3/24/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 3/18/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending March 18, 2022 which was 276,000 barrels per day more than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.8 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day.
U.S. crude oil imports averaged 6.5 million barrels per day last week, up by 92,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.2 million barrels per day, 9.1% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 721,000 barrels per day, and distillate fuel imports averaged 172,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.5 million barrels from the previous week. At 413.4 million barrels, U.S. crude oil inventories are about 13% below the five year average for this time of year. Total motor gasoline inventories decreased by 2.9 million barrels last week and are about 0% below the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.1 million barrels last week and are about 17% below the five year average for this time of year. Propane/propylene inventories increased by 0.3 million barrels last week and are about 23% below the five year average for this time of year. Total commercial petroleum inventories decreased by 6.7 million barrels last week.
Total products supplied over the last four-week period averaged 21.0 million barrels a day, up by 11.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, up by 4.0% from the same period last year. Distillate fuel product supplied averaged 4.3 million barrels a day over the past four weeks, up by 8.6% from the same period last year. Jet fuel product supplied was up 43.7% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $104.69 per barrel on March 18, 2022, $4.62 below last week’s price but $43.26 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.133 per gallon, $0.066 less than last week’s price but $1.243 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $3.634 per gallon, $0.196 above last week’s price and $1.962 over a year ago.
The national average retail regular gasoline price decreased to $4.239 per gallon on March 21, 2022, $0.076 below last week’s price but $1.374 over a year ago. The national average retail diesel fuel price decreased to $5.134 per gallon, $0.116 per gallon less than last week’s price but $1.940 higher than a year ago.
Are you saying that the Russians want to prop up their currency by requiring Western nations to seek out rubles to purchase Russian oil? This is all I can think of that makes any sense.
Mrs. Smith
API Welcomes DOI Plan to Resume Federal Leasing
3/18/2022 API Press Release: https://www.api.org/news-policy-and-issues/news/2022/03/18/api-welcomes-doi-plan-to-resume-federal-leasing
WASHINGTON, March 18, 2022 — American Petroleum Institute (API) Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola issued the following statement in response to the Department of Interior’s announcement that it will resume oil and gas leasing on federal lands and waters.
“At a time when the administration and allies around the world are calling for more American energy, we welcome the Department of the Interior’s announcement today and urge the administration to hold onshore lease sales under the Mineral Leasing Act with sufficient acreage and fair terms. We also call on the administration to accelerate the long delayed five-year program for leasing on the Outer Continental Shelf.”
Since 1980, the U.S. Secretary of the Interior has been required to prepare a 5-year program to best meet national energy needs for the 5-year period, including a schedule of oil and gas lease sales and details on the size, timing and location of proposed leasing activity. The next 5-year offshore leasing program must be in place by July 1, 2022, as the current program is scheduled to expire and there will be no opportunities to obtain new leases for federal offshore development. Unfortunately, DOI is well-behind schedule in this multi-year regulatory process and has yet to initiate the third comment period required for completion.
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Its nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.
Biden administration plans to resume plans for federal oil and gas development
https://www.reuters.com/business/energy/biden-administration-says-will-resume-plans-federal-oil-gas-development-2022-03-18/
March 18 (Reuters) - The Biden administration on Friday said it would resume plans for oil and gas development on federal lands following a court ruling this week that temporarily restored a measure meant to factor the cost of global warming into federal decision-making.
The development is the latest in a string of stops and starts to the federal oil and gas leasing program since President Joe Biden took office in January 2021. Biden pledged during his presidential campaign to halt federal drilling auctions, but that effort has been stymied by a court challenge from Republican-led states.
Just a month ago, the Interior Department said it would delay upcoming federal oil and gas lease sales because a Louisiana federal judge blocked the administration from using its "social cost of carbon" value to factor the risks of climate change into decisions on permitting, investment and regulatory issues.
Then earlier this week, a federal appeals court allowed the government to continue, temporarily, using the value of around $50 per ton of greenhouse gases emitted. The White House had reverted back to an Obama-era value, which is far higher than the roughly $10 a ton imposed by the Trump administration, early last year.
"With this ruling, the department continues its planning for responsible oil and gas development on America’s public lands and waters," Interior spokesperson Melissa Schwartz said in an emailed statement.
She declined to say whether the administration would resume oil and gas leasing auctions in the near term.
Before the February ruling, Interior's Bureau of Land Management (BLM) had been preparing to hold lease sales in several Western states. The environmental analyses for those sales had relied on the social cost of carbon imposed by Biden.
An industry group, the Western Energy Alliance, said the sales should now proceed.
"We have heard directly from BLM that the district court ruling caused them to stop progress because they would have had to change the analysis, but now that’s not the case, they can move forward," Kathleen Sgamma, President of the Alliance, said in an email.
The rig count in the GOM has declined by roughly 6 rigs from it’s recent high. Without any indications of Gulfslope executing a surety bond on the Tau 2 well, I am starting to have reservations about the one rig in question.
Who was it that said government policies are not affecting oil drilling and domestic energy production?
Mrs. Smith
Over the years, the Gulfslope board has CONSISTENTLY offered up industry reporting, analysis, and discussions on the domestic and global crude oil markets. Especially during the recent oil supply/demand imbalance, and the historical ‘lows’ and ‘highs’ in crude pricing.
Do not forget Gulfslope is listed under the IHub category of ‘Oil and Natural Gas Energy Production’. Think back on all the times Gulfslope has mentioned the world crude oil market environment in their quarterly and annual financials. In my opinion, it is and will continue to be an important topic.
You can not attract partners unless your oil and gas prospect is viable and economic, and that will not come to pass unless the crude oil market conditions are favorable now and in the foreseeable future. So once again, I say crude oil pricing will continue to be one of the top criteria of interest to those following this stock. I have nothing more to add except, LLS $105.07/bbl.
