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LONDON – Oil prices tanked 4% on Wednesday as OPEC+ producers unexpectedly delayed a meeting on output planned for Sunday, raising questions about the future course of crude production cuts.

 futures was down $3.39, or 4.1%, to $79.06 a barrel by 1412 GMT. U.S. West Texas Intermediate (WTI) crude futures were down $3.26, or 4.2%, to $74.51.

OPEC+ delayed its ministerial meeting to Nov. 30 from Nov. 26 as previously scheduled, OPEC said in a statement, a surprise development that gave no reason for the postponement.

The meeting of OPEC+, which includes Saudi Arabia, Russia and other allies and members of the OPEC group of oil-producing countries, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts and OPEC+ sources.

Earlier on Wednesday, Bloomberg News reported that the OPEC+ meeting could be delayed for an unspecified period of time after Saudi Arabia expressed its dissatisfaction with other members about their output numbers.

Analysts had predicted before the delay that OPEC+ was likely to extend or even deepen oil supply cuts into next year.

Both Brent and WTI oil benchmarks have fallen for four straight weeks – the former down from near $98 in late September – pressured by rising supplies and concern about demand and a potential economic slowdown.

The two contracts had climbed about 2% on Monday after three OPEC+ sources told Reuters the group, the Organization of the Petroleum Exporting Countries and allied producers, was set to consider more oil supply cuts when it meets on Nov. 26.

“The upcoming meeting has been the key central focus for oil prices for now, with sentiment shrugging off the sharp build in  inventories,” said Jun Rong Yeap, a market strategist at IG, before the meeting delay announcement.

To support prices, OPEC and its allies will need to not only extend, but increase cuts, said John Evans of oil broker PVM in a note on Wednesday.

“A rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is ‘tight’,” he said, also before the delay. “Oil is in for some tense and headline-reactive days.”

Earlier this week, an OPEC technical panel invited a top financial market dealer to give a presentation, seen by Reuters, which painted a bearish outlook for the oil market.

Even if the OPEC+ nations extend their cuts into next year, the global oil market will see a slight supply surplus in 2024, the head of the International Energy Agency’s (IEA) oil markets and industry division said on Tuesday.

 

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The bloc has drastically increased purchases from the South Asian nation, RIA Novosti reports, citing EU statistics

 

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The news agency claims Ankara said it would not ratify Stockholm’s bid in time for a NATO ministerial meeting next week

 

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The outflow follows a huge fine on the exchange and criminal charges against its former CEO in the US
 

 

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Energy News Beat

 November 22, 2023

Data source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update, and the U.S. Bureau of Labor Statistics

On November 20, 2023, the Monday before Thanksgiving, the retail price of regular gasoline averaged $3.29 per gallon (gal) across the United States, 10% less than the same time last year. After adjusting for inflation (real terms), retail gasoline prices this Thanksgiving weekend are 13% lower than last year, but they remain higher than pre-pandemic levels for the third year. This Thanksgiving, the American Automotive Association (AAA) forecasts 55 million people will travel 50 miles or more for the Thanksgiving holiday, a 2% increase compared with 2022.

Typically, U.S. retail gasoline prices follow a seasonal trend: prices increase in late summer when people drive more frequently and then decline going into the winter. Less gasoline demand than usual this fall and an early transition to winter-blend gasoline in California helped accelerate the decline in prices. Regulations on gasoline vapor pressure allow refiners to switch to less expensive components to produce gasoline in the fall, which tends to reduce gasoline prices.

Despite crude oil production cuts by OPEC+ members over the last year, concerns about slowing economic growth reducing world oil demand have continued to push crude oil prices down. The Brent crude oil price declined 15% from its most recent peak of $96.55 per barrel (b) on September 27 to $82.32/b on November 20, reaching its lowest level since July. Crude oil prices are the primary driver of U.S. gasoline prices, making up 55% of the total cost to produce a gallon of gasoline.

U.S. gasoline prices vary regionally, reflecting local supply and demand conditions, different fuel specifications required by state laws, and taxes. Regional gasoline prices are usually highest on the West Coast because of the region’s limited connections with other major refining centers, tight local supply and demand conditions, and gasoline specifications that make it more costly to manufacture. West Coast prices as of November 20 averaged $4.42/gal, down 8% since the same time last year.

