The Biden administration is worried about gasoline prices, and they don't understand why they're so high, or what to do about it. Perhaps setting the expectation that the administration would slowly be cracking down on all fossil fuels, thereby limiting investment in the fossil energy industry and future supply might have something to do with it. The Financial Times reports on Biden's confusion, writing: White House rankled by high gasoline prices It could be a headline from practically any presidency in recent decades. And the administration of Joe Biden — despite its green credentials … [Read more...]
OPEC Ready to Feed Growing Oil Demand After Biden Slowed US Production
OPEC expects oil demand to grow beyond pre-pandemic levels by 2022. And while Joe Biden has acted to restrict the number of drilling permits on public lands, reducing oil production, OPEC is more than happy to fill increased demand. The Wall Street Journal's David Hodari writes: The world’s thirst for oil will exceed pre-pandemic levels next year, with improving vaccination rates and increasing public confidence in governments’ management of Covid-19 spurring a recovery in travel, the Organization of the Petroleum Exporting Countries said Monday. In its closely watched monthly market … [Read more...]
Worries Over Delta Variant Hit IEA Oil Demand Forecast
The International Energy Agency is lowering its forecast of oil demand citing the possibility countries will implement new lockdowns in response to the spread of the COVID-19's Delta variant. Neil Hume reports in the Financial Times: The International Energy Agency has “sharply” lowered its oil demand forecasts for the rest of the year after several major energy-consuming countries imposed fresh curbs to stop the spread of the Delta coronavirus variant. In its monthly market report, the Paris-based organisation said growth would be 500,000 barrels per day lower in the second half of 2021 … [Read more...]
Delta Variant News Spooks Commodities Market
The media uproar over the Delta Variant, a version of COVID-19 that is thought to spread more quickly than other variants, is having an effect on commodities prices, reports the FT, writing: From crude to copper and corn, commodity prices slipped on Monday, knocked by the spread of highly infectious coronavirus variants and concerns about slowing growth in China, the world’s biggest consumer of raw materials. Brent, the international oil marker, fell as much as 1.7 per cent to $74.27 a barrel, while copper dropped 1.1 per cent to $9,390 a tonne — leaving it more than $1,000 below the … [Read more...]
SURPRISE: The World Doesn’t Have Enough Natural Gas
A surprising surge in demand thanks to hotter than expected temperatures, droughts, and economic growth has created a shortage in natural gas. Joe Wallace reports for The Wall Street Journal: A scramble for natural gas is creating pockets of scarcity in the global market, boosting prices for the fuel and for the electricity generated by burning it. Rampant demand in China is sucking in chilled cargoes of gas from the U.S., after a year in which American energy companies throttled back production. A drought in Brazil has added to the competition by curtailing power output from hydroelectric … [Read more...]
As Oil Prices Rise, Where Are Shale Drillers?
In the recent past, shale oil drillers have acted to create a cap on oil prices by drilling heavily any time the price of crude seemed to get too high. Despite climbing oil prices, shale drillers seem to be absent. Collin Eaton and Christopher Matthews explain why at The Wall Street Journal, writing: Shale companies pumped with abandon anytime oil prices rose sharply last decade. But as crude tops $70 a barrel, they are barely doing enough to sustain U.S. production. Frackers have been forced to rein in spending and live within their means after many investors lost faith in the companies … [Read more...]
Electric Vehicles? American Gasoline Demand Hits Record High
Despite all the attention being given to electric vehicles, American gasoline demand has just hit an all-time high. Bloomberg's Mike Jeffers reports: Gasoline supplied in the U.S. hit a record high going back to 1990 during the week leading to the July 4th holiday weekend. A proxy for demand, gasoline supplied rose to 10 million barrels a day the week ended July 2, according to the Energy Information Administration. Market watchers were eagerly awaiting this week’s figures to see whether demand for the fuel has fully recovered from the pandemic. The inflection point underscores how … [Read more...]
COAL COMEBACK: What Happens When the Sun Doesn’t Shine?
Despite major investments in renewable energy around the world, coal is making a comeback. Coal is best suited to the energy challenges of today's post-COVID-19 economic rebound. Coal energy can come online quickly, and doesn't need the sun to shine, or the wind to blow, in order to produce. The resurgence of coal use may not last long, but its occurrence shows the inflexibility of renewable power sources. Sarah McFarlane and Katherine Blunt write for the WSJ: Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the … [Read more...]
Heating Your Home Could Be a Lot More Expensive This Winter
Since prices and production collapsed because of COVID-19, drilling for fossil fuels has not rebounded as fast as demand, driving up their prices. This winter, reports The Wall Street Journal, prices for heating fuels could jump significantly. Ryan Dezember writes: Propane has rarely been so expensive this time of year, and prices may have to move higher yet to ensure ample supply for winter, when millions of rural Americans rely on the fuel to heat their homes. At hubs in Mont Belvieu, Texas, and Conway, Kan., propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. … [Read more...]
Economic Researchers on Commodity Cycle: This Too Shall Pass
Don't call it a "supercycle." That's the message from economic researchers Jumana Saleheen and Lavan Mahadeva from the commodities consultancy, CRU. They suggest this is no Kondratieff Cycle, but rather a shorter business cycle set off by the pandemic. They write: Commodity prices have surged to very high levels this year. Iron ore and copper prices hit all-time highs before falling back after Beijing moved to curb prices. Aluminium prices are elevated and oil prices are fluctuating at about $75 a barrel. So are we at the start of a new commodities supercycle? Our view is that we are … [Read more...]
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