Day: August 3, 2022

Oil prices fluctuated in early trade on Wednesday over an expected rise in US crude oil inventories in the world’s largest oil-consuming country and supply uncertainties ahead of a much-expected meeting of the OPEC+ group.

International benchmark Brent crude was trading at $100.52 per barrel at 09.29 a.m. local time (0629 GMT) for a 0.02% decrease after the previous session closed at $100.54 a barrel.

American benchmark West Texas Intermediate (WTI) was at $94.39 per barrel at the same time for a 0.03% drop after the previous session closed at $94.42 a barrel.

The American Petroleum Institute (API) announced its estimate of a rise of over 2.2 million barrels in US crude oil inventories late Tuesday, relative to the market expectation of a 467,000-barrel fall.

The predicted increase in stockpiles signals a drop in crude demand in the US, the world’s top oil consumer, putting downward pressure on prices.

The uncertainties around the OPEC+ production scheme for September are set to continue to arouse market volatility ahead of the cartel’s meeting later on Wednesday.

‘The group has gone quiet because they seem to be caught between their inability to increase output anywhere close to quotas and being the central bank of oil,’ said Christof Ruhl, a senior research scholar at the Center on Global Energy Policy of Columbia University in New York City, in his daily energy markets review for Gulf Intelligence Consultancy firm.

Ruhl stressed that a key question for the group is how to keep Russia in the fold “because a group like OPEC+ is more effective the more members it has.”

‘I think that both Russia and the core OPEC members have a huge incentive to stick together and to devise a new scheme for navigating these choppy waters. They may step back a little bit from making big announcements on managing the market for now, but they will become significant again the next time oil prices are significantly down,’ Ruhl added.

Amid numerous uncertainties, Ruhl expects oil prices to remain somewhere around $100 a barrel in the third quarter of the year.

“An expected recession and slowdown in economic growth, plus the lockdown in China, have played a role in bringing oil prices down and there have also been safety valves such as the SPR release and the possibility of Iran and Nigeria producing more. So, I am quite bearish and expect excess supply to dominate over demand,” he said, adding that the biggest unknown for the second half of the year is the impact of continued sanctions on Russian oil production capacity.

Upward movements in crude oil prices, which are indexed to the US dollar, have been suppressed by the rising value of the greenback.

The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, rose 0.03% to 106.28.

Source: Anadolu Agency

Russia’s additional oil and natural gas revenues fell below estimates, reaching 259 billion rubles (approx. $4.2 billion) in July, the Ministry of Finance of Russia reported Wednesday.

This result means that the extra revenue was 74.7 billion rubles lower than projections, according to the ministry.

The estimate for August revenue is 359 billion rubles (approx. $6 billion).

The ministry announced that additional revenue from the country’s oil and natural gas exports would not be added to reserves this year due to sanctions but would be used to support the economy.

The drop in revenue could be linked to measures taken by the EU to distance themselves from Russian oil and gas.

EU envoys approved the bloc’s sixth sanctions package against Russia, with measures including a partial oil embargo on June 2.

The sanctions package covers a ban on Russian seaborne oil imports, which could cut 92% of Russia oil trade into the bloc by the end of this year.

EU countries also reached a political agreement on July 26 to cut gas use by 15% through next winter ahead of possible cuts from Russia.

Source: Anadolu Agency

Poland called on the EU to be mindful of countries in need of energy resources for winter in its blanket proposal to member states to cut back on gas consumption, Anna Moskwa, Poland’s climate and environment minister, indicated on Tuesday.

She argued that the energy solidarity mechanism proposed by the EU must not lead to a reduction in energy security of any EU member state in the face of reduced supplies from Russia due to sanctions applied because of the Russian-Ukraine war.

“We cannot talk about energy security based on a forced solution. Solidarity should be shown above all to those in need, not to those who can cope on their own,’ she said.

She warned of the necessity to maintain EU solidarity in response to Russian aggression, including in the field of energy, saying “solidarity requires that we act in a spirit of cooperation and coordinate actions to alleviate the crisis.”

The EU regulation, to be adopted by the Council, foresees a reduction target on member states, namely a 15% reduction in gas consumption from now until next spring.

However, Moskwa said that each country should be able to determine its own energy security strategy.

‘We do not believe this would be necessary or useful. As for Polish achievements, since the beginning of the energy crisis, Poland has been actively preparing, while in many other Member States gas consumption has remained at a similar level or even higher than in previous years. Poland had already prepared for a potential crisis filling up its storage facilities,’ Moskwa explained.

The Polish minister said that Warsaw has long indicated that Moscow pursues a policy of energy blackmail against Europe.

‘The issue of ensuring the EU’s energy security and diversifying the directions of supplies of strategic raw materials to the Member States was indicated by us as the overriding objective of the EU energy policy. We talked about it not only on the occasion of the Nord Stream 2 gas pipeline. Unfortunately, some of the EU Member States until February 24 this year did not notice, or pretended not to notice, the seriousness of these problems,’ she said.

