Global Oil Markets Under Pressure
Crude oil producers from Europe, Africa and the United States faced difficulties selling to Asia, especially China, as buyers took cheaper oil from storage while refinery maintenance has reduced demand, industry sources said.
Chinese independent refiners, which account for a fifth of the country’s imports, have slowed imports in the second quarter because of refinery maintenance, strong Brent prices and a large influx of supplies, including Iranian oil, in first quarter.
These buyers and others in Asia are lapping up cheap oil offered by traders under pressure to clear storage after Brent crude flipped into backwardation, with prices for prompt delivery higher than those for future months, traders said.
As a result, traders were forced to sharply reduce prices for spot cargoes loading in April and May from Europe, Africa and the United States for delivery to Asia.
Lockdowns in Europe have also reduced demand, they said.
“Barrels are struggling to find homes in the export market as Asia still isn’t buying and Europe is struggling as well,” said Scott Shelton, energy specialist at United ICAP.
Crude grades priced on Brent were worst hit, traders said, as a wide spread between the global benchmark and Middle East’s Dubai crude price made them least appealing to Asian buyers.
“China’s demand for (Russian) Urals, West African, CPC Blend oil just evaporated. Buying from stock is much more interesting for them now,” said a source with a western trading house.
Virgin Islands Refinery Expansion Permit Blocked
The US Environmental Protection Agency revoked a permit that would have allowed a US Virgin Islands oil refinery to expand with limited review, citing concerns that the area around the facility is already overburdened with pollution.
The move marks the first big move by President Joe Biden’s EPA against a large industrial facility over considerations of environmental justice, which Biden has said would be a big priority for his administration.
The Limetree Bay refinery, located on the island of St. Croix, fully restarted earlier this year, with a goal to process up to 200,000 barrels of crude oil every day. The refinery can keep operating, but it cannot pursue additional expansion before an environmental review to assess measures the facility needs to take to protect nearby residents.
“Withdrawing this permit will allow EPA to reassess what measures are required at the Limetree facility to safeguard the health of local communities in the Virgin Islands, while providing regulatory certainty to the company,” said EPA acting Regional Administrator Walter Mugdan, in a statement.
Some local residents told Reuters recently here that since the refinery restarted they have had difficulty breathing, along with headaches and watery eyes. Some reported oil droplets covering their homes and chemical odors like rotten eggs. The facility employs several hundred people, which the island's governor has praised as necessary during "difficult economic times."
After nearly a decade idle, the refinery restarted last month after securing a permit from the Trump administration on Dec.
US Gas Increasingly Relies on LNG Exports
US gas producers have become increasingly reliant on liquefied natural gas (LNG) exports to Europe and Asia to absorb their growing output and prevent domestic prices from plunging as a result of oversupply.
Between 2015 and 2020, US gas production grew roughly twice as fast (4.3% per year on average) as consumption (2.3% per year), according to data from the US Energy Information Administration.
Some of the excess has been used to replace previous imports, but the rest has been exported by pipeline or as LNG, to markets in the Americas, Europe, the Middle East and Asia.
LNG exports surged to almost 67 billion cubic metres in 2020, up from less than 1 billion cubic metres in 2015, and were rapidly catching up with pipeline exports to Canada and Mexico.
Repsol Seeks EU Funds to Develop Biofuels
Spain’s Repsol is bidding for European pandemic recovery funds to support projects including new biofuel plants and ‘green’ hydrogen production made from renewable sources in a pivot away from oil and gas to supplying low-carbon energy.
Spain and Italy, due the biggest chunks of Europe’s 750 billion euro ($884 billion) lifeline in recognition of the damage the pandemic caused their economies, have invited companies to propose projects that could help wean their economies off carbon.
Repsol responded by putting forward 30 projects which it calculates will need total investment of 5.96 billion euros, the company said.
India Slams Saudi Advice on Tapping Stored Oil
Indian oil minister Dharmendra Pradhan described his Saudi counterpart’s advice to reduce oil stores to tackle high crude prices as “undiplomatic”.
“That was in a way (an) undiplomatic answer by our old friend. I politely disagree with that kind of approach.
“Certainly India has its own strategy, when and how to use our own storage, and we are conscious about our interests,” Pradhan said at Times Network’s India Economic Conclave in the Indian capital.
Pradhan has criticized OPEC and Saudi output cuts aimed at supporting prices and suggested India will have to look for energy alternatives to Persian Gulf oil, its main source of crude.
US to Slash Solar Energy Costs by 60%
The Biden administration set a goal to cut the cost of solar energy by 60% over the next decade as part of an ambitious plan to decarbonize the United States’ power sector by 2035.
The US Department of Energy said the goal accelerates its previous utility-scale solar cost target by five years. For the US power grid to run entirely on clean energy within 15 years, a key pillar of President Joe Biden’s climate change agenda, solar energy will need to be installed as much as five times faster than it is today, DOE said.
To get there, the agency committed to spending $128 million on technologies including perovskite solar cells, which are regarded as a promising cheap alternative to the silicon cells that dominate the market. Funds will also support research on cadmium telluride and concentrating solar technologies.