Mrs. Smith
API Monthly Statistical Report ‘MSR’, Released 3/17/2022. API Statistics Department & Office of the Chief Economist
For Notable Chart Details and Data By Section see ‘MSR’ pdf link: https://www.api.org/-/media/Files/News/2022/03/17/API-Monthly-Statistical-Report-Feb-2022.pdf
Petroleum Facts at a Glance: https://www.api.org/-/media/Files/News/2022/03/17/Petroleum-Facts-at-a-Glance-February-2022.pdf
EXECUTIVE SUMMARY:
In February, U.S. petroleum demand (21.6 million barrels per day, mb/d) was at its strongest for any month since August 2005, due to the reduced impact of the Omicron COVID variant, solid urban commuting and freight transportation, and strong demand for consumer products that are enabled by other oils in refining and petrochemicals.
Demand increased despite higher crude oil and motor fuel prices, which rose as Russia’s war on Ukraine escalated in late February. The war caused global oil prices to increase by more than domestic prices, which showed that the U.S. having its own domestic oil production is beneficial, and also spurred an acceleration in U.S. refinery activity and exports.
U.S. crude oil production edged up by 0.1% m/m to 11.6 mb/d in February, and drilling activity also continued to pick up. However, as evident in comparison with the relatively stronger petroleum demand as well as the lowest crude oil inventories for the month of February since 2014, greater domestic production is likely to be needed to help place downward pressure on consumer prices.
Leading economic indicators have continued to be mixed. API’s Distillate Economic IndicatorTM suggested solid growth of U.S. industrial production and broader economic activity (please see the following chart for details), However, the University of Michigan’s consumer sentiment index plummeted in February and early March, and this has historically related to weaker consumer spending.
Demand
• Strongest U.S. petroleum demand since August 2005.
– Urban commuting returned motor gasoline demand to near the top of the five-year range.
– Freight trucking drove the strongest February distillate demand since 2015.
– Jet fuel demand was 10% below its Feb. 2019 level.
– Highest Feb. residual fuel oil demand since 2012.
– Other oils’ demand sustained near-record levels.
Prices & Macroeconomy
• Increased crude oil prices outpaced those of gasoline in February.
• Leading indicators highlight industrial growth, but a continued drop in consumer sentiment.
Supply
• U.S. crude oil production edged upwards.
International trade
• U.S. petroleum net imports persisted despite higher exports.
Industry operations
• Refinery capacity utilization and gross inputs at their highest for February since 2018 and 2019, respectively.
Inventories
• Inventories were at their lowest since 2018.
PETROLEUM FACTS AT A GLANCE – March 2022 RELEASE
1. Total U.S. supply of crude oil, natural gas liquids and other liquids in February 2022: 18,490,000 b/d, up by 3,550,000 b/d compared with February 2022 (February 2021: 14,940,000 b/d) [API]
2. U.S. crude oil production in February 2022: 11,617,000 b/d (of which 421,000 b/d was Alaskan) (February 2021: 9,773,000 b/d). U.S. production of natural gas liquids in February 2022: 5,758,000 b/d (February 2021: 4,215,000 b/d). [API]
3. Total petroleum products delivered to the domestic market in February 2022: 21,626,000 b/d (February 2021: 17,444,000 b/d). [API]
4. U.S. petroleum exports in February 2022: 7,705 ,000 b/d (February 2021: 7,661,000 b/d). [API]
5. U.S. petroleum trade balance expanded by 782,000 b/d to imply February 2022 net imports of 769,000 b/d (February 2021: 13,000 b/d net exports). [API]
Federal Reserve Bank of Dallas ”Energy Slideshow”, Updated March 11, 2022
See link below for slideshow charts on Energy Prices, Global Petroleum Data, National Outlook Data, and Regional Activity:
https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en
Mrs. Smith
GOM Offshore Rig Count increased by 1 from the previous week and is currently showing 12 rigs. US Total Oil and Gas Rig Count remained unchanged reflecting 663 rigs as of 3/18/2022. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
WTI $104.70/bbl - April Contract, 21:40 pm CDT 3/19/2022: https://oilprice.com/oil-price-charts/45
WTI $102.97/bbl - Wholesale Spot Petroleum Prices, 3/17/2022 Close:https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
Oil inventories increased by 4.3 million barrels - EIA Weekly Petroleum Status Report, Release Date: 3/16/2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $95.04/bbl - April Contract, 16:17 pm CDT 3/16/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 3/11/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ending March 11, 2022 which was 224,000 barrels per day more than the previous week’s average. Refineries operated at 90.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.4 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.4 million barrels per day last week, up by 76,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels per day, 15.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 531,000 barrels per day, and distillate fuel imports averaged 222,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.3 million barrels from the previous week. At 415.9 million barrels, U.S. crude oil inventories are about 12% below the five year average for this time of year. Total motor gasoline inventories decreased by 3.6 million barrels last week and are at the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories increased by 0.3 million barrels last week and are about 16% below the five year average for this time of year. Propane/propylene inventories decreased by 2.2 million barrels last week and are about 25% below the five year average for this time of year.
Total commercial petroleum inventories decreased by 3.6 million barrels last week. Total products supplied over the last four-week period averaged 21.0 million barrels a day, up by 12.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, up by 8.6% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels a day over the past four weeks, up by 4.6% from the same period last year. Jet fuel product supplied was up 39.3% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $109.31 per barrel on March 11, 2022, $6.46 below last week’s price but $43.72 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.199 per gallon, $0.215 less than last week’s price but $0.988 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $3.438 per gallon, $0.297 below last week’s price but $1.630 over a year ago.
The national average retail regular gasoline price increased to $4.315 per gallon on March 14, 2022, $0.213 above last week’s price and $1.462 over a year ago. The national average retail diesel fuel price increased to $5.250 per gallon, $0.401 per gallon more than last week’s price and $2.059 higher than a year ago.
Since opinion is one of the topics, I will offer mine regarding “light selling pressure”. I see it as a contest between those wishing to move the price one way or the other to create opportunities for buys or sells vs shareholders with already significant numbers of shares that have no real interest in the small monetary value involved with these transactions.
