Bloomberg Survey: Brent To Exceed $80 By Year’s End
The Brent crude oil benchmark is set to exceed $80 per barrel by the end of this year, according to a new Bloomberg Intelligence oil price survey. The survey showed that the majority of respondents—53%–see Brent crude oil prices above $80 per barrel at the end of 2024. A much smaller percentage—5%–see crude oil prices exceeding $100 per barrel. The new Bloomberg Intelligence survey also showed that nearly a quarter of respondents see peak oil demand to hit prior to 2030—that’s down from 50% of those surveyed in 2022 who saw peak demand by that time. As for geopolitical risk, the overwhelming majority of respondents—92%—say that the geopolitical risk premium already baked into crude oil prices is less than $5 per barrel. So even with Russia invading Ukraine, Houthi rebels attacking vessels in the Red Sea, causing oil tankers to take the long way around, and tensions between the United States and Iran continue to fester, oil prices are not too far off the mark from where they would be without all that tension. “The turmoil in the Red Sea and the Israel-Hamas conflict has arguably had a limited effect on prices, given there hasn’t been any substantial disruption to oil flows, and OPEC+ has a meaningful amount of spare capacity. However, the Middle East tensions and the geopolitical risk premium may be slowly starting to become more baked into oil prices. That’s after they were outweighed by weak economic prospects and a bleak demand picture in the past few months, as Brent oil price tests $85 a barrel,” Salih Yilmaz, Senior Industry Analyst for Bloomberg Intelligence, said. While survey respondents largely agreed that the geopolitical premium for crude oil was small and peak oil wouldn’t happen before 2030, few agreed on what will drive oil prices over the next few years. 27% of respondents said OPEC+ will be the driving force. 27% said China’s demand. 22% said non-OPEC+ supply growth, and just 14% named Fed policy and interest rates.
Russia Oil Revenue Falls As Some Buyers Shun Its Crude, IEA Says
Russia’s oil-export revenue declined in February as tougher monitoring of western sanctions against the Kremlin reduced some buyers’ appetite for the nation’s barrels, according to the International Energy Agency. The top-three global oil producer earned $15.69 billion from crude and petroleum product exports last month, down 0.95% from January, the Paris-based agency said in its monthly oil report on Thursday.
Brent Soars Past $85 As IEA Recalculates Supply, Demand
Crude oil prices hit a four-month high on Thursday, with the U.S. benchmark crossing over the $80 mark and Brent passing $85 per barrel after changes in supply and demand predictions that bring OPEC+ and International Energy Agency (IEA) forecasts into closer alignment. After gaining nearly $3 on Wednesday, at 3:43 p.m. ET on Thursday, Brent crude was trading at $85.23, up 1.43% on the day. West Texas Intermediate (WTI) was trading at $81.13, up 1.77% on the day. Earlier on Thursday, the IEA tweaked its forecasts for this year, predicting a tighter market and higher demand growth than previously anticipated, primarily due to disruption from Houthi attacks on Red Sea shipping lanes. Since November last year, the IEA has upwardly revised its oil demand growth forecasts for 2024 four times–each time primarily as a result of Red Sea-related supply disruption potential, noting that the “global economic slowdown acts as an additional headwind to oil use”. The IEA’s forecasts have contradicted OPEC+ forecasts for some time, with the international energy agency in May 2021 saying there was no need for new oil and gas exploration any longer due to the pace of the energy transition. February 2024 oil demand forecasts from the IEA and OPEC+ diverged by over 1 million bpd. The IEA has now slashed its 2024 supply forecast to 102.9 million bpd this year. In its Oil Market Report for March, the IEA now assumes that OPEC+ would continue with the voluntary cuts through 2024, which prompted the agency to change its view on the supply-demand balance this year. “Demand is staying high, while supplies are getting tighter, particularly on the fuel side. The refining margins are also very strong and a positive for crude demand,” Reuters quoted Dennis Kissler, senior vice president of trading at BOK Financial, as saying on Thursday, noting that near-six-month-high crack spreads were prompting refiners to process more crude.
