Daily Energy Standup Episode #337 – Oil Demand Surpasses Expectations, California Gas Prices, Exxon’s LNG Expansion, PetroChina’s Record Profits, and Shell’s Strategic Shift

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Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude

Don’t let California politicians gaslight you. Higher gas prices are driven by deliberate policy choices.

Highlights of the Podcast

00:00 – Intro

01:36 – Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude

04:44 – Don’t let California politicians gaslight you. Higher gas prices are driven by deliberate policy choices.

07:18 – Exxon Mobil Ahead of Schedule in Doubling LNG Portfolio, Executive Says

10:41 – PetroChina Books Record Profit as Natural Gas and Fuel Demand Soar

13:58 – Oil settles higher as Russia orders output cuts, geopolitical tensions persist

16:26 – Shell sells interest in U.S. offshore wind joint venture as company refocuses on oil and gas

18:42 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome in to the Tuesday, March 26th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up oil demand outpaces expectations. Testing calculus on peak crude oil. Great. I’m back in. I’m back in college now. We’re doing calculus to kill me. Next up, our favorite state. Don’t let California politicians gaslight you. Higher gas prices are driven by deliberate policy choices. A nice little op ed out of the, out of the state of California. Next up, Exxon Mobil, ahead of schedule in doubling its LNG portfolio, according to executives. We’ll finalize the news segment with Petro China booking record profits as natural gas and fuel demand absolutely soar. Stool. Then toss it over to me. I will quickly cover what’s going on in the oil and gas markets and touch on Shell’s and touch on Shell’s selling its interest in U.S offshore wind joint venture as company refocuses on oil and gas. You can’t make this stuff up, folks. We’ll cover all of that in a bag of chips, guys. As always, I’m Michael Tanner, joined by Stuart Turley, the, editor and purveyor of energy news beat.com. Where do you want to begin? [00:01:35][80.9]

Stuart Turley: [00:01:36] Hey, let’s get rolling over here at Peak oil. Oil demand outpaces expectation testing calculus on peak crude. You know we keep doing peak crude. And everybody’s saying, have we reached peak crude in the Permian. And I think we’re not even close. Here’s what you know, we talked about this last week a little bit. Amir Nassir is CEO of Saudi Aramco. We should abandon this fantasy of phasing out oil and gas. This is one we didn’t talk about. Was Russell Hardy, the CEO of v toll, the global oil trader? He had said the same kind of thing. Peak oil and consumption to oil 2030s because of downgraded expectations and the adoption of electric vehicles. Michael, this is just an absolute trend. And then there’s also, oil governor, governor Group expects an increase of 1.4 million barrels per day this year. To refer to figure to figure. Would you you like, says the consensus is, expectation about 1.5 million in demand, but argues there’s considerable upside to risks. What are your thoughts on demand? [00:03:02][85.9]

Michael Tanner: [00:03:03] Well, I mean, it’s clear that we’re probably going to see demand slightly higher than supply. I think that’s the current sentiment right now, considering where oil prices are. You’ve got all of these different, you know, oil traders, Trafigura, Gunvor, they’re all in the same in, down the same gun barrel is that, you know, really the fantasy of phasing out oil and gas? Is it coming? And we need to make sure that we have enough demand. I see, you know, demand somewhere in that 1.3 to 1.5 million range. That’s not going to shock anybody. I’m always going to be a little bit higher than what the IEA says. I mean, they still the IEA in their defense still has demand rising by 1.3 million barrels a day, which was clearly less than, last year’s 2.2 million. Right. Where’s that extra growth going to come from this year? You know, we talked a lot last week about AI and some of that stuff. So I don’t know how much crude oil demand you’re going to see from the increase today. You’re going to see probably a lot more than that gas and LNG demand. But there is something to be said about where is that energy going to come from? You know, I think all eyes are going to be on India as they continue to grow, grow, grow, buy cheap Russian oil, continue to, to increase. I think, you know, you know, Helen Curry, she’s the chief economist over ConocoPhillips pointed out, you know, really what you need to do is look at where the emerging market growth is going to come from. It’s probably going to be India. The other thing is, what are EVs going to do depending on that route. So I think there’s a lot of different stuff. I’m going to take the over on the IEA number though. Trust me, I. [00:04:35][92.3]

