Archives for October 2021

“Extremely high prices for natural gas in Europe are the result of underestimated demand by the European Union with storage facilities remaining at record low levels of 60% to 65%, which contributed to rising gas costs,” according to the chairman of Banca Intesa Russia.

Also on rt.com European gas prices fall as Gazprom signals additional supplies in November

“Russia has delivered 15% more natural gas than it is obligated to under the current agreement. This also includes Ukraine’s pipeline network which saw a 10% boost in transmission,” Fallico told RT on the sidelines of the 14th Eurasian Economic Forum in Verona, Italy.

He added that out of the 28 billion cubic meters of gas agreed to with the US, only 7 billion cubic meters have been delivered to Europe, with the rest going to Asia.

“This is why accusations that Russia uses energy as a geopolitical weapon is not accurate. This rhetoric is baseless,” Fallico said.

Also on rt.com Germans should change course on energy policy to avoid having to heat homes with firewood, as Putin once joked – Knorr-Bremse boss

He also said that despite the temporary nature of the situation, the gas crisis is part of a bigger structural problem, because the EU economy is not working as well as it should.

“The situation may become even more difficult if investment in the development of traditional energy is stopped or decreased and alternative energy fails to compensate for the deficit,” he warned, adding that any energy transition must be balanced.

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Article source: https://www.rt.com/business/538831-europe-gas-crisis-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

According to trading data from the Intercontinental Exchange (ICE), the price of December gas futures on the Dutch TTF index was trading at $844.90 per 1,000 cubic meters, or €70.135 per megawatt hour in household terms, marking a drop of 9.5%.  However, the benchmark remains almost five times higher than a year ago.

Also on rt.com ‘Nobody will freeze’: Russia will supply Europe with as much gas as it needs, says country’s energy committee

On Thursday, Russian President Vladimir Putin ordered the country’s state energy major Gazprom to start delivering more supplies to the EU, prompting an immediate fall in prices.

Gazprom boss Aleksey Miller confirmed that the company would start pumping gas into its storage units in Austria and Germany after November 8, by which time Russia’s domestic depots are expected to be full.

The announcement reversed soaring gas prices on the European markets that had previously reached unprecedented levels of nearly $2,000 per 1,000 cubic meters. The series of price spikes are mostly attributed to seasonal factors exacerbated by the reopening of European economies after Covid-related lockdowns.

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Article source: https://www.rt.com/business/538842-europe-gas-russia-supply-ease/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

So far in October, the ruble has risen over 3% versus the US currency. The pair have remained on a downward trend, with investors opting to use gains to sell the greenback against the Russian currency, according to analysts at VTB Capital, as quoted by Reuters.

On Friday, the ruble stepped back from the 15-month high of 69.21 it reached against the dollar on Tuesday, and was trading at 70.57, marking a decline of 0.5%. Versus the euro, the ruble slipped 0.4% to a one-week low of 82.34.

Also on rt.com Russians stock up on foreign currency, choose US dollar over euro

The decline comes due to the end of monthly tax payments, which commonly involve converting dollar and euro funds among export-focused businesses that have to meet local liabilities.

At the same time, the Russian currency is being bolstered by high oil prices, with Brent crude – a global benchmark for Russia’s main export – trading up 0.1% at $84.39 per barrel.

Moreover, the Russian central bank has raised the key rate six times this year, and may report another hike as soon as next month, boosting the investment appeal of Russian assets and providing extra support for the national currency.

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Article source: https://www.rt.com/business/538826-ruble-big-gain-versus-dollar/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Gazprom’s output surged 16.6%, or 56.7 billion cubic meters, since the beginning of the year through the middle of October, compared to the same period a year ago. The increase was triggered by the dramatic surge in global demand as major economies reopened after the coronavirus pandemic.

“Thus, Gazprom is not only ensuring the reliable operation of Russia’s fuel and energy complex, but also making a considerable contribution to the development of the global energy market,” the company said in a press release.

Also on rt.com Russia’s Gazprom ramps up production as gas exports surge

The preliminary estimates cited by Gazprom show that global gas consumption is expected to grow by 150 billion cubic meters to 4.2 trillion cubic meters in 2021, with the largest, most significant upturn in gas demand to come from the company’s key markets – Russia, China and Europe.

“Despite changes in the price environment – surging gas prices in Asia and Europe – and new initiatives for the decarbonization of the economy, leading research organizations continue to forecast significant increases in global gas consumption in the short and long term,” the company said.

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Article source: https://www.rt.com/business/538790-gazprom-global-gas-consumption-surge/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Chronic underinvestment in new oil supply since the 2015 crisis and the pressure on oil and gas companies to curb emissions and even “keep it in the ground” will likely lead to peak global oil production earlier than previously expected, analysts say. 

