Tom Whipple and Steve Andrews, Editors

Quotes of the Week

“…across all key basins [oil] production has been relatively flat for most of the past year, and in particular for 2022. …What this means for oil prices is yet unclear in the short term as for the last six weeks concerns about a possible recession have trimmed roughly $20 per barrel from the price of WTI and Brent. Longer term, if this trend toward lower well productivity bears out, we could see a sharp reversal higher, as shale output declines.
David Messler, oilprice.com

“Brent crude prices have averaged $105 per barrel for the first half of 2022, a gain of 48 percent over 2021’s annual average price. However, the sharp gains in Brent have failed to spur similar increased investment across the supermajors peer group…The difficulty in making multi-billion-dollar investments over the long-term term continues to be dogged by uncertainty raised by the energy transition and most majors have chosen to exercise caution and remain balanced in guidance for capital expenditure in 2022.”
Fitch Solutions Country Risk and Industry Research

Stats of the Week

“The average US price of retail gasoline has fallen by more than USc 80 per gallon (16%) since the mid-June peak, which should support demand in August. However, we think the theory that the US market will bear gasoline prices of USD 5 per gallon for an extended period has now been tested to its destruction.”
Standard Chartered report

According to StanChart data, in July, gasoline demand in the U.S. dropped by 7.6% on the year to 8.592 million barrels daily, which, the report noted, was the lowest demand level since 1997 except for the lockdown-heavy 2020.  (From www.oilprice.com]

Graphic of the Week

“The DPR monthly report makes a simple calculation of individual well productivity per rig by dividing the production for that month (shown two months in arrears), by the number of active rigs. The data is revelatory in the following respects.
“The blue line, representing all eight basins tabulated in the report, trends down over the last year, while the total rig count as reported by Baker Hughes is rising sharply. The orange line, representing the Permian basin, follows the same trajectory, with daily production declining per well by about 120 bbl per day over this time.
“What is additionally noteworthy about this data is while production is declining as rigs are added – something that is a little counter-intuitive – the rates of monthly DUC-Drilled but Uncompleted wells and withdrawals are also declining. This is suggestive that the daily production rate per rig, already on the downslope, was boosted artificially by operators fracking an already drilled well to turn it inline.”
David Messler, oilprice.com

Headlines for the week of Aug 8 – Aug 14

The Global Energy Situation

Offshore drilling is coming back with a bang
IEA raises 2022 oil demand growth forecast by 380,000 b/d
The global diesel crunch is going to get worse
Oil supermajors continue to hold back on investment

Russia

Standard Chartered: Putin’s gas weapon is weakening as inventories build
As many as 80,000 Russian troops hurt or killed in Ukraine, Pentagon Says
Russia rebuffs calls to allow access to Ukraine nuclear plant

Europe

Soaring European gas prices will drive higher oil use, IEA forecasts
Europe’s dash for new LNG import infrastructure picks up pace
France risks winter blackouts as nuclear-power generation stalls
Rhine River water level at Kaub seen dropping to 30cm on Aug. 15
Europe’s newest gas pipeline could come online within 9 months

North America

How high can U.S. shale production climb?
U.S. drilling activity sees decline for second straight week
What’s really happening with gasoline demand?
Gasoline-demand forecast is cut for this year amid high US prices
EIA lowers U.S. oil production forecast
Gasoline use is falling in US as decades-high inflation hits consumers

Middle East

Iran signals that the latest nuclear deal proposal could be ‘acceptable’
U.S. says ready to quickly conclude Iran nuclear deal based on EU text
All hopes are dashed for international oil companies in north Iraq

China

China’s mounting risks set the stage for PBOC to rein in stimulus
Tesla faces crowded field in China as new-energy car market booms
Two Chinese cities approve Baidu’s unmanned self-driving taxis

Latin America

PDVSA pauses oil-for-debt shipments to Europe, wants product swaps

Africa

Nigeria’s Buhari grants consent to Seplat’s buy of Exxon Mobil’s Nigeria unit
Nigerian oil output falls 6% in July as pipeline closures persist
Nigeria: No respite for Nigeria as oil production falls to 1.083 million bpd in July

The Global Economy

Agriculture

Major Ukraine grower says Russia stole 200,000 tons of its crops

US

Stocks record their best stretch of the year, as inflation fears recede.

Europe

German economy to lose $265 billion in added value due to war, high energy prices – study
IAEA sees “very real risk of a nuclear disaster” In Ukraine
The vast nuclear plant in the eye of the war in Ukraine
Historic drought threatens to cripple European trade
Retailers turn off lights, cut opening hours to save energy

China

China’s exports gain steam but outlook cloudy as global growth cools

Middle East

Heat wave in Baghdad sends the temperature to 122, cripples power grid –
Turkey agrees to pay for Russian gas with rubles

Global Warming

World’s largest ice sheet risks melting, threatens spike in sea levels
Why solar power is failing amid record-breaking heat

North America
Hot nights: US in July sets new record for overnight warmth

Europe

Climate risks dwarf Europe’s energy crisis, space chief warns

Asia

South Korea suffers worst rainfall in eight decades