India Poised for $4.95 Billion Natural Gas Infrastructure Investment
India is expecting significant investment of 410 billion rupees ($4.95 billion) to build a natural gas pipeline infrastructure in its northeastern states and the federal territories of Kashmir and Ladakh. This investment is part of India’s efforts to increase the use of cleaner fuel and reduce carbon emissions. Prime Minister Narendra Modi aims to raise the share of natural gas in India’s energy mix to 15% by 2030, up from the current 6.2%. The development of natural gas infrastructure in the northeast region will also help in utilizing domestically produced gas. Licenses have been awarded to supply natural gas to small industries, automobiles, and households in the northeastern states and the territories of Kashmir and Ladakh. The city gas distribution network is expected to cover the entire northeastern region by the end of 2025. State-run companies Bharat Petroleum Corporation Ltd (NSE: BPCL) Hindustan Petroleum Corp Ltd (NSE: HINDPETRO), and Oil India Ltd (NSE: OIL) have licenses to set up city gas distribution networks in various areas. Additionally, the pipeline network will enable the monetization of surplus gas from Oil India and Oil and Natural Gas Corporation Ltd (NSE: ONGC) in the northeastern states. Why This Is Important for Retail Investors Investment Opportunities: The massive investment in natural gas infrastructure in India offers potential investment opportunities for retail investors. As the industry expands, there will be a growing demand for companies involved in pipeline construction, gas distribution, and exploration. Clean Energy Focus: With India’s commitment to reducing carbon emissions and increasing the share of natural gas in its energy mix, there will be a significant shift towards cleaner fuel sources. This presents opportunities for retail investors to support environmentally responsible initiatives and be part of the transition to a greener economy. Economic Growth Potential: The development of natural gas infrastructure is crucial for economic growth in the northeastern states and territories. Retail investors can benefit from investing in companies operating within these regions, as the increased access to clean energy will unlock new business opportunities and drive economic development. Diversify Portfolio: Including investments related to natural gas infrastructure in India can help retail investors diversify their investment portfolios. By investing in different sectors and regions, investors can spread their risk and potentially enhance their returns. Long-Term Sustainability: Investing in the natural gas sector aligns with the global trend towards cleaner and more sustainable energy sources. By investing in this sector, retail investors can contribute to long-term sustainability while potentially reaping financial rewards as the industry grows and evolves. Capitalize with Renowned Leaders in Energy Investment This under-the-radar stock presents an alternative investment idea in the small-cap sector. Leading the company is a renowned and accomplished team with a strong track record in energy and capital markets. With their exceptional track record, robust financial backing, industry expertise, resilient leadership skills, and extensive experience, this team provides a solid foundation for the company. Heightened geopolitical tensions have sparked a pressing need for Europe to strengthen its energy security.
India Faces Clean Energy Challenges As Energy Demand Soars, Global Fossil Fuel Subsidies Rise
The 2022 global energy crisis, together with India’s growing energy demand, has led the country to adopt a hybrid approach, expanding all forms of supply in 2023. This approach has pushed India’s total energy subsidies to 9-year high of Rs 3200 billion (USD 39.3 billion) for the fiscal year ending 2023, states new report titled ‘Mapping India’s Energy Policy: A Decade in Action’ by International Institute for Sustainable Development (IISD), an independent think tank working for a stable climate, sustainable resource management. It states in recent years, India has positioned itself as an international climate leader, steering the G20 under its presidency to call for global renewable energy capacity to triple by 2030 while also funding decarbonization measures to decouple the fast-growing economy from greenhouse gas emissions and reach net-zero targets. However, clean energy subsidies accounted for less than 10% of total energy subsidies in FY 2023, while coal, oil, and gas subsidies contributed around 40%. The majority of the remaining subsidies were for electricity consumption, particularly in agriculture. In 2023 rising energy demands and the impact of the international energy price crisis following Russia’s invasion of Ukraine led India to put several measures in place that significantly increased support for fossil fuels. With an aim to protect low-income households, India responded to peaking fossil fuel prices in 2022/2023 by capping retail prices of petrol, diesel, and domestic liquefied petroleum gas; cutting taxes; providing direct budgetary transfers to businesses and consumers; and supporting existing energy supplies. As a result, oil and gas subsidies rose by 63% in FY 2023 compared to FY 2022, according to a report by the International Institute for Sustainable Development (IISD)
BPCL signs initial pact to set up Compressed Bio Gas plants in Bhilai
An MoU was signed on Wednesday between BPCL, Chhattisgarh Biofuel Development Authority and municipal corporations of Raipur and Bhilai for the production of Compressed Bio Gas (CBG) in Chhattisgarh, officials said. As per the pact, BPCL- a central PSU, will set up CBG plants in Raipur and Bhilai with an investment of around Rs 1 billion and the capacity of each plant will be 100-150 tonne per day. The MoU was signed in the presence of Chief Minister Vishnu Deo Sai and Deputy CM Arun Sao here at the former’s official residence, they said. In his address, Chief Minister Sai said the establishment of CBG plants is a key step towards clean city, clean energy and zero carbon emissions. About 200-250 metric tonne of municipal solid waste will be used every day in the production of biofuel in the two CBG plants. BPCL will invest approximately Rs 1 billion for setting up the two plants, Sai said. The setting up of these plants will create about 60,000 man days of employment directly and indirectly every year. On production and sale at full capacity in these plants, the state will receive GST to the tune of Rs 4.5 million per year, he said. These plants will also yield organic fertilizer as a by-product which will help in organic farming in the state, he added. The MoU was signed by Chief Executive Officer of Chhattisgarh Biofuel Development Authority Sumit Sarkar, Chief General Manager of BPCL, Mumbai Anurag Saravagi, Commissioner of Raipur Municipal Corporation Avinash Mishra and Commissioner of Bhilai Municipal Corporation Devesh Kumar Dhruv, officials said.