Not denigrating anyone or anything. Often these transactions are dealing with the smaller volumes that many shareholders do not find appealling. I am only pointing out that there are different levels of stimuli needed to get some folks interested in what is happening. We are not trading XOM here, so a 10,000 share trade @ 0.0115 is only $115.
So to some, any activity less than 250,000 shares or even more, regardless of the price, is of very limited interest, so they do not participate. That means they are not sellers. So they supply no shares to buyers for purchase.
And they may not be buyers either. With holdings that are most likely already large in size, they may not see the need to increase their number of shares. They could just be content to hold what they have and wait for drilling news. Then a discovery. Then production. At that point, I am sure their interests will pick-up.
I suppose what I am saying is that perhaps, at prices this low, there is no incentive to buy or sell small volumes. And maybe not even large volumes. Sadly, some shareholders may be underwater from their purchase price, and so they might be even less inclined to sell at low prices.
So I think the ‘no buyers’ issue is due largely to ‘no sellers’ (at prices too low). Only a few seem willing to sell cheap and maybe the number of shares they control is limited. And possibly being reduced with every sales transaction, depending on the focus and goals of the buyers.
Just a thought.
Mrs. Smith
March 2022 OPEC Monthly Oil Market Report “MOMR”, Released 3/15/2022
3/2022 MOMR PDF: https://momr.opec.org/pdf-download/res/pdf_delivery_momr.php?secToken2=accept
WTI $97.45/bbl - April Contract, 12:19 pm CDT 3/15/2022: https://oilprice.com/oil-price-charts/45 : https://oilprice.com/oil-price-charts/45
OIL MARKET HIGHLIGHTS:
Crude Oil Price Movements
Crude oil spot prices increased strongly in February compared to the previous month, supported by strong physical crude market fundamentals, dissipating fears about COVID-19, and an escalating geopolitical conflict in Eastern Europe that raised concerns about a near-term oil supply disruption resulting in a rally in oil futures markets. The OPEC Reference Basket rose by $8.81, or 10.3%, to settle at $94.22/b. Crude oil futures prices rose on both sides of the Atlantic with the ICE Brent front month up $8.53, or 10.0%, to average $94.10/b and NYMEX WTI rising by $8.65, or 10.4%, to average $91.63/b. Consequently, the Brent-WTI futures spread narrowed by 12¢ to an average of $2.47/b. The market structure of all three crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – moved into deeper backwardation as investors were anticipating a potential supply disruption. Strong demand in the spot market added support to the market structure. Hedge funds and other money managers raised their net long positions in anticipation of higher oil prices.
World Economy
The conflict in Eastern Europe has added more downside risk to the performance of world economy in 2022. So far, and in addition to the ongoing pandemic, the conflict has led to a number of key issues including rising commodity prices, which are further escalating global inflation. The effects of the conflict, especially the impact of rising inflation, if sustained, will lead to a decline in consumption and investments to varying degrees. Moreover, financial conditions of the various asset classes, such as in currency markets, equities and an ongoing repricing of debt are being impacted. Clearly, this will impact economic activities in 2022, though to what exactly extent remains to be seen. Given the complexity of the situation, the speed of developments, and fluidity of the market, with so far limited data to understand the far-reaching consequences of this conflict, projections are changing almost on a daily basis, making it challenging to pin down numbers, with reasonable degree of certainty. However, with more data and hence a deeper understanding of the unravelling events, over the next few weeks, the global GDP growth forecast for 2022 remains under assessment at 4.2%, and will be reviewed and adjusted, when there is more clarity on the far-reaching impact of the geopolitical turmoil. Similarly, all headline economic forecast numbers for 2022 remain under assessment.
World Oil Demand
World oil demand growth in 2021 is revised up by 0.05 mb/d, reflecting the actual data across the regions, to now stand at 5.7 mb/d. The 4Q21 figure for all OECD region is revised higher, as a result of the better performance. The OECD in 2021 increased by 2.7 mb/d, while the non-OECD showed growth of 3.1 mb/d. Given the above mentioned developments and the extremely high uncertainty surrounding global macroeconomic performance, the 2022 forecast for global oil demand growth remains under assessment at 4.2 mb/d, with OECD forecast at 1.9 mb/d and non-OECD at 2.3 mb/d. However, this forecast is subject to change in the coming weeks, when there is more clarity on the far-reaching impact of the geopolitical turmoil.
World Oil Supply
Non-OPEC liquids supply growth in 2021 remained broadly unchanged from last month’s assessment at around 0.6 mb/d y-o-y. Total US liquid output increased by 0.15 mb/d, y-o-y. Oil supply in 4Q21 is estimated to have declined in Canada and Australia, while there have been some minor upward revisions in other countries. The 2021 oil supply estimation primarily sees growth in Canada, Russia, the US and China, while output is projected to decline in the UK, Brazil, Colombia and Indonesia. The forecast for non-OPEC supply for 2022 remains at 3.0 mb/d, y-o-y. This forecast is under assessment, and will be reviewed and adjusted in the coming weeks, if deemed necessary. The main drivers of liquids supply growth are expected to be the US and Russia, followed by Canada, Brazil, Kazakhstan, Guyana and Norway. OPEC NGLs are forecast to grow by 0.1 mb/d both in 2021 and 2022 to average 5.1 mb/d and 5.3 mb/d, respectively. In February, OPEC crude oil production increased by 0.44 mb/d m-o-m, to average 28.47 mb/d, according to available secondary sources.
Product Markets and Refining Operations
In February, refinery margins on all main trading hubs improved, mainly reflecting fuel supply-side dynamics over an already increasingly tight global product balance. Most product prices in all regions soared, which in turn helped lift product crack spreads, in response to a contraction in product outputs due to maintenance, concerns about dislocations due to geopolitical developments, and stronger crude prices. In the immediate near term, refinery intakes are expected to decline further, which could exacerbate the global product shortage, and drive product prices upwards.