Data source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update

The Rocky Mountain region faces similar logistical constraints as the West Coast, although overall the region has both less supply and demand. Rocky Mountain gasoline retail prices averaged $3.20/gal on November 20, down 12% from 2022.

Gasoline prices are usually the lowest on the Gulf Coast, which holds about half of U.S. refining capacity and produces more gasoline than it consumes. On November 20, the average retail gasoline price on the Gulf Coast was $2.79/gal, down 8% from the same time last year.

On the East Coast, which has the most gasoline demand of the five regions, retail gasoline prices averaged $3.17/gal, down 11% from 2022. In the Midwest, prices decreased 11% from this time last year to average $3.12/gal on the Monday before Thanksgiving.

Principal contributor: Alexander de Keyserling

 

On November 20, 2023, the Monday before Thanksgiving, the retail price of regular gasoline averaged $3.29 per gallon (gal) across the United States, 10% less than the same time last year. After adjusting for inflation (real terms), retail gasoline prices this Thanksgiving weekend are 13% lower than last year, but they remain higher than pre-pandemic levels for the third year. This Thanksgiving, the American Automotive Association (AAA) forecasts 55 million people will travel 50 miles or more for the Thanksgiving holiday, a 2% increase compared with 2022. 

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​This commentary was submitted by Sneha Ayyagari, a Clean Energy Leadership Institute Fellow and a Program Manager for Clean Energy Initiative at the Greenlining Institute. See our commentary guidelines for more information.

Winter is coming, and having resilient homes is crucial in climate disasters. For instance, Texans were woefully unprepared for Storm Uri which resulted in 246 deaths. While my family shivered under blankets, temperatures in our house stayed safe since we had insulation and a heat pump that kicked into gear when we had short periods of power. It was devastating hearing of families living in poorly insulated homes exposed to hypothermia. Weatherizing buildings and switching to efficient systems like heat pumps can be lifesaving in extreme weather and generally be more comfortable and can save residents money.

However, for more than a third of residents living in rental housing, accessing incentive programs that allow them to make these upgrades in their homes is very difficult. These barriers are especially high for residents in multifamily affordable housing and mobile homes where many people who are most susceptible to heat-related illnesses live.

States and local governments should implement federal funding with renters in mind. The Department of Energy’s Home Energy Rebates (HER) program provides $8.8B in rebate funding for energy efficiency and electrification projects and an additional $200M for states to develop complementary contractor training programs. States can provide their most vulnerable residents health, economic, and environmental benefits by prioritizing low-income renters in their applications for Home Energy Rebate funding.

To ensure the benefits of this program reach tenants, states should:

Renters should not have to fear that their landlords would use building upgrades as a reason to raise rents or displace them (as has happened in construction projects including apartment renovations in Los Angeles). At a minimum, HER guidance states that the owner must agree to rent the dwelling to a low-income tenant and cannot increase rent as a result of energy improvements for two years. Tenants must also have written notice of their rights in a specific and verifiable mechanism. States should go further to specify clear enforcement and penalties. They should ensure that tenants have access to legal services and support in reporting violations without fear of retaliation. Administrators should prohibit rent increases due to HER or at least extend the window of preventing rent increases to at least 10 years following the precedent of other programs.

In addition to building decarbonization programs, states should adopt policies such as rental efficiency standards, rental registries, eviction protections, and rent-stabilization measures to preserve affordability and increase the quality of rental housing. State and local renter protections such as California’s Transformative Communities Draft Program Guidelines and Berkeley’s Existing Buildings Electrification Strategy include a list of tenant protections and anti-displacement resources.

States have many resources from tenant advocates, environmental justice leaders, and policy groups to build from. This letter led by Just Solutions Collective in collaboration with 60 environmental justice, housing, workforce, and environmental organizations has detailed recommendations on reducing barriers for tenants. Strategic Actions for a Just Economy shared recommendations on developing a tenant protection plan to prevent rent burden, limit evictions, minimize disruptions to tenants, and design enforcement and penalty systems. The Greenlining’s Equitable Building Decarbonization Framework shares how to design a community-led approach to implementation. Just Solutions Collective provides recommendations on ensuring access to low income renters, and Green and Healthy Homes Initiative and Building Decarbonization Coalition  shares lessons learned from past federal building retrofit programs. Other resources include American Council for an Energy-Efficient Economy’s webinars and Energy Innovation’s report on ways to design effective outreach strategies.

