Oil Daily | Shale Growth Stalls, China Boosts Russian Imports, Hurricane Threatens Gulf Operations

【Global Oil Supply and Demand】

The International Energy Agency (IEA) reports that tripling renewable energy by 2030 is achievable but requires significant investments in power grids and storage. Nearly 200 countries pledged at COP28 to boost global renewable capacity, but current policies need acceleration to meet these goals. Grid and storage expansion are crucial.

Bank of America analysts warn that traders shorting crude oil face risks as energy demand may rise due to economic growth and advancements in artificial intelligence. They predict a significant increase in natural gas demand, potentially boosting U.S. electricity demand and pointing to a rise in global GDP and energy demand next year.

Europe's natural gas prices increased amid supply risks from the Middle East and Ukraine. European storage is over 93% full, offering some reassurance, but concerns about potential supply disruptions persist. Maintenance in Norway and lower temperatures in Europe also contribute to the market dynamics.

【Oil-Producing Countries Dynamics】

Wil VanLoh, CEO of Quantum Energy Partners, states the U.S. shale revolution is ending, making large production gains unlikely. Investor demands for returns limit supply growth. The U.S., having tripled oil and doubled natural gas production, might struggle to increase output further due to inventory depletion and capital discipline.

China's crude oil imports from Russia increased by 25.6% in August, seeking discounted supplies amid lower international oil prices. Imports from Malaysia and Iran also rose, while Saudi supplies fell. August saw the highest monthly crude imports for the year, following a July low, reflecting China's preference for cheaper crude.

【Latest Oil Policies】

France's new energy minister, Agnes Pannier-Runacher, emphasizes reducing reliance on fossil fuels and supporting nuclear and renewable energy. The government focuses on cleaner vehicles and home renovations to lower bills and pollution. France aims to expand its nuclear fleet, contributing to its net-zero goals, despite budget challenges.

More than a dozen global banks, including Goldman Sachs and Barclays, pledge support for nuclear power, aligning with the COP28 target to triple nuclear capacity by 2050. The banks' endorsement highlights nuclear energy's crucial role in achieving net-zero goals, despite historical delays and cost challenges in the industry.

【Industry News】

Shell, Chevron, and Equinor evacuate staff from Gulf of Mexico facilities due to a potential hurricane. Chevron completed evacuations, while Shell prepared to shut production at certain platforms, and Equinor evacuated non-essential staff. The storm, nearing Cuba, is expected to intensify, prompting safety measures.

Shell halts plans for a low-carbon hydrogen plant in Norway due to insufficient demand. Equinor also paused its hydrogen pipeline project to Germany. Hydrogen's high production costs and lack of binding offtake agreements hinder its market development, despite its potential role in global energy transition.

【Company News】

The Federal Trade Commission is likely to approve Chevron's $53-billion acquisition of Hess Corp, despite challenges from Hess's Guyana partner and opposition from Congress. The deal's outcome depends on an arbitration panel's ruling on Exxon’s rights to Hess's Guyana assets, central to the acquisition.