• 11 hours U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World
  • 13 hours Senior Interior Dept. Official Says Florida Still On Trump’s Draft Drilling Plan
  • 15 hours Schlumberger Optimistic In 2018 For Oilfield Services Businesses
  • 17 hours Only 1/3 Of Oil Patch Jobs To Return To Canada After Downturn Ends
  • 20 hours Statoil, YPF Finalize Joint Vaca Muerta Development Deal
  • 22 hours TransCanada Boasts Long-Term Commitments For Keystone XL
  • 23 hours Nigeria Files Suit Against JP Morgan Over Oil Field Sale
  • 1 day Chinese Oil Ships Found Violating UN Sanctions On North Korea
  • 1 day Oil Slick From Iranian Tanker Explosion Is Now The Size Of Paris
  • 2 days Nigeria Approves Petroleum Industry Bill After 17 Long Years
  • 2 days Venezuelan Output Drops To 28-Year Low In 2017
  • 2 days OPEC Revises Up Non-OPEC Production Estimates For 2018
  • 2 days Iraq Ready To Sign Deal With BP For Kirkuk Fields
  • 2 days Kinder Morgan Delays Trans Mountain Launch Again
  • 2 days Shell Inks Another Solar Deal
  • 3 days API Reports Seventh Large Crude Draw In Seven Weeks
  • 3 days Maduro’s Advisors Recommend Selling Petro At Steep 60% Discount
  • 3 days EIA: Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019
  • 3 days IEA: Don’t Expect Much Oil From Arctic National Wildlife Refuge Before 2030
  • 3 days Minister Says Norway Must Prepare For Arctic Oil Race With Russia
  • 3 days Eight Years Late—UK Hinkley Point C To Be In Service By 2025
  • 3 days Sunk Iranian Oil Tanker Leave Behind Two Slicks
  • 3 days Saudi Arabia Shuns UBS, BofA As Aramco IPO Coordinators
  • 3 days WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 3 days Norway Grants Record 75 New Offshore Exploration Leases
  • 4 days China’s Growing Appetite For Renewables
  • 4 days Chevron To Resume Drilling In Kurdistan
  • 4 days India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 4 days India’s Reliance Boosts Export Refinery Capacity By 30%
  • 4 days Nigeria Among Worst Performers In Electricity Supply
  • 4 days ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 4 days Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 5 days Saudis To Award Nuclear Power Contracts In December
  • 5 days Shell Approves Its First North Sea Oil Project In Six Years
  • 5 days China Unlikely To Maintain Record Oil Product Exports
  • 5 days Australia Solar Power Additions Hit Record In 2017
  • 5 days Morocco Prepares $4.6B Gas Project Tender
  • 5 days Iranian Oil Tanker Sinks After Second Explosion
  • 7 days Russia To Discuss Possible Exit From OPEC Deal
  • 8 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

The Bearish Backlash In Energy This Fall

Offshore

It’s been an exciting summer for fossil fuels and renewables, with natural gas production hitting a year-to-date high, global crude oil stocks finally starting to decline, and demand for solar power installations booming as costs shrink.

This fall is also shaping up to be an exciting one, but not necessarily in a positive way for the energy industry—fossil fuel and renewables alike.

Nat Gas Prices Will Remain Subdued

The Energy Information Administration’s latest Natural Gas Monthly report found that natural gas production in the country hit a 2017 high in July, at 2.278 trillion cu ft daily. Consumption, on the other hand was 2.111 trillion cu ft daily in that month, which leaves a considerable surplus. No wonder, then, that LNG exports doubled on the year in July.

And yet there seems to be quite a lot natural gas staying at home, limiting the upward potential of prices. The Henry Hub benchmark has climbed up in the last couple of weeks, hitting an average of $3.13 per mmBtu at the end of last week, but unfavorable weather forecasts and robust production will cap the gains.

Already, natural gas is down this week, trading at $2.92 per mmBtu at the time of writing. It seems that traders are focusing on the negative influences, mainly the weather forecasts, rather than on the positive ones, such as the growing exports, which means prices will in all likelihood remain subdued.

Related: Next Week Could Be A Turning Point For The OPEC Output Deal

More Bad News for Oil

Oil bulls had a good week last week, with crude oil prices recording their highest rally since the start of the year. It didn’t last, however, as the good news about finally declining global inventories that brought it about was displaced by fresh reports about higher OPEC output in September.

Add to this the end of driving season and the fact that historical data suggests the fourth quarter of the year is usually bearish for oil prices, and the end of the rally becomes unavoidable. Still, some analysts such as Citi’s Ed Morse insist that oil’s fundamentals are strongly in favor of a rally, and the price decline this week is only a result of a sell-off as traders took their profits.

Official OPEC production data for September is due out later this month, which should dispel any doubts as to where prices are going. Yet, if we’re to trust historical patterns, the months between end of driving season and the end-of-year holiday rush is a slow time for crude oil. That’s also maintenance time at a lot of refineries, which means one more bearish factor for prices.

Solar Industry at a Crossroads

Solar power companies bristled when a federal court last month ruled in favor of imposing import tariffs on crystalline silicon solar cells and modules, and are now waiting to see whether their worst fears will materialize with actual tariffs. Meanwhile, their stocks reacted with a high jump immediately after the ruling followed by a steep drop a couple of days later, as the implications of a tariff regime for solar modules started to sink in.

The court ruling was on a case brought in front of it by two solar panel makers, Suniva and SolarWorld, which the rest of the industry branded as incapable of turning a profit on their own. The plaintiffs claimed cheap Chinese cell and module imports undermined their own production.

Related: U.S. Shale Isn’t As Strong As It Appears

The rest of the industry, however, lashed out at the two with the argument that Chinese cell and module imports were a major factor supporting the fast growth of the solar industry, making its products more affordable, hence stimulating consistent growth in demand. This demand is now under threat if tariffs are introduced, and so is the solar industry’s growth.

Bonus food for thought: A new study published in Nature has found that the U.S. oil and gas industry is just as reliant on subsidies as renewable energy. The study, from the Stockholm Environment Institute, found that almost 50 percent of new fields in the United States that began production in mid-2016 needed subsidies to be profitable with WTI prices at $50 a barrel.

The renewables industry can now throw this study in the face of oil and gas, which have mocked the green guys for needing subsidies to survive. Of course, the deeper question is how low exactly have production costs in the shale patch gone if new discoveries still need to be subsidized to make a profit?

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Brandon on October 04 2017 said:
    Actual numbers are: market needs crude oil supply to grow by at least 150.000 bpd each month to fulfill the growing demand. Currently this is not the case, therefore we must expect an oil spike rather soon. The rest is - I'm afraid - propaganda from speculators.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News