Regional and local community based organizations should be compensated to be part of the program administration team and help with outreach, implementation, and evaluation of the Home Energy program. The HER application also requires that states create Community Benefits Plans that describe anticipated economic and direct benefits especially for disadvantaged communities. As states develop their community benefits plans, they should ensure that benefits to low income tenants are prioritized within the scope of the goals.

Stacking and braiding federal funding with other state, local, and utility housing, energy, and building retrofits programs can maximize benefits to renters while streamlining the effort of property owners applying for multiple programs. Philadelphia’s Built to Last and Washington’s Weatherization and Health are good examples of holistic programs.

Families shouldn’t have to choose between affording rent and having a safe and healthy place to live, especially in the face of climate disasters. States have a historic opportunity to drastically improve the lives of tenants. By collaborating with tenants, state energy offices can create strong applications in 2024 that ensure healthy, affordable, and climate-resilient housing for all.

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Energy News Beat

TotalEnergies has completed the sale of TotalEnergies EP Canada Ltd., which holds a 31.23 percent working interest in the Fort Hills oil sands mining project, to Suncor Energy Inc.

Aside from the Fort Hills asset, the acquisition also includes associated midstream commitments. The consideration for the transaction is around $1.1 billion (CAD 1.47 billion) and has an effective date of April 1, TotalEnergies and Suncor said in separate news releases Monday. Including adjustments, TotalEnergies said it received a cash payment of roughly $1.3 billion (CAD 1.83 billion) at closing.

Suncor now owns 100 percent of the Fort Hills Project, which it operates. The project is an open-pit truck and shovel mine located in Alberta’s Athabasca region, 56 miles (90 kilometers) north of Fort McMurray. The acquisition adds 61,000 barrels per day (bpd) of net bitumen production capacity and 675 million barrels of proved and probable reserves to Suncor’s existing oil sands portfolio, the company said in an earlier news release announcing the acquisition.

Along with its 100 percent ownership of Firebag and MacKay River in-situ assets, the acquisition provides Suncor with additional long-life, physically-integrated bitumen supply to maximize the utilization of its wholly-owned Base Plant upgraders post the end of the Base Mine life. Suncor’s Base Plant operation includes two mines and extraction operations north of Fort McMurray, in the Regional Municipality of Wood Buffalo.

In October, TotalEnergies completed the sale of its 50 percent participation in the Surmont oil sands project and associated midstream commitments to ConocoPhillips. TotalEnergies received approximately $2.75 billion in cash (CAD 3.7 billion) after closing adjustments, as well as future contingent payments of up to approximately $0.33 billion (CAD 0.44 billion).

ConocoPhillips owns 100 percent of Surmont and is continuing as the asset’s operator. Surmont is located in the Athabasca region of northeastern Alberta, approximately 35 miles south of Fort McMurray. According to the company website, Surmont’s net production reached 69 million barrels of oil equivalent in 2011.

“With these two divestments over the last couple of months, TotalEnergies effectively exits the Canadian oil sands, focusing our allocation of capital to Oil & Gas assets with low breakeven”, TotalEnergies Chief Financial Officer Jean-Pierre Sbraire said. “The company has hence received more than US$4 billion from these sales during the fourth quarter 2023, out of which, as previously announced, US$1.5 billion will be shared with shareholders as buybacks in 2023”.

Gas Power Plant Acquisitions

Meanwhile, TotalEnergies signed an agreement to acquire three gas-fired power plants with a total capacity of 1.5 gigawatts (GW) in Texas for $635 million from TexGen. The three plants are connected to the Electric Reliability Council of Texas (ERCOT), the second largest power market in the USA, according to a separate news release. The transaction remains subject to approval by the relevant authorities.

The acquisition is for the Wolf Hollow I plant, with a 745-megawatt (MW) combined-cycle gas turbine (CCGT) plant on the outskirts of Dallas; the Colorado Bend I plant with a 530-MW CCGT and a 74 MW open-cycle gas turbine (OCGT) south of Houston; and the La Porte site with a 150-MW OCGT, southeast of Houston.