This would be a welcome development for green energy advocates, net-zero agendas, and the planet if it weren’t for one simple fact: oil demand is rebounding from the pandemic-driven slump and will set a new average annual record as soon as next year.  

Also on rt.com Rising petrol prices spur fuel tourism across Europe

The energy transition and the various government plans for net-zero emissions have prompted analysts to forecast that peak oil demand would occur earlier than expected just a few years ago. However, as current investment trends in oil and gas stand, global oil supply could peak sooner than global oil demand, opening a supply gap that would lead to increased volatility on the oil market, with spikes in prices, and, potentially, structurally higher oil prices by the middle of this decade and beyond. 

Supply could peak before demand

“On current trends, global oil supply is likely to peak even earlier than demand,” Morgan Stanley’s research department wrote in a note this week carried by Reuters.  

“The planet puts boundaries on the amount of carbon that can safely be emitted. Therefore, oil consumption needs to peak,” analysts at Morgan Stanley said.

The problem with the world is that oil consumption – wishful thinking, investor pressure, and all – is not peaking. Nor will it peak until the end of this decade at the earliest, according to most estimates. 

OPEC expects global oil demand to continue to grow into the mid-2030s to 108 million barrels per day (bpd), after which it is set to plateau until 2045, as per the cartel’s latest annual outlook. 

Also on rt.com Oil prices will remain high for years to come – Oilprice.com

Some other analysts expect peak demand at some point in the late 2020s.

Investment in new supply, however, is severely lagging global oil demand growth.

Demand is growing again after the 2020 Covid crisis and, contrary to some expectations from early 2020 that the world’s oil consumption would never return to pre-pandemic levels, demand is currently just a few months away from hitting and exceeding those levels. 

Supply gap is looming in just a few years

Supply, on the other hand, looks constrained beyond the OPEC+ deal horizon. 

New investment last year slumped to a decade-and-a-half low. Last year, global upstream investment sank to a 15-year low of $350 billion, according to estimates by Wood Mackenzie from earlier this year. 

Investment is not expected to materially pick up this year, either, despite $80 oil. That’s because supermajors stick to capital discipline and pledge net-zero emission targets, part of which some of them plan to reach by curbing investment and developments in non-core little-profitable new oil projects. 

US shale, for its part, is not rushing this time to “drill themselves into oblivion,” as Harold Hamm said in 2017, as American producers look to finally reward shareholders after years of plowing cash flows into drilling and chasing production growth. 

Also on rt.com European gas prices to increase further in event of harsh weather, Wintershall CEO says

Considering that oil demand will still grow, at least for a few more years, underinvestment in new supply would be a major problem in the medium and long term. 

Despite the energy transition, demand will not just vanish, and new supply will be needed for years to come to replace declining production and reserves. 

The oil industry will need massive investments over the next 25 years in order to meet demand, according to OPEC. The industry will need cumulative long-term upstream, midstream, and downstream oil-related investments of $11.8 trillion by 2045, OPEC says.

Patrick Pouyanné, chief executive at France’s TotalEnergies, said at the Energy Intelligence Forum this month that oil prices would “rocket to the roof” by 2030 if the industry were to stop investments in new supply, as some scenarios for net-zero by 2050 suggest. “If we stop investing in 2020, we leave all these resources in the ground … and then the price will rocket to the roof. And even in developed countries, it will be a big issue,” Pouyanné said. 

$100 oil is no longer an outrageous prediction 

A triple-digit oil price is no longer an outrageous prediction as it would have been in early 2020.  

Francisco Blanch, global head of commodities and derivatives research at Bank of America, expects oil to hit $100 by September 2022, or even earlier if this winter is much colder than expected. 

Demand is coming back, while we have seen severe underinvestment in supply the last 18 months, Blanch told Bloomberg at the end of September.  

 “The underinvestment problem cannot be solved easily, and at the same time we have surging demand,” he said. 

Also on rt.com The 2021 oil price rally is far from over

“We are moving into a straightjacket for energy, we don’t want to use coal, we want to use less and less gas, we want to move away from oil,” Blanch told Bloomberg. 

While oil is unlikely to sit at triple digits for a sustained period of time, underinvestment has become “a multi-year problem” for the industry, Blanch noted. 

Even if oil doesn’t stay at $100 a barrel, a supply crunch down the road would nevertheless move the floor under oil prices higher and lead to unsustainable price spikes. As much as climate activists want a stop to investment in new supply, the industry and the world cannot afford it because oil demand continues to grow.  

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/538588-global-oil-shortage-inevitable/?utm_source=rss&utm_medium=rss&utm_campaign=RSS