In response to Russia’s suspension of gas supplies to Poland, she said that Poland was ready for this move, as it already planned to terminate gas imports from Russia by the end of 2022.

This plan has been consistently implemented since 2015 when the government took steps to diversify sources of natural gas supplies through the culmination of key infrastructure projects this year to cover natural gas demand from directions other than Russia.

This plan will also allow for regional cooperation in the natural gas sector and energy security, thanks to Poland’s geographical location, allowing Central and Eastern Europe to gain broad access to the global LNG market and deposits from the Norwegian Continental Shelf.

The Poland-Lithuania connection plays a key role in this, enabling gas imports from the LNG terminal in Klaipeda, Lithuania but plans are also afoot for more pipeline connections and upgrades to LNG infrastructure.

‘This year, gas pipeline connections with Norway (Baltic Pipe) and Slovakia will be commissioned. We are similarly active in the area of LNG reception infrastructure. The regasification capacity of the LNG terminal in Swinoujscie is being upgraded from 6.2 billion cubic meters to 8.3 billion cubic meters per year, and in the next five years the new Polish terminal in Gdansk should also be put into operation,’ Moskwa said.

Moskwa advocated for the capacity expansion in underground gas storage facilities in Poland from the current 3.23 billion cubic meters to a total capacity of well over 4 billion cubic meters.

– ‘Rethink unwise decisions’

Moskwa elaborated on the difficulty in attaining climate goals and plans for emission reductions as set out by the EU through the ETS (European Emissions Trading System) in the face of the war in Ukraine and the energy crisis in Europe.

‘The Polish energy transformation is a transformation of dialogue. Poland does not deny the need to transform, preserve natural resources and maintain biodiversity. Polish energy policy and transformation, contrary to European documents, is well thought out. We strongly support all these directions, but we are unable to find a justification for all the dates that we have on these paths, especially in the face of the war in Ukraine,’ she said.

As Russia is using energy as a weapon, she said that the energy transformation cannot take place in isolation from the social situation or the security of states.

She said the goal of protecting the planet must be achieved in a manner that is acceptable to society and therefore recommended that at this stage of the energy crisis, Poland proposes to EU partners to suspend ineffective climate instruments and reform them.

‘The ETS should be suspended immediately, at least for a while, as should the regulations that hinder the burning of coal in the EU and its use in the economy,” she said.

She added that the shutdown of nuclear power plants, in some cases months before winter for some countries when the difficult situation on the EU gas market is known, should not go ahead.

“We urge you to rethink such unwise decisions that could lead to an even greater energy crisis across the EU. If energy security is fully ensured, we are ready to cooperate in a spirit of solidarity within the current legal framework,’ she said.

Source: Anadolu Agency

Daily electricity consumption in Türkiye increased by 1.9% on Tuesday compared to the previous day, totaling 1.04 million megawatt-hours, according to official figures of Turkish Electricity Transmission Corporation (TEIAS) on Wednesday.

Hourly power consumption peaked at 50,984 megawatt-hours at 03.00 p.m. local time (1200 GMT), data from TEIAS showed. The country’s electricity usage dropped to the lowest level of 36,210 megawatt-hours at 07.00 a.m. local time (0400 GMT).

Electricity production amounted to 1.03 million megawatt-hours on Tuesday, marking an increase of 12.8% compared to Monday.

Electricity production from natural gas plants constituted 29.8% of total generation, while imported coal plants and hydroelectricity plants contributed 20.5% and 12.4%, respectively.

On Tuesday, the country’s electricity exports amounted to 8,826 megawatt-hours and imports totaled 18,710 megawatt-hours.

Source: Anadolu Agency

The Group of Seven (G-7) on Tuesday condemned Russia’s “weaponization of energy”, and vowed to work on new measures to stop Moscow “from profiting from its war” in Ukraine.

?Top diplomats of the G-7 group, the world’s most advanced economies – Canada, France, Germany, Italy, Japan, the UK, US and EU – issued a joint statement on energy security.

?The ministers condemned “Russian attempts to weaponise its energy exports and use energy as a tool of geopolitical coercion.”

?They pledged to consider new measures “to prevent Russia from profiting from its war of aggression,” including a “comprehensive prohibition of all services that enable transportation of Russian seaborne crude oil and petroleum products globally.”

?They also stated that Moscow is “not a reliable energy supplier” and vowed to further reduce their dependence on Russian fossil fuels and civil nuclear technology.?

The G-7 group also committed to acting together to ease the consequences of disruptions in energy supply in their own markets, and to support global energy stability by assisting low- and middle-income countries.?

The document also reaffirmed the G-7 countries’ commitment to climate neutrality.

?The statement reiterated the “condemnation of Russia’s brutal, unprovoked, unjustifiable, and illegal war of aggression against Ukraine” and called on Moscow to immediately withdraw its forces from Ukraine.

Source: Anadolu Agency