Stuart Turley: [00:04:36] Loved her comment there. Her quote we’re looking for another record high in world demand. I like your comment. All right. Let’s roll to the next one here. Let’s go to our favorite third world country, California. Don’t let California politicians gaslight you. Higher gas prices are driven by deliberate policy choices. There’s some couple good things in here, and I want to just give a shout out. This came from the OC Register. So, I mean, this is not some kind. Yeah. Publication. That’s just kind of going out there a little bit. Right wing type thing. So, the bottom line is that California’s policy changes are driving the high cost at the pump, and they’re continuing to do so. It might be easier to play the blame game with the facts or the facts. The state of California makes a lot of money off of a gallon of gas, more than the oil companies do. So, you know, you sit back and take a look. There’s there’s taxes on the EMV, there’s taxes on it being imported in. There’s taxes when it’s being drilled out of the rainforest. And guess who gets it in the drives through my home. It’s just unbelievable. [00:05:55][79.4]

Michael Tanner: [00:05:56] The consumer gets it through. You know it’s it’s it’s. [00:05:59][3.3]

Stuart Turley: [00:06:00] It’s a. [00:06:00][0.3]

Michael Tanner: [00:06:01] La times would gaslight their own readers. I would have never guessed that. [00:06:04][3.4]

Stuart Turley: [00:06:05] And and this one is just amazing. $1.83 a gallon in taxes. [00:06:11][6.2]

Michael Tanner: [00:06:13] That’s almost that’s almost what we were paying in Covid here in Texas. [00:06:17][3.9]

Stuart Turley: [00:06:19] Trump was $1.80 something that I just did a thing on it. And I took another picture, over the weekend, and it was in, Bruce Willis, death, or, what was the one where he was in, Nagasaki Tower. There was a picture of gasoline at $0.74. Die hard, the first Die Hard seven. Oh, yeah. [00:06:47][28.2]

Michael Tanner: [00:06:48] Since I was like, what are we talking about here? But yes, we lost. Oh. [00:06:53][5.2]

Stuart Turley: [00:06:53] Yeah. Oh, yeah. Here it is. Carb expects cost could increase another $0.47. So it’s almost going to even go up from Die Hard. [00:07:02][8.8]

Michael Tanner: [00:07:02] It was going to be $2. I do love, the O.C. Register. They’re they’re one of the few papers down in, southern California county that will actually read. Oh, yeah. It’s redneck part of California. Don’t don’t get me wrong. What’s next? [00:07:17][14.5]

Stuart Turley: [00:07:18] Hey, let’s go to our buddies over there to Exxon Mobil ahead of schedule and doubling LNG portfolio. Holy smokes. Not only is oil and gas not at peak, LNG is really taking off here. Exxon is revamping its LNG strategy amid growing production of the fuel as a wider corporate reorganization that began in 2022. Michael, I do want to share with you that in the news feeds that I get, you know, I get about two hours worth of reading in every day. You know, the number of bunkering LNG ships is going through the roof. Disney has just taken another cruise. Ship you. I would never want to go on a, cruise period. But no, you know, you can’t go on one because people would think that you’re Mickey is as they walk up and go, Mickey. So yeah, that was supposed to be funny, by the way. Yeah. You’re a great Mickey Mouse. It was. [00:08:23][65.1]

Michael Tanner: [00:08:23] Okay. It was okay. [00:08:24][0.8]

Stuart Turley: [00:08:25] So but LNG is becoming a fuel of choice and it meets the stringent, shipping. And there’s more shipping container coming around. Bunker is the infrastructure’s there. This is pretty cool. Here’s a quote. Our portfolio is never going to look like shells. It’s not going to look like totals. We’re targeting different aspects of the value chain, he told Reuters. [00:08:54][28.8]

Michael Tanner: [00:08:55] Well who and what does that specifically mean? It’s they’re going to be trading their own LNG, not necessarily other people’s LNG, as an intermediary and getting into the vital game in the Trafigura game, the gun ball game, they’re going to say, we’ve got enough LNG capacity ourselves to go ahead and pump it all through. So that’s the little bit of a difference that they’re going to have. I think they they could have a larger trading portfolio. But that Paul Clark I think is his name. Is it Paul? Peter Clark, Exxon senior vice president for global LNG, was basically saying that the margin in that business are basically small relative to what it can make of selling its own natural gas, which I think is actually interesting thing. You know, there’s more value in producing, liquefying and selling it, where those long term contracts still account for about 80% of the global trade. I love this quote, Stuart. He goes, the biggest component in the LNG space is obviously the commercialization of LNG yourself. It’s like what Elon said, anyone could build one rocket to go to Mars one time. It’s how do you manufacture thousands of those to keep going? And it’s in the manufacturing or the commercialization. Of an industry which allows you to scale from zero to. Large amounts. [00:10:14][79.3]