Tanker Market
The dirty tanker market remained at muted levels for much of February, although volatility accelerated at the end of the month as geopolitical developments intervened. In monthly terms, VLCCs continued to be anchored at historically weak levels, as has been the case since mid-2020. Suezmax and Aframax rates have performed better and were slightly higher than in the previous year, registering an improvement m-o-m. Clean rates were flat to the east but picked up in the Atlantic Basin. The volatility seen at the end of the month will become more evident in March data, with upward pressure particularly concentrated in the Aframax and Suezmax classes.
Crude and Refined Products Trade
Preliminary data shows US crude imports declined 5% in February, m-o-m, following three months of gains. US crude exports picked up from the low levels of the previous month, rising 16%, m-o-m. China’s crude imports averaged 10.5 mb/d in January, as flows were supported by new import quotas but capped by limited refinery runs during the Beijing Olympics and the Lunar New Year holidays. India’s crude imports averaged 4.5 mb/d in January, down around 3% from the strong level the month before. Crude imports were expected to rise in February, as the economy gains momentum and refiners boost runs. Japan’s crude imports declined in January from the multi-year high seen the month before. Japan’s product exports in January were the highest since March 2020, with gasoline outflows at a multi-year high and gasoil at the highest since March 2020. Recent developments in Eastern Europe have created considerable dislocations, which is likely to be visible in March data, adding considerable uncertainty to crude and product trade flows.
Commercial Stock Movements
Preliminary data for January sees total OECD commercial oil stocks down, m-o-m, by 3.1 mb. At 2,677 mb, OECD commercial oil stocks were 359 mb less than the same time one year ago, 280 mb lower than the latest five-year average and 250 mb below the 2015-2019 average. Within the components, OECD commercial crude stocks fell, m-o-m, by 8.7 mb, while OECD commercial product stocks rose, m-o-m, by 5.5 mb. At 1,294 mb, OECD commercial crude stocks were 158 mb less than the latest five-year average and 139 mb below the 2015-2019 average. OECD commercial product stocks stood at 1,383 mb, representing a deficit of 142 mb compared with the latest five-year average and were 112 mb below the 2015-2019 average. In terms of days of forward cover, OECD commercial stocks fell, m-o-m, by 0.7 days in January, to stand at 59.3 days. This is 11.6 days below January 2021 levels, 6.2 days less than the latest five-year average, and 2.8 days lower than the 2015-2019 average.
Balance of Supply and Demand
Demand for OPEC crude in 2021 was revised up by 0.1 mb/d from the previous month’s assessment to stand at 28.0 mb/d, which is around 5.0 mb/d higher than in 2020. In contrast, demand for OPEC crude in 2022 was also revised up by 0.1 mb/d from the previous month’s assessment to stand at 29.0 mb/d, which is around 1.0 mb/d higher than in 2021.
OPEC Featured Article: ‘Assessment of the global economy’, Released March 15, 2022
Media Advisory - OECD to release an assessment of the impacts and policy implications of war in Ukraine on Thursday 17 March 2022: https://www.oecd.org/newsroom/media-advisory-oecd-to-release-an-assessment-of-the-impacts-and-policy-implications-of-war-in-ukraine-on-thursday-17-march-2022.htm
OECD WEB TV - March 17, 2022, 10:40AM to 12:20PM: https://oecdtv.webtv-solution.com/49ebf7b8c883b0ac306936c9cb39e009/or/impacts_and_policy_implications_of_the_war_in_ukraine.html
FEATURED ARTICLE: Assessment Of The Global Economy
The year 2022 began with the expectation of underlying global economic recovery towards mid-year. The outlook also anticipated gradual monetary tightening, continued improvement in global labour markets and an easing of supply-chain disruptions. Similarly, global oil demand growth was forecast to continue to recover, fueled by pent-up demand both in the global goods and particularly services sectors.
However, while the drag of the pandemic was still being felt in major economies in 1Q22, the war in Eastern Europe has led to a level shift in global economic uncertainty. This conflict has so far led to a number of issues, including rising commodity prices, which are further escalating global inflation. Moreover, heavily impacted trade flows and transportation logistics are – in part – offsetting the gradual easing of global supply chain bottlenecks.
Thereby, the effects of the conflict and especially the impact of rising inflation, if sustained, will lead to a decline in consumption and investments to varying degrees. Finally, financial conditions of the various asset classes are impacted, such as in currency markets, equities and an ongoing repricing of debt.
Clearly, this will impact economic activities in 2022, though to what exactly extent remains to be seen. Given the complexity of the situation, the speed of developments, and fluidity of the market, with so far limited data to understand the far-reaching consequences of this conflict, projections are changing almost on a daily basis, making it challenging to pin down a single number with reasonable degree of certainty. However, with more data and hence a deeper understanding of the unravelling events over the next few weeks, the global GDP growth forecast for 2022 remains under assessment at 4.2%, and will be reviewed and adjusted, when there is more clarity on the far-reaching impact of the geopolitical turmoil. With this, all headline economic forecast numbers for 2022 remain under assessment.
In addition the potential impact of the conflict in Eastern Europe, the COVID-19-related 1Q22 impacts are also expected to impact forecasts for the major OECD economies accordingly. Furthermore, non-OECD economies are forecast to be impacted rather selectively, and to varying degrees. Indeed, the pandemic has led to some 1Q22 downward momentum in the US, the Euro-zone and Japan, in addition to negative 1Q22 consequences of the zero-COVID-19 policy in China. For now, the pandemic is assumed to be largely contained. Nonetheless, numerous challenges remain, including virus mutations and the effectiveness of vaccines against variants. Moreover, sovereign debt levels in most economies have risen to a point where interest rate increases could cause severe fiscal strain. The expected further rise in inflation, especially in the US and the Euro-zone, is forecast to keep gradual monetary tightening on track, albeit with flexibility about the timeline and magnitude.