The 1.5 GW additional flexible production capacity will complement the company’s renewable capacity in Texas, which currently has 2 GW gross installed, 2 GW under construction and more than 3 GW under development, TotalEnergies said, adding that the acquisition would strengthen its trading capabilities in the gas and power markets.

“We are delighted with the agreement signed with TexGen to acquire 1.5 GW of CCGT in ERCOT. After the signing of several corporate PPA over the last couple of years and the recent start-up of the utility-scale Myrtle solar plant, this deal is a major milestone for our Integrated Power strategy in the ERCOT market”, TotalEnergies President for Gas, Renewables and Power Stephane Michel said. “These plants will enable us to complement our renewable assets, intermittent by nature, provide our customers with firm power, and take advantage of the volatility of electricity prices”.

Source:

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Unintended but not unexpected is one way of describing what’s happening to the price of steel-making coal as governments suppress supply in the face of steady demand growth, a perfect recipe for a higher price.

On cue, high-quality hard coking (or metallurgical) coal has risen by 9% over the past three months to around $264 a tonne, and is forecast by Goldman Sachs to rise by another 6% to $280/t before the end of the year.

Multiple factors influence the price of coking coal and its lower-grade cousin, thermal or steaming coal used in the production of electricity, with both blamed by environmentalists and governments for causing carbon pollution and climate change.

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Imagine a household that consumes 1,000 kilowatt hours of energy per month. Then they install solar panels on their roof that generate 500 kilowatt hours of electricity per month on average. How much should their consumption of electricity drawn from the power grid decline after they install solar? Five hundred kilowatt hours is the expectation, but in reality, it’s less than that for most people. Now, they’re consuming more than 1,000 kilowatt hours per month.

This paradox is called the solar rebound effect: the ratio of the increase in energy consumption to the amount that is generated by the solar panels. In new research from the Georgia Institute of Technology, Matthew Oliver, an associate professor in the School of Economics, presented this argument for how the economics of solar power really work, in “Tipping the Scale: Why Utility-Scale Solar Avoids a Solar Rebound and What It Means for U.S. Solar Policy,” published in The Electricity Journal.

“Getting people to adopt this technology does reduce their reliance on conventional energy sources, but not by as much as you think,” Oliver said. “This is because people end up increasing their electricity consumption after adopting solar panels, as an economic and behavioral response.”

People may believe they are saving money due to subsidies, or might perceive that their electricity consumption isn’t as environmentally damaging as it was before—so they leave the lights on longer and appliances running.

Policymakers must account for solar rebound when determining solar subsidies, Oliver argues. Take the example of a typical household. If their solar rebound is 20%, they’re eliminating 20% of the carbon reduction benefits that they should have received from adding panels.

“You have to build the estimated rebound effect into your benefit-cost ratio with regard to how much electricity consumption you’re actually displacing,” he said. “Because it’s not happening on a one-for-one basis.”

If subsidizing residential solar proves to not be worthwhile, then shifting subsidies to utility-scale solar may be a good alternative. While household solar rebound effects happen because of individual consumer behavior, this is not an issue with utility providers. Utility-scale solar could enable solar to reach its full carbon reduction potential.

“Policymakers could consider reallocating subsidies in a more optimal way to support greater investment in utility-scale solar,” Oliver said. “That’s not to say policymakers wouldn’t continue to subsidize residential solar, but there has been an overwhelming policy focus on the adoption of residential solar.”

Source: Techxplore.com

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Investors withdrew $14.2 billion from U.S. sustainable funds over the past year.
Global renewable energy funds experienced record outflows in Q3 2023, with stocks plummeting amid rising costs and market challenges.
Political and regulatory changes, including challenges to the Biden Administration’s ESG rule and SEC’s anti-greenwashing efforts, contribute to the decline in sustainable investing.

Investors are withdrawing money from sustainable funds as the ESG enthusiasm of the past few years is waning amid high interest rates, poor returns, plunging renewable energy stocks, tightened SEC rules, and political backlash.

Over the past year, investors have withdrawn a total of $14.2 billion from U.S. sustainable funds in four consecutive quarters of net withdrawals, data from Morningstar showed.

Green Energy Stocks Battered 

Globally, renewable energy funds saw record outflows of money in the third quarter of 2023 as stocks of wind and solar developers and suppliers crashed amid rising costs, higher interest rates, and supply-chain challenges.