Stuart Turley: [00:10:15] I love to quote down in here from Clark and he spells his name Clark. The market is expanding and by 2050, 75% of global energy demand will be in Asia Pacific. So we are really focused in that area. I applaud them on their market strategies as well as long term growth. [00:10:38][23.4]

Michael Tanner: [00:10:39] Yeah, absolutely. What’s next? [00:10:40][1.3]

Stuart Turley: [00:10:41] Okay. Let’s go to our buddies over there at Petro China books. President XI new redundancy record profit as natural gas and fuel demand soar. You know, I think you can recognize this red net. Total revenues for Petro China slumped by 7% in 2023. And they’re up this year. The volumes processed by a crude jumped 15.3% year over year. Jet fuel soared by 77%. Production rose 14.4 and diesel output 8.9. Michael, here’s where I talked about this a few about a month ago. And that is that the, downstream capabilities of, China are, increasing downstream is increasing. And, Californian chatter heads are looking to import from China refined goods. [00:11:51][70.0]

Michael Tanner: [00:11:52] Yeah. It’s it’s, it’s it’s pretty crazy. I mean, everybody wants to go get their, their oil and gas from somewhere other than the United States. You know, I mean, this just goes to show that, you know, China’s going to continue, to dominate the market from a buying perspective. You know, they’re the the, the world’s top importer. You know, it is interesting to know that that the total revenues did slumped by 7%. But that’s mainly due to international oil and gas prices, which affects their upstream unit volumes up. We also saw the same thing happened with with the Chinese National Offshore Oil Company, which saw its net profit in 2023, slipped by 12.5% again due to those international prices. So, I mean, they’re going to be taking a long over there, but as long as they keep buying, it’s it’s not really going to matter now. [00:12:39][46.9]

Stuart Turley: [00:12:40] They’re still buying everything they possibly can. Now what do you think that Russia’s, the Ukraine attack in Russia on their refined products, is going to do because that drove oil up, if I remember right, today, there was some things going on. [00:12:59][19.2]

Michael Tanner: [00:13:00] Well, yeah. No, we we did see oil prices, Bob. We’ll go ahead and and roll over to finance then. But before we do that we’ll quickly pay the bills here. Guys. As always, the news and analysis you just heard, brought to you by the world’s greatest website, www.energynewsbeat.com. The best place for all your energy and oil and gas news doing the team do a tremendous job keeping that website up to speed. Everything you need to know to be the tip of the spear when it comes to the energy business. Check out dashboard.EnergyNewsBeat.com The best place for all your data and energy news. Com we’ll go ahead and hit the description below. Links to the articles, all of the different timestamps so you can jump back here. Hear what we just talked about ExxonMobil. Or jump ahead and hear what’s going on with shell and the wind business. Or just go ahead and skip the end of the show because you like your honest sign off. Whatever floats your boat. Again, as always, guys, check us out. Energynewsbeat.com. [00:13:54][53.8]

Michael Tanner: [00:13:56] Go ahead and moving over to the finance section guys. Oil closing settles higher mainly off Russia ordering output cuts and geopolitical tensions persisting. We saw US markets from an S&P 500 standpoint down three quarters. down 3/10 of a percentage point. Nasdaq also down about 3/10 of a percentage point. Big news today is Boeing CEO and entire management team just absolutely gets waxed. And so they’ll. [00:14:21][25.2]

Stuart Turley: [00:14:21] as well they should. [00:14:22][0.6]