Looking ahead, and given the latest developments, which are still only beginning to unfold, it is clear that uncertainty will dominate in the remaining months of 2022: i.e.: uncertainty with regard to the scope and impact of the current geopolitical turmoil, restrictions and restructuring of production and trade flows, uncertainty on to what degree this will impact inflation and oil demand, and how this will serve to accelerate the drive towards energy transition, particularly in Europe.
Given this unprecedented level of uncertainty, the forecast for total global oil demand growth for 2022 also remains under assessment at 4.2 mb/d, until more clarity prevails. In light of these highly volatile times, the safeguarding of market stability will remain paramount to both oil producing and consuming countries.
US Oil and Gas Rig Count up 13 reflecting 663 rigs as of 3/11/2022. GOM Offshore Rig Count decreased by 1 from the previous week and is currently showing 11 rigs. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
https://rigcount.bakerhughes.com/static-files/94d7e6c8-aa0b-4105-962f-f3104231741c
WTI $98.17/bbl - April Contract, 12:16 pm CDT 3/15/2022:https://oilprice.com/oil-price-charts/45
WTI $103.22/bbl - Wholesale Spot Petroleum Price, 3/14/2022 Close:https://www.eia.gov/todayinenergy/prices.php
Mrs. Smith
A few interesting articles:
Ukraine crisis distracts from bigger trends in seaborne LNG market, analyst says: https://www.workboat.com/offshore/ukraine-crisis-distracts-from-bigger-trends-in-seaborne-lng-market-analyst-says
American Energy Ignorance: The Anti-Oil Business Is Trying To Fool You Again: https://www.forbes.com/sites/judeclemente/2022/03/13/american-energy-ignorance-the-anti-oil-business-is-trying-to-fool-you-again/?sh=31fef3a43c5c
Mrs. Smith
Yes, I do agree with your crude price forecast.
Over the short-term, the only countries that I am aware of with the ability to alleviate production woes is SA and the UAE, except it has been reported that they are not accepting phone calls from our President.
Releases of global SPRs will have a very limited effect due to the fact that they will only equal 1 to 2 days of global consumption.
So unfortunately, without increasing domestic production, we can expect prices to remain towards the upper end of the spectrum for the foreseeable future.
Apparently, the President is relieving himself while facing into a gale force wind.
Mrs. Smith
I am not that concerned about the price as long as it remains above $65 per barrel. However, I prefer that the price not exceed $85.
There exists a Catch 22 in oil pricing. The price must be high enough to provide the profit necessary to risk the investment. But it must not become so high that it affects demand for the product, because lower demand restricts the producers ability to sell the production at that price. Therefore, there will always be a balance between price and demand. The turmoil during the interim is what we are experiencing at this time.
I am in a good mood this morning, so I put on my most pricey scent. High Octane.
Mrs. Smith
This Week in Petroleum, Released: March 9, 2022 | Next Release Date: March 16, 2022
Full Report with Charts: https://www.eia.gov/petroleum/weekly/
Crude oil prices forecast to average more than $100 per barrel in 2022
On February 24, 2022, Russia’s further invasion of Ukraine contributed to a significant increase in the Brent crude oil price, which rose to $134 per barrel (b) as of March 8. This price increase reflects increased geopolitical risk and uncertainty regarding how announced and potential future sanctions may affect energy markets. In addition, a number of international oil companies have announced plans to stop operations in Russia and end partnerships with Russian firms, which could limit Russia’s ability to produce crude oil in the future. Additionally, on March 8, the United States, United Kingdom, and European Union all announced some measure of eliminating or limiting imports of energy commodities from Russia, pushing crude oil prices up further.
In our March 2022 Short-Term Energy Outlook (STEO), which was finalized on March 3, we increased our Brent crude oil price forecast to $117/b for March and $116/b for the second quarter of 2022 (2Q22) because of possible constraints on Russia’s crude oil exports and increased geopolitical risk. This forecast was completed before the announcements limiting imports from Russia and therefore does not include the potential impacts of the announcements on the energy markets. The new announcements limiting U.S., UK, and EU energy imports could put additional upward pressure on crude oil prices; however, any international response and the impacts on global balances are uncertain.
Prior to these announcements, we revised up our 2022 Brent crude oil price forecast in our March STEO to $105/b from $83/b in the February STEO and our 2023 Brent crude oil price forecast to $89/b from $68/b (Figure 1). We forecast the price of West Texas Intermediate (WTI) crude oil will average $101/b in 2022 and $85/b in 2023.
The increase in crude oil prices reflects the potential effects of the extensive sanctions that the United States, the European Union, and others levied on Russian entities in response to Russia’s further invasion of Ukraine. The high prices also reflect the risk of potential disruptions to crude oil and energy production and infrastructure because of the conflict. Up until March 8, sanctions primarily targeted Russian individuals and financial institutions but avoided directly targeting Russia’s energy companies, including crude oil and natural gas producers and exporters. Although Russia’s energy sector had not been directly targeted by sanctions, trade press reports indicated that sanctions targeting financial institutions (and the potential for additional sanctions) increased concerns among oil market participants about purchasing energy from Russia. As a result, trade press reports indicated that significant volumes of crude oil and petroleum products from Russia had remained unsold through early March.
On March 8, President Biden announced that the United States would ban imports of oil, liquefied natural gas, and coal from Russia into the United States. The announcement came alongside an announcement that the United Kingdom would phase out imports of oil from Russia over the course of the year and an announcement from the European Union of a plan to make Europe independent from Russian fossil fuels before 2030. On March 8, the spot price of Brent rose to $134/b and the price of WTI rose to $124/b.
Oil market uncertainties linked to Russia’s further invasion of Ukraine have occurred while global petroleum inventory levels are low. This situation has contributed to historically high levels of backwardation (when near-term prices are higher than longer-dated ones). The spread between crude oil front-month contracts and third-month contracts (1-3 spread) reflects heightened calls on crude oil inventories in the very short term (Figure 2). The five-day moving average of the Brent 1-3 spread increased to its highest level on record at $8.04/b on March 8. The WTI 1-3 crude oil price spread increased similarly to the Brent spread, reaching a high of $7.78/b on March 8.