Rising Gasoline Prices Bring Bad News for Biden
The recent rise in U.S. gasoline prices is driving up inflation higher than expected, complicating the Fed’s monetary easing plans and President Joe Biden’s task to convince voters his Administration is winning the fight on the economy front. The latest U.S. consumer price reading from Tuesday showed inflation rose more than anticipated on the back of a surge in gasoline prices. Granted, gas prices in the U.S. are now slightly lower than they were at this time last year. But they are a massive 60% higher now than they were in early November 2020, just before President Biden won the election. The rise in gasoline prices is typical for this time of year—summer-spec fuels are being rolled out, demand is inching up as Americans drive more with the warmer weather, and production overall has been lower because of seasonal refinery maintenance. But the jump in gas prices ahead of and during the summer is expected to reverse to a steady decline in the autumn with the end of the driving season, and ahead of the presidential election in November. Experts don’t see the average national price topping $4 per gallon this year. Nevertheless, higher gas prices pushing up inflation numbers in an election year can’t be good for President Biden, who is struggling to convince likely voters that the economy is doing well. The Administration doesn’t have many tools to lower gasoline and other energy prices, with the Strategic Petroleum Reserve (SPR) low. Moreover, gasoline and distillate fuel inventories in the United States are below the five-year seasonal averages, leaving prices exposed to upswings if sudden outages occur. Gasoline prices are set to fall ahead of the election, but by then, they may have done the damage of derailing President Biden’s showing of good economic performance coupled with lower consumer prices. Last week, gas prices rose for a second consecutive week. “Much of the seasonal rise that happens this time of year is a culmination of refinery maintenance, the switch to summer gasoline, and rising demand,” said Patrick De Haan, head of petroleum analysis at GasBuddy. The current rise in gas prices is normal for this time of year, but it is still being felt by consumers/voters. U.S. inflation rose by 3.2% over the last 12 months to February, data from the Labor Department showed on Tuesday. The rise in consumer prices was higher than expected, while gasoline and shelter contributed over 60% of the monthly increase in the index for all items. Core inflation – prices less gasoline and food – was 0.4% last month over January, suggesting still sticky inflation in the U.S. that is higher than the Fed would like. At a testimony to Congress last week, Fed chair Jerome Powell said the central bank would begin easing interest rates at some point this year if “the economy evolves broadly as expected.” “But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured,” Powell noted. Expectations of tighter crude markets in the spring and summer, and a tight global fuel balance amid shipping disruptions and slow new refinery startups could also put upward pressure on the price of diesel, which would lead to an uptick in the price of goods and services, boosting inflation. Gasoline prices may not come to the rescue of President Biden, who doesn’t have much time to convince likely voters that he is doing a good job with the economy. Ahead of Super Tuesday last week, a CBS News/YouGov poll found that 65% of registered U.S. voters rate the economy under President Trump as “good,” compared to 38% of registered voters who think that the economy has been good so far into President Biden’s term in office. Fortunately for President Biden, the election in early November coincides with a seasonal drop in gasoline demand and prices in the autumn.
India achieves 11.6% ethanol blend with petrol in first 4 months of 2023-24
India has achieved an average ethanol blending rate of 11.60 per cent in the first four months of 2023-24 supply year that started from November, against the 15 per cent target set by the government for the whole year. By 2025 supply year, the government has set the target of blending 20 per cent ethanol with petrol. This comes on the back of supplies of 1.8 billion litres of ethanol from both sugarcane-based molasses and also grains from November to February. The government had in December last year banned the use of sugarcane juice and sugar syrup for making ethanol in the 2023-24 supply year. But it has claimed that this ban would not cast a shadow on the blending target. ALSO READ: India’s perpetual sugar glut needs ethanol and export support. Data sourced from private players showed that between November to February, around 57 per cent of the contracted supply of ethanol has been delivered by the sugar mills and distilleries. So, according to industry experts, out of the 8.25 billion litres of ethanol supply tender opened by OMCs, bids equivalent to 5.62 billion litres were received from companies in the first offer (around 69 per cent of the tendered quantity). Of the 5.62 billion litres, around 2.69 billion litres of ethanol was to be supplied by the sugarcane industry, while the balance of 2.92 billion litres was to come from grains. In sugarcane-based molasses, around 1.35 billion litres would have come from sugarcane juice and 1.30 billion litres from B-heavy molasses, while a very small quantity from 0.04 billion litres from C-heavy molasses. Ethanol is produced largely from sugarcane-based molasses or grain-based sources as feedstock in India. In sugarcane, it is either through sugarcane juice or syrup, then B-heavy molasses and C-heavy molasses. There is a different procurement price for ethanol produced from each source.’