Michael Tanner: [00:14:23] As well. They should. I’m not you know I’m flying Airbus as much as I can. We also saw ten year year, or two year and ten year yield stay fairly flat, about 0.04 percentage points and 0.05 percentage points. We saw Bitcoin up four percentage points. As I mentioned, crude oil on the WTI side actually up about 1.64 percentage points 8195. Brant oil actually stays fairly flat 8687 again mainly due to the fact that that Russia ordering those output cuts really ironically only affects the WTI price relative to Brant, which is absolutely, hilarious. So more of a regression to mean to give you guys an idea. Brant up about 11% this year, WTI up about 12.5 percentage points a little bit of. A spread trade there. Moscow came out today and ordered companies to reduce oil output in the second quarter to meet production targets of 9 million barrels per day by the end of June, in line with its pledges, via OPEC plus Hill Flynn out of rice futures group. Russia’s committed to the OPEC cut. They’re looking beyond the current supply demand fundamentals and looking for unity with OPEC. Plus you know we saw some crazy stuff happening in in Russia over the weekend. in terms of of the attacks they had locally. So it’s going to be interesting to see from a geopolitical standpoint how they respond that we have seen some more Russian oil refineries have some of their capacity knocked offline due to continued drone strikes over the weekend. You know, they’ve got about I mean, you know, this is out a Reuters to about 7% of their total refining capacity has been cut off line. So you know we’re we’re dancing on a razor’s edge here. You know, we also are hoping to adopt a resolution demanding the cease fire, there in Palestine with Israel and Hamas. Who knows where that goes? You know, the oil prices are sort of teetering on that, but, you know, good strength. Early on this Monday, we love to see a good $81 in. And and nobody’s going to complain about that. Especially shell great day to announce that they go ahead and sell their interest in U.S offshore wind joint venture as company refocuses on oil and gas. To give you guys an idea shell New Energies ventures, which is, you know, is a subsidiary, Shell New Energies USA, LLC. They’ve sold their 50% equity share in the South Coast wind energy project to the joint venture partner that they had, Ocean Wind North America. And this was ironically, this is one of those Nimby stew not in my backyard. They’re trying to build this power player. They’re trying to build this proposed offshore wind farm in the US federal, waters, about 30 miles south of Martha’s Vineyard and 33 miles south of Nantucket, Massachusetts. Apparently, they’re going to have a, the goal was to have a capacity of about 20 400MW, covering around, 127,000 acres, which, I mean, is Guy, when you just think about that, guys, the amount of energy you can you the amount of oil that can produce 20 400MW does not take up 12, 120,000 acres specifically sitting offshore. So it’s it’s pretty unbelievable. [00:17:37][193.9]

Stuart Turley: [00:17:39] And then carbon does not ever make it to net zero. By the time these things fail out on mean time between failure doesn’t happen. [00:17:52][13.7]

Michael Tanner: [00:17:54] Yeah, absolutely. Well, I also think that, I was going to say I, I also think that, you know, it’s good for the bird population. They’re trying to keep the bird population down out there. So, we. Absolutely. [00:18:06][12.6]

Stuart Turley: [00:18:07] And I know you don’t mind killing the whales, but I do. Glenn Wright, senior vice president of Shell Energy, says we’re grateful to Ocean Winds for their years of partnership with this venture and continue to seek opportunities for more energy with fewer emissions. [00:18:22][15.7]

Michael Tanner: [00:18:25] It’s absolutely unbelievable. As the door. [00:18:28][3.2]

Stuart Turley: [00:18:29] Closes. [00:18:29][0.0]

Michael Tanner: [00:18:30] There’s the door closes. Hey, shell taking it seriously, their CEO said we’re shifting back to oil and gas. Here’s another, you know, believe him when he says it. Trust me. [00:18:38][7.8]

Stuart Turley: [00:18:38] Oh, yeah. They gotta make money somehow. [00:18:40][1.9]

Michael Tanner: [00:18:41] Absolutely. What else you need? [00:18:43][1.7]

Stuart Turley: [00:18:43] Well, I tell you, I our hearts go out for the folks in affected and in Russia. I’m, nobody should be putting up with terrorism. Nobody. And it’s just the, Russian people that are hit by. I believe ISIS has been claiming it. Now. Terrorism sucks in all forms. [00:19:04][20.3]

Michael Tanner: [00:19:05] Consumer always takes it in the shorts, whether it’s here in the U.S, whether it’s in Russia, whether it’s abroad, you know, and we stand with the people. Yeah. So with that guys, we’ll let you get out of here, get back to work, start your Tuesday. Appreciate everybody checking us out. World’s greatest, energy news website, energy news beat.com. We’ll see you tomorrow, folks. [00:19:05][0.0][1097.6]

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The post Daily Energy Standup Episode #337 – Oil Demand Surpasses Expectations, California Gas Prices, Exxon’s LNG Expansion, PetroChina’s Record Profits, and Shell’s Strategic Shift first appeared on Energy News Beat.

The post Daily Energy Standup Episode #337 – Oil Demand Surpasses Expectations, California Gas Prices, Exxon’s LNG Expansion, PetroChina’s Record Profits, and Shell’s Strategic Shift appeared first on Energy News Beat.