A number of western energy companies, including ExxonMobil, Shell, BP, and Equinor, have announced that they are stopping operations in Russia and ending partnerships with Russian firms. Trade press also reports that a number of European refiners, shippers, and insurance companies are not purchasing or shipping crude oil from Russia. We expect that the withdrawal of some firms from Russia, combined with limitations on finance, will constrain new field development and crude oil production.
We estimate that Russia’s production of petroleum and other liquids averaged 11.3 million barrels per day (b/d) in February 2022, and given recent reports, we expect that production in Russia will fall by 0.3 million b/d in March and fall an additional 0.5 million b/d in April. We expect production will temporarily decrease as some shippers refrain from picking up crude oil cargoes from Russia, mainly because of current sanctions or anticipation of additional sanctions. We assume that Russian crude oil exports will decrease during the coming months, and, in turn, production. As Russian crude oil exports decrease, onshore storage likely will fill up quickly because of limited onshore storage capacity, which will prompt production shut-ins and floating storage on ships. For the March STEO, we assessed that most of Russia’s crude oil would eventually find export destinations, but we expected production and exports would be temporarily dislocated as new trade routes were established and as Russia found other crude oil buyers.
The impacts on Russian petroleum production from the latest round of announcements limiting Russian energy imports were not assessed for this STEO and are not incorporated into this forecast.
Compared with our forecast last month, in which we were expecting growth in Russia’s liquid fuels production, in our March STEO, we expect Russia’s liquid fuels production to decline by 1.0 million b/d on average from 2Q22 through the end of 2023 (Figure 3). This forecast remains subject to significant revisions because the extent to which sanctions and other private corporate actions will affect production remains unclear.
In our March STEO, decreased petroleum production in Russia contributes to lower global petroleum inventory builds in our March forecast compared with our February forecast. In the March STEO, we forecast that global liquid fuels inventories will generally increase beginning in 2Q22, when we expect an increase of 740,000 b/d. We forecast that builds will average 390,000 b/d in 2022 and 420,000 b/d in 2023. The forecast inventory builds in our March STEO are down from forecast builds of 780,000 b/d in 2022 and 1.0 million b/d in 2023 in our February STEO.
In the March STEO, the smaller inventory builds result in less downside price pressure throughout the forecast compared with our February STEO, contributing to the higher price forecast in the March STEO. However, the price forecast is highly uncertain, and a number of factors could push prices higher or lower than we have forecast. Some of those factors include crude oil production outages as a result of increased geopolitical tensions or lower-than-expected growth in oil demand. The uncertainty surrounding the futures curve is reflected in the market-derived WTI price confidence intervals, which are based off of futures and options prices for the five trading days ending March 3, 2022 (Figure 4).
Higher crude oil prices are driving up gasoline prices. The front-month futures price of RBOB (the petroleum component of gasoline used in many parts of the country) settled at $3.68 per gallon (gal) on March 8, up $1.11/gal from February 1. In our March STEO, we forecast that U.S. regular retail gasoline prices will average $3.79/gal in 2022 (up $0.55/gal from the February STEO) and $3.33/gal in 2023 (up $0.49/gal from the February STEO). If realized, the average 2022 retail gasoline price would be the highest average price since 2014, after adjusting for inflation.
Oil inventories decreased by 1.9 million barrels - EIA Weekly Petroleum Status Report, Release Date: 3/9/2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
WTI $110.36/bbl - April Contract, 16:45 pm CDT 03/09/2022: https://oilprice.com/oil-price-charts/45
WTI - $123.64/bbl - Wholesale Spot Petroleum Price, 3/8/2022 Close
https://www.eia.gov/todayinenergy/prices.php
Summary of Weekly Petroleum Data for the week ending March 4, 2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ending March 4, 2022 which was 21,000 barrels per day less than the previous week’s average. Refineries operated at 89.3% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day. Distillate fuel production decreased last week, averaging 4.6 million barrels per day.
U.S. crude oil imports averaged 6.3 million barrels per day last week, increased by 0.6 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.2 million barrels per day, 10.1% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 760,000 barrels per day, and distillate fuel imports averaged 274,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.9 million barrels from the previous week. At 411.6 million barrels, U.S. crude oil inventories are about 13% below the five year average for this time of year. Total motor gasoline inventories decreased by 1.4 million barrels last week and are about 1% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 5.2 million barrels last week and are about 18% below the five year average for this time of year. Propane/propylene inventories decreased by 1.6 million barrels last week and are about 21% below the five year average for this time of year. Total commercial petroleum inventories decreased by 8.1 million barrels last week.
Total products supplied over the last four-week period averaged 21.6 million barrels a day, up by 12.3% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million barrels a day, up by 7.5% from the same period last year. Distillate fuel product supplied averaged 4.4 million barrels a day over the past four weeks, up by 5.6% from the same period last year. Jet fuel product supplied was up 35.4% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $115.77 per barrel on March 4, 2022, $24.09 above last week’s price and $49.69 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.414 per gallon, $0.632 more than last week’s price and $1.364 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $3.735 per gallon, $1.033 above last week’s price and $1.929 over a year ago.
The national average retail regular gasoline price increased to $4.102 per gallon on March 7, 2022, $0.494 above last week’s price and $1.331 over a year ago. The national average retail diesel fuel price increased to $4.849 per gallon, $0.745 per gallon more than last week’s price and $1.706 higher than a year ago.
March 2022 EIA Short-term Energy Outlook “STEO” Forecast: Release Date: March 8, 2022 | Forecast Completed: March 3, 2022 | Next Release Date: April 12, 2022.
Huge Note: For the month of March the EIA increased the forecasted “average” price per barrel for WTI in 2022 and 2023 by 27.5% and 32%, respectively. The forecasted “average” price per barrel for Brent in 2022 and 2023 increased by 27% and 30%, respectively.