US trying to help India get lower prices for Russian oil, Joe Biden envoy says
The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said on Tuesday. Washington imposed sanctions late last month on Russia’s leading tanker group Sovcomflot on the two-year anniversary of Moscow’s full scale invasion of Ukraine. It also designated 14 crude oil tankers as property in which Sovcomflot had an interest. That led to concerns in India of a potential dent in Russian oil sales to India, the biggest buyer of Russian seaborne crude, and that the fresh sanctions could complicate efforts by Indian state refiners to secure annual supply deals, Reuters reported late last month. “At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters on the sidelines of a conference. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do,” Hochstein said. Western sanctions on Russia, one of the world’s top energy producers, have shifted global oil markets, forcing the country to ship oil to new customers in India and China and away from traditional consumers in Europe. The sanctions and the $60 per barrel price cap imposed on cargoes of Russian oil that use Western-based maritime services such as insurance, transportation and flagging, have pushed dozens of tankers carrying Russian oil to swap flags from Liberia and the Marshall Islands that have registries based in Virginia, to flags from other countries, including Gabon. The tankers have swapped flags in an effort to avoid sanctions, but they could still be vulnerable to the measures if they carried oil above the price cap with the original flag. The goal of the price cap has been to reduce Russia’s revenues it can spend on the war in Ukraine while keeping oil flowing to global markets.
IEA, OPEC Divergence on Oil Demand Becomes Too Big To Ignore
Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy. This has led to a growing divergence between the IEA’s and OPEC’s outlooks on the future of the commodity, increasing the risk of confusion among analysts and investors. The question “Who’s right?” has become a legitimate one. To begin with, it’s worth noting that neither authority is completely impartial. OPEC has a vested interest in stronger global demand, so there may well be an overestimation bias in its outlooks. The IEA, on the other hand, acts like it has a vested interest in the energy transition, which has led it to regularly underestimate oil demand, with its most marked departure from reality to date contained in the original Net Zero Roadmap. The document came out in May 2021. In that report, the IEA said there was no need for new oil and gas exploration as of that year because the energy transition was moving fast enough to make that redundant. But did not take long for the IEA to revise its view. In November of that same year, the agency called for more investment in new oil and gas exploration amid a risk of a supply shortage. Last year, the IEA began the year by forecasting oil demand growth at 1.9 million barrels daily. Over the next 11 months, it kept revising this, to end the year at 2.3 million bpd in global demand growth—a view it held over January this year as well, and a figure very close to OPEC’s forecasts during the year that all saw demand growing by over 2 million barrels daily. Related: Europe’s Secret Weapon In Its Energy War With Russia Reuters this week reported that the divergence between IEA and OPEC demand numbers is the largest in 16 years, based on the analysis of data going back to 2008. This divergence concerns the February oil demand forecasts of the two organizations, and the gap is indeed considerable, at over 1 million bpd. In its February Oil Market Report, the IEA forecast oil demand growth at a modest 1.2 million barrels daily this year, citing a deceleration in demand recovery after the pandemic lockdowns. OPEC, for its part, kept its 2024 oil demand growth forecast unchanged from previous months at 2.2 million bpd. There is also divergence over the longer-term prospects for oil demand, with the IEA last year predicting that it would peak before 2030, along with natural gas demand and coal demand. This prediction seems to have been the last drop for OPEC, which reacted with a sharp warning to the IEA to stop politicizing energy, accusing it of cheerleading for the energy transition and letting this affect the accuracy of its forecasts. “The IEA has a very strong perception that the energy transition will move ahead at a much faster pace,” a former official at the agency told Reuters. “Both agencies have boxed themselves in with a position, which is why they have this enormous gulf in demand forecasts,” Neil Atkinson, former head of the agency’s oil markets division explained. Some form of bias is almost unavoidable when it comes to predicting oil demand, and this is precisely because of the massive push for a transition that has seen a lot of money funneled into climate advocacy organizations that, among their advocacy activity, also deal in forecasting.