Renewable energy exchange traded funds (ETFs), tracking the performance of clean energy companies, suffered a total of $1.4 billion of outflows in the third quarter, the highest outflows of any previous quarter, according to data from LSEG Lipper cited by Reuters.

The record outflows between July and September only partially offset net inflows of $3.36 billion for the first half of 2023, the data showed.

A perfect storm of soaring costs, supply chain delays, rising interest rates, and low electricity prices at auctions have been hurting renewables-related companies in recent months.

“There’s a dark cloud hanging over green stocks,” Martin Frandsen, a portfolio manager at Principal Asset Management, told the Financial Times last month.

Investors Pull Billions From U.S. Sustainable Funds 

It’s not only the recent flop in renewable energy stocks that’s keeping Wall Street away from sustainable investments. The high interest rates and politicians targeting sustainable investing have also played a role in investor decisions, industry executives and analysts say.

In the third quarter of 2023 alone, investors pulled $2.7 billion from U.S. sustainable funds, continuing a trend of net withdrawals that started in the fourth quarter of 2022, per data from Morningstar Direct.

“Although the motivations behind outflows cannot be perfectly quantified, many factors are in play. These include rising energy prices, high interest rates, concerns about greenwashing, and political backlash,” Alyssa Stankiewicz, an associate director of sustainability research for Morningstar, wrote in an analysis last month.

All U.S. funds also saw net withdrawals in the third quarter of 2023, but the demand drop in sustainable funds was steeper compared to conventional funds, according to Morningstar.

As a result of net withdrawals and poor performance, assets in sustainable funds dropped back below the $298.8 billion mark at the end of the third quarter—falling by 17% from the record-high of $358.2 billion at the end of 2021 but up by 10% from the recent low of $272.2 billion in the third quarter of 2022, Morningstar data showed.

Moreover, for the first time ever, more sustainable funds closed in the third quarter than the number of funds launched. Three new sustainable funds launched, and one existing fund was added to the sustainable funds landscape in Q3, while 13 sustainable funds closed and four funds moved away from ESG mandates, Morningstar said.

Columbia Threadneedle, Hartford, and BlackRock liquidated the largest sustainable funds in terms of assets in the third quarter.

As a result, the total number of sustainable open-end and exchange-traded funds in the United States were 661 at the end of the quarter.

After the third quarter, the list of the top 12 worst-performing ETFs in October was packed with thematic funds in the clean energy space, according to Morningstar Direct research from early November. Electric Vehicle Charging Infrastructure UCITS ETF, First Trust Nasdaq Clean Edge Green Energy UCITS ETF, and the Invesco Solar Energy UCITS ETF were the biggest ETF losers.

New Rules And Political Backlash Discourage Sustainable Fund Investors

In recent months, the Biden Administration’s rule allowing employee retirement plans to consider ESG factors in investment decisions has been challenged by Republican-led states. Fund managers say the rule may have impacted the popularity of sustainable funds.

“We found that the demand for ESG investing, by financial professionals working with retirement-plan participants, was more limited than we anticipated,” Ron Rice, vice president of marketing at Pacific Financial, told The Wall Street Journal.

In addition, the Securities and Exchange Commission (SEC) has been stepping up efforts to combat the greenwashing of labeling funds as sustainable. The SEC updated in September the so-called Names Rule, requiring 80% of a fund’s portfolio to match the asset advertised by its name.

“The updated rule will apply not only to funds whose names suggest a focus in particular investments, industries, or geographies—but also to funds whose names suggest a focus in investments with particular characteristics. This includes names suggesting an investment focus on Environment, Social, and Governance (ESG)-related factors through names such as “sustainable,” “green,” or “socially responsible,” SEC chair Gary Gensler said.

In addition, sustainable investing in the U.S. has been criticized by Republican states, most notably Texas, which says that ESG standards are harming America’s energy industry and threatens millions of jobs. Texas prohibits state contracts and investments with companies that boycott energy companies.

At the end of last year, the Florida Treasury said it would divest $2 billion worth of assets under management by BlackRock because of the ESG investing by the world’s largest asset manager.

“If Larry, or his friends on Wall Street, want to change the world – run for office,” Florida Chief Financial Officer (CFO) Jimmy Patronis said at the time.

“Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for.”

Source: Oilprice.com

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