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THE LATEST OIL NEWS: Oil prices slid Thursday on a lot of news.
Futures for the international benchmark Brent Crude fell by 4.59% to $108 a barrel as of this writing, while futures for U.S.-based West Texas Intermediate fell by 3.82%, down to $104 a barrel.
Here’s what happened…
First, the Biden administration outlined its plans to release up to 180 million barrels of oil from the U.S. Strategic Petroleum Reserve.
President Joe Biden will announce this afternoon that the administration will release 1 million barrels a day from the SPR for the next six months, the biggest release since the creation of the strategic reserves in 1974.
Second, the White House will call on Congress to pass a sweeping “use it or lose it” provision intended to prevent oil and gas drillers from sitting indefinitely on federal leases without producing.
Biden is seeking legislation to force companies to either start producing oil and gas on pre-approved federal lands or start paying fees for each well and unused acre.
“Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production,” a White House fact sheet read.
That measure is not likely to become law or affect prices. But…
…Third, OPEC+ will maintain course and move forward: OPEC and its allies, including Russia, announced today that they will move forward with a modest monthly output increase of 432,000 barrels per day in May, resisting calls from the IEA and the U.S. to greatly scale up production. The group has continued to resist calls to ratchet up production, citing the group’s desire to “stay out of politics” (and avoid making an enemy of Russia).
A news release put out by the cartel said the meeting’s conclusion was that the oil market is currently “well-balanced” and “that current volatility is not caused by fundamentals, but by ongoing geopolitical developments.”
One day earlier, OPEC Secretary-General Mohammad Barkindo encouraged members of the group to “stay the course” and “remain vigilant and attentive to ever-changing market conditions.”
Industry analysts were unsurprised by the move, though they noted it is likely to harden existing tensions between OPEC+ and the West at a time when the U.S. and its allies are taking extraordinary steps to ramp up production amid Russia’s ongoing war in Ukraine.
“When you look at the structure of forward curves, they are very much telling you that this is not a market that is well supplied and there is a considerable supply shock going forward over the rest of 2022,” Edward Bell, senior director of market economics at Emirates NBD, told CNBC.
Bell also told CNBC that the U.S. tapping its SPR for more oil could have the opposite effect on the cartel: “What this may do is just be the ammunition OPEC+ needs to say ‘Well, look, there is oil available out there, you can draw it out on the reserves.’ We have seen similar messaging from OPEC countries in the past when there have been requests for faster increases.”
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PUTIN SAYS RUSSIA WILL REQUIRE RUBLES FOR GAS STARTING FRIDAY: Russian President Vladimir Putin signed a decree today requiring all foreign buyers to pay in rubles for Russian gas, announcing its existing contracts will be halted if the payments are not made. “In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” Putin said. But the details are less black-and-white than he made it seem.
“If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences,” Putin added. “Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped.”
The move comes after Western countries said they would refuse to pay in rubles for Russian gas imports. Russia currently supplies roughly 40% of gas to the EU, and leaders have scrambled in recent weeks to adopt alternative supplies in anticipation of an abrupt cut-off from Moscow.
THE FINE PRINT: Putin’s tough talk doesn’t exactly square with the fine print of the decree. Countries do have options for purchasing Russian gas with foreign currency–– making payments to a Russian bank that will convert the money into rubles. The AP has more details on the decree and what it portends for buyers.
RED SOX LAUNCH FIRST ‘CARBON NEUTRAL’ FAN EXPERIENCE: The Red Sox announced plans to make Fenway Park the first carbon neutral baseball Major League Baseball facility.
The team said it partnered with climate finance company Aspiration on the deal, which uses a portion of proceeds from each ticket to purchase carbon offsets. Fans will not pay a surcharge, Aspiration explained. (The company, which recently agreed to go public at a $2.3 billion valuation, recently netted a similar deal with the LA Clippers.)
“What we’ve done is taken the tech we’ve built around measuring climate footprint, and worked with the Red Sox in assessing their emissions,” Aspiration co-founder and CEO Andrei Cherny told Axios. “They have a lot of data, including about how people get to and from games.”
ENERGY PROPOSES FIRST NEW APPLIANCE EFFICIENCY RULES: Proposed rules published by the Energy Department yesterday would require manufacturers of room air conditioning units and pool heaters to make their products more efficient, the first new standards for appliances since Biden was inaugurated.
The department emphasized that the rules will conserve energy and save customers money, estimating that, if finalized as is, the air conditioner rule would save consumers up to $275 over the life of the product, while electric pool heater users would save more than $1,000 over the life of the product.
The Energy Department also proposed new building code requirements for the government’s building fleet to put federal properties on track to meet international building energy conservation standards.
On his first day in office, Biden ordered executive agencies to review Trump-era regulations of all kinds, and the Energy Department finalized a rule in January rolling back Trump-era changes to efficiency standards for dishwashers.
EUROPE’S RECORD MARCH: Europe’s five largest economies suffered the highest electricity prices on record in March, a month when benchmark gas prices briefly reached almost double their winter peak in the days after Russia began attacking Ukraine.
Germany, France, Italy, United Kingdom, and Spain each had record average spot power prices this month, according to data from research and analytics firm Rystad Energy.
Italy’s average rate of more than 300 euros per megawatt hour (~$330) led the pack, and U.K., France, and Spain were right around 300. For the Germans, the average was around 250 euros.
EU members have been talking over various market intervention ideas, and some of them, especially Spain and France, are asking the European Commission to reform pricing mechanisms so that gas prices don’t determine electricity prices.
MANUFACTURERS WANT GREEN TAX PROVISIONS: More than 100 companies that manufacture energy efficiency and renewable energy products are pressing Democratic leadership get green energy tax provisions of the sort proposed by the stalled “Build Back Better” package passed, saying they’ll help Biden meet his climate, manufacturing, and supply chain goals and enable repatriation of jobs back to the United States.
“With these policies in place, we can invest in production and manufacturing in the United States,” the companies, which include solar module, steel, and heat pump manufacturers, wrote to Congress’s top Democrats yesterday.
The Rundown
E&ENews Md. poised to enact sweeping energy, climate plan
Bloomberg A test for congestion charges in smaller cities
Washington Post Salmon travel deep into the Pacific. As it warms, many ‘don’t come back.’
AP Russia’s ruble rebound raises questions of sanctions’ impact
Calendar
WEDNESDAY | APRIL 6
10:00 a.m. Dingell 2123 The House Energy and Commerce Committee will hold a hearing with six oil company executives titled, “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.”