FULL REPORT WITH EXCELLENT GRAPHS: https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
ALL FIGURES AND DATA: https://www.eia.gov/outlooks/steo/data.php?type=figures
U.S. MONTHLY CRUDE OIL AND NATURAL GAS PRODUCTION, Released 2/28/2022 / Next release date 3/31/2022: https://www.eia.gov/petroleum/production/
WTI $125.37/bbl - April Contract, 18:30 pm CDT 03/08/2022: https://oilprice.com/oil-price-charts/45
WTI - $119.26/bbl - Wholesale Spot Petroleum Price, 3/7/2022 Close
https://www.eia.gov/todayinenergy/prices.php
Forecast Highlights
Global liquid fuels
* The March Short-Term Energy Outlook (STEO) is subject to heightened levels of uncertainty resulting from a variety of factors, including Russia’s further invasion of Ukraine. This STEO assumes U.S. GDP will grow by 3.6% in 2022 and by 2.7% in 2023, after growing by 5.7% in 2021. We use the S&P Global (formerly IHS Markit) macroeconomic model to generate our U.S. economic assumptions. Global macroeconomic assumptions in our forecast are from Oxford Economics and include global GDP growth of 4.3% in 2022 and 4.0% in 2023, compared with growth of 5.9% in 2021. These GDP forecasts were completed in mid-February. The rest of the forecast was completed on March 3 and accounts for available information to that point. A wide range of potential macroeconomic outcomes could significantly affect energy markets during the forecast period. Supply uncertainty results from the conflict in Ukraine, the production decisions of OPEC+, and the rate at which U.S. oil and natural gas producers increase drilling.
* Brent crude oil spot prices averaged $97 per barrel (b) in February, an $11/b increase from January. Daily spot prices for Brent closed at almost $124/b in the first week of March as the further invasion of Ukraine by Russia and subsequent sanctions on Russia and other actions created significant market uncertainties about the potential for oil supply disruptions. These events are occurring against a backdrop of low oil inventories and persistent upward oil price pressures. Global oil inventories have fallen steadily since mid-2020, and inventory draws averaged 1.8 million barrels per day (b/d) from the third quarter of 2020 (3Q20) through the end of 2021. We estimate that oil inventories fell further in the first two months of 2022 and that commercial inventories in the OECD ended February at 2.64 billion barrels, which is the lowest level since mid-2014.
* We expect the Brent price will average $117/b in March, $116/b in 2Q22, and $102/b in the second half of 2022 (2H22). We expect the average price to fall to $89/b in 2023. However, this price forecast is highly uncertain. Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market. In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months. Although we reduced Russia’s oil production in our forecast, we still expect that global oil inventories will build at an average rate of 0.5 million b/d from 2Q22 through the end of 2023, which we expect will put downward pressure on crude oil prices. However, if production disruptions—in Russia or elsewhere—are more than we forecast, resulting crude oil prices would be higher than our forecast.
* We forecast that global consumption of petroleum and liquid fuels will average 100.6 million b/d for all of 2022, up 3.1 million b/d from 2021. We forecast that consumption will increase by 1.9 million b/d in 2023 to average 102.6 million b/d. Economic forecasts in this outlook were completed before Russia’s further invasion of Ukraine. The outlook for economic growth and oil consumption in Russia and surrounding countries is highly uncertain. Oil consumption will depend on how economic activity and travel respond to recent and any potential future events and sanctions.
* U.S. regular gasoline retail prices averaged $3.52 per gallon (gal) in February, up 20 cents/gal from January and up $1.02/gal from February 2021. Retail diesel prices averaged $4.03/gal in February—the highest average price (not adjusted for inflation) for any month since March 2013. Product prices have risen compared with year-ago levels because of rising crude oil prices and high refining margins. We expect crude oil price increases will push the U.S. average gasoline price to $4.10/gal on average in 2Q22, which would be the first time that gasoline prices (not adjusted for inflation) have reached at least $4/gal in any month since July 2008. We expect diesel prices will average $4.43/gal during 2Q22. Gasoline and diesel prices are closely tied to crude oil prices. We forecast gasoline prices will average $3.71/gal in 2H22, and we forecast diesel prices will average $4.04/gal over the same period. However, actual prices could be significantly affected by the same factors that affect crude oil prices.
* U.S. crude oil production fell below 11.6 million b/d in December 2021 (the most recent monthly historical data point), a decline of 0.2 million b/d from November 2021. We forecast that production will rise to average 12.0 million b/d in 2022 and then to record-high production on an annual-average basis of 13.0 million b/d in 2023. The previous annual-average record of 12.3 million b/d was set in 2019.
Natural Gas
* In February, the Henry Hub natural gas spot price averaged $4.69 per million British thermal units (MMBtu), which was up from the January average of $4.38/MMBtu. Although temperatures across the eastern part of the United States were close to normal in February, reducing natural gas consumption from January levels, natural gas production fell slightly last month relative to January, in part as a result of temporary freeze-offs in producing regions. The drop in production partly contributed to inventory draws outpacing the five-year (2017–2021) average in February. This outlook assumes that temperatures in March will be milder than February and near the 10-year average for March. We expect production will rise from February levels, contributing to a lower average Henry Hub price of $4.10/MMBtu for March. We expect the Henry Hub price will average $3.83/MMBtu in 2Q22 and $3.95/MMBtu for all of 2022. We expect the Henry Hub spot price will average $3.59/MMBtu in 2023.
* We estimate that inventory withdrawals in February were 627 billion cubic feet (Bcf) and that natural gas inventories ended the month at 1.6 trillion cubic feet (Tcf). We expect natural gas inventories to fall by about 95 Bcf in March, ending the withdrawal season at about 1.5 Tcf, which would be 10% less than the five-year average for this time of year. We forecast that natural gas inventories will end the 2022 injection season (end of October) at 3.5 Tcf, which would be 4% less than the five-year average.
