This week, S&P International Commodity Insights editors and analysts study China’s curiosity in US LNG, tanker freight charges amid adjustments in oil commerce flows, France’s nuclear output, and US energy burn.
1. US LNG developments appeal to China consumers
What’s occurring? New LNG developments within the US have been gaining curiosity from worldwide consumers, together with quite a few state-owned teams in China. Amenities owned by Cheniere, NextDecade and Power Switch signed separate offers this yr with Chinese language consumers comprising round 650 MMcf/d in future US feedgas demand.
What’s subsequent? Researchers counsel the traction between US LNG tasks and consumers in China marks greater than a industrial bonanza for US LNG, with the sector presenting a broadening space of cooperation between Beijing and Washington. No matter historic commerce tensions between the US and China, latest rapprochement on LNG commerce between the geopolitical rivals could mark the start of a development with endurance. Rising curiosity from China is one key purpose why US LNG exports are forecast to roughly double to 22 Bcf/d between now and 2027, based on information from S&P International Commodity Insights.
2. Tanker freight charges outlook bullish as commerce flows change
What’s occurring? With nearly 1,000,000 barrels of Russian oil shifting long-haul to Asia every single day, as a substitute of quick haul journeys to Europe, tankers are being employed for an extended length. Persian Gulf-China VLCC freight has greater than doubled from the abysmally low ranges in the beginning of the yr. Homeowners at the moment are incomes greater than $40,000/day.
What’s subsequent? The tanker freight outlook stays bullish because of the huge international oil commerce disruption brought on by the Ukraine struggle. Whereas OPEC+ determined to chop oil manufacturing by 2 million b/d from subsequent month, analysts take into account the restricted impression on transport to be destructive within the near-term as a number of the member nations are unable to fulfill their quota targets. Excessive gasoline costs are additionally leading to a switchover to grease.
3. Strikes hit French nuclear energy vegetation
What’s occurring? Strikes at French nuclear energy vegetation has prompted operator EDF to additional delay deliberate returns from upkeep at 5 reactors. Nuclear output to date this October is averaging under 27 GW in comparison with a 31 GW common forecast for the entire month primarily because of the strikes. The reactor ramp-up schedule for items returning in October and November has additionally fallen not on time.
What’s subsequent? Analysts at S&P International Commodity Insights forecasts nuclear output to common round 35 GW in November and 43 GW in December earlier than rising above a 47 GW common for January and February. French President Emmanuel Macron stated Oct. 12 that reactor availability would rise from 30 presently to 40 over the approaching weeks, with 45 reactors to be out there in early January.
4. US turbines to be extra reliant on pure gasoline this winter amid coal retirements
What’s occurring? US energy turbines have shuttered almost 10.3 GW of coal-fired producing capability to date this yr. Earlier than end-2022, one other 3.3 GW of coal capability can also be scheduled for retirement.
What’s subsequent? US energy turbines are anticipated to rely extra on gasoline this winter with the continued retirement of coal-fired energy throughout the US this yr. This might add extra gasoline to the rally in gasoline costs this winter. In the course of the peak heating-demand months from December 2022 to February 2023, US energy burn is forecast to outpace the report 2019-2020 winter season when low gasoline costs lifted generator demand to a mean 29.9 Bcf/d over the identical three-month interval, information from S&P International present.
Reporting and analyses by Dylan Chase, Sameer Mohindru, Andreas Franke, J. Robinson