* In February, U.S. liquefied natural gas (LNG) exports averaged 10.9 billion cubic feet per day (Bcf/d), down from 11.2 Bcf/d in January. Similar to last year, U.S. LNG exports in February were limited by fog in the Gulf of Mexico that affected vessel traffic and led to piloting services being suspended for several days on the Sabine Pass, Lake Charles (location of Cameron LNG), and Corpus Christi waterways. Although exports fell in February, they were higher than in any month prior to December 2021. Many U.S. LNG cargoes were delivered to Europe last month, where inventories are lower than the five-year average and potential supply disruptions related to the conflict in Ukraine are a concern. Although Europe’s inventories are low, the additional LNG imports, as well as a mild winter, are helping bring inventories closer to the five-year average than they were at the beginning of the winter. We expect high levels of U.S. LNG exports to continue in 2022, averaging 11.3 Bcf/d for the year, a 16% increase from 2021.
* We expect that U.S. consumption of natural gas will average 84.6 Bcf/d in 2022, up 2% from 2021. The increase in U.S. natural gas consumption reflects rising demand in the industrial sector as a result of increased manufacturing activity. In addition, the increase in natural gas consumption reflects higher consumption in the residential and commercial sectors as a result of colder temperatures this year compared with 2021. Higher consumption in these sectors is partly offset by lower consumption in the electric power sector due to a forecast increase in generation from renewable energy sources.
* We estimate dry natural gas production averaged 95.3 Bcf/d in the United States in February, down 0.6 Bcf/d from January. Production in January and February was lower than in December because of freezing temperatures in certain production regions. We forecast natural gas production to average 95.7 Bcf/d in March. For 2022, we expect that natural gas production will average 96.7 Bcf/d, which is 3.1 Bcf/d more than in 2021. We expect dry natural gas production to rise to an average of 99.1 Bcf/d in 2023.
Electricity, coal, renewables, and emissions
* U.S. electric power sector generation in February 2022 was 1.3% lower than generation in February 2021, when generation was high because of extreme cold weather. We forecast that the annual share of U.S. electricity generation from renewable energy sources will rise from 20% in 2021, to 22% in 2022, and to 24% in 2023, as a result of continuing increases in solar and wind generating capacity. This increase in renewables generation leads to an expected decline in natural gas generation, which falls from a 37% share in 2021, to 36% in 2022, and to 35% in 2023. Natural gas generation falls in the forecast even though we expect the cost of natural gas for power generation to fall from $4.97/MMBtu in 2021, to $4.16/MMBtu in 2022, and to $3.80/MMBtu in 2023. Increasing renewable generation also contributes to our forecast that the share of generation from coal will fall from 23% in 2021 to 22% in 2022 and 21% in 2023. Nuclear generation remains relatively constant in the forecast at an average share of 20%.
* Planned additions to U.S. wind and solar capacity in 2022 and 2023 increase electricity generation from those sources in our forecast. The U.S. electric power sector added 14 gigawatts (GW) of new wind capacity in 2021. We expect 10 GW of new wind capacity will come online in 2022 and 5 GW in 2023. Utility-scale solar capacity rose by 13 GW in 2021. Our forecast for added utility-scale solar capacity is 22 GW for 2022 and 24 GW for 2023. We expect solar additions to account for nearly half of new electric generating capacity in 2022. In addition, in 2021, small-scale solar capacity (systems less than 1 megawatt) increased by 5.4 GW to 33 GW. We project that small-scale solar capacity will grow by 4.0 GW in 2022 and 4.3 GW in 2023.
* We expect U.S. coal production to increase by more than 25 million short tons (MMst) (4%) in 2022 to 604 MMst and then rise by 9 MMst (1%) in 2023. Although labor strikes at some metallurgical mines in Appalachia continue to affect production, we expect producers to regain a portion of that production later during 1H22. Increased production of coal will help support rising export demand as well as help replenish coal inventories at power plants that were depleted during 2021.
* We expect U.S. coal consumption to decrease by 7 MMst in 2022 and by 15 MMst in 2023. In both forecast years, declining consumption from the electric power sector is somewhat offset by rising consumption at coke plants.
* Coal exports in our forecast total 88 MMst in 2022, up 3% from 2021, and 91 MMst in 2023. We assume international prices will remain supportive of U.S. coal exports as the conflict in Ukraine creates the potential to disrupt supplies from that region.
* U.S. energy-related carbon dioxide (CO2) emissions increased by nearly 7% in 2021 as economic activity increased and contributed to rising energy use. We expect a 2% increase in energy-related CO2 emissions in 2022, primarily from growing transportation-related petroleum consumption. Forecast energy-related CO2 emissions remain almost unchanged in 2023. We expect petroleum emissions to increase by 4% in 2022 compared with 2021, and this growth rate slows to less than 1% in 2023. Natural gas emissions increase by 2% in 2022 and then decrease slightly in our forecast for 2023. We forecast that coal-related CO2 emissions will fall by 3% in 2022 and by 2% in 2023.
Looking forward to a Gulfslope Energy news release with great anticipation. I hope it turns out to be one of those heartwarming, passionate, toe curling, and stomach tightening ones. Let us keep our fingers crossed.
Mrs. Smith
2022 ”Annual” Energy Outlook (AEO2022) EIA Released 3/3/2022
SLIDESHOW OF HIGHLIGHTS: https://www.eia.gov/pressroom/presentations/AEO2022_ReleasePresentation.pdf
SLIDESHOW WITH PROJECTIONS THROUGH 2050: https://www.eia.gov/outlooks/aeo/pdf/AEO2022_ChartLibrary_full.pdf
VIDEO:
Update regarding my attached post, on 3/3/2022 BSEE permitted another “New Well” in the GOM. FYI, it was a new well for BP.
Mrs. Smith
Not to worry. Only a “what if” chat.
Mrs. Smith
Good point. Yes, drilling is the most important thing, but unless you are Big Oil you will need partners. Macroeconomics and the geopolitical situation both have great influence on the “economics” of an oil and gas prospect. Partners are necessary, but you will not get them unless the venture is shown to be viable and “commercial”.
Mrs. Smith