This week, oil markets are feeling the strain of persistent demand concerns, with OPEC revising down its global oil demand growth forecast for the fourth consecutive month. The decision follows disappointing economic data from China, which has weighed heavily on market sentiment.
Impact of Trump’s Re-election on Clean Energy Stocks
In the wake of Donald Trump’s re-election confirmation as US president, clean energy stocks have taken a sharp hit. Solar companies like Sunnova and First Solar saw drastic drops, with their stock prices plunging by 50% and 20%, respectively, in just one day. This market volatility has led renewable energy developers to pause several investments, awaiting more clarity on the Trump administration’s policies. Since the passage of the Inflation Reduction Act (IRA), these developers have already invested a staggering $450 billion in new projects.
Although Trump’s stance on the IRA remains unclear, analysts warn that if current tax credits for renewables are phased out and new tariffs are imposed on imported equipment, renewable energy deployments could fall by as much as 30%. During his first term, Trump oversaw significant growth in renewable energy, with solar and wind capacity increasing by 32% and 69%, respectively. Additionally, electric vehicle (EV) sales doubled from 2016 to 2020, albeit from a lower baseline.
Energy Deals and Discoveries
In other energy sector news, QatarEnergy has agreed to purchase a 23% stake in the North El-Dabaa offshore exploration block in Egypt from US oil giant Chevron. The deal, which was not disclosed in financial terms, marks an expansion of QatarEnergy’s global reach.
UK-based Shell has made a significant discovery in the North Sea. The company confirmed finding 130 billion cubic feet (BCf) of gas at the Selene prospect, which includes a 100-meter net gas column located at a water depth of 3,370 meters.
US shale producer Ovintiv has also exceeded analysts’ expectations with its Q3 results. The company reported record-breaking drilling speeds, achieving a 28% year-over-year increase in its drilling pace to over 2,170 feet per day.
Oil Prices and Global Market Shifts
Tuesday, November 12, 2024, saw continued pressure on oil prices, with West Texas Intermediate (WTI) crude dipping below $70 per barrel, while ICE Brent held steady at $72 per barrel. Economic data has been disappointing, with inflation figures below expectations, while stimulus efforts in China have failed to provide significant relief. As a result, concerns over oil demand are mounting, exacerbated by the strengthening US dollar. OPEC’s decision to cut its oil demand forecast for the fourth straight month has only added to these fears.
Trump Administration’s Potential Shift on Climate Policy
As the COP29 climate summit begins in Baku, speculation is growing that the incoming Trump administration may withdraw the US from the Paris Climate Agreement. This move could open the door to more domestic drilling and mining activities, as well as the potential lifting of the Biden-era ban on LNG permits.
US SPR Refillments and Shell’s Legal Victory
The Biden administration has finalized the latest round of refills for the Strategic Petroleum Reserve (SPR). The US Department of Energy has purchased 2.4 million barrels of sour crude oil from Macquarie and midstream company Energy Transfer, with delivery scheduled for April-May 2025.
In a legal development, Shell scored a major victory against the Dutch state. The Appeals Court in The Hague overturned a 2021 ruling that required Shell to reduce its carbon emissions by 45% by 2030. The case, brought by climate group Friends of the Earth, had aimed to hold Shell accountable for its contribution to climate change.
Energy and Gas Developments Around the World
Ukraine is set to increase its gas transit fees for the 2025-2029 period, more than doubling the charges for natural gas transportation. The government has pointed to a decline in transportable volumes and the shift in tariff calculations from dollars to euros as reasons for the increase.
Meanwhile, Saudi Arabia’s crude oil exports to China are expected to fall for the second consecutive month, dropping to 36.5 million barrels in December. This represents a further decline from November’s 37.5 million barrels and October’s 46 million barrels, signaling continued weak demand from China.
Russia Considers Oil Industry Consolidation
Russia is reportedly considering merging its three largest oil companies—Rosneft, Gazprom Neft, and Lukoil—into a single entity, which would become the world’s second-largest oil producer. While the companies have denied the rumors, the idea has sparked considerable interest in the industry, according to the Wall Street Journal.
Global Metals and Energy Cooperation
In a move to strengthen ties, Indonesia’s President Prabowo Subianto visited China to finalize agreements on expanding cooperation in nickel smelting and other key areas such as lithium batteries and photovoltaics. These efforts are part of broader initiatives by both countries to dominate the global market for critical minerals.
Progress at COP29 and Nuclear Power in the US
At COP29, delegates have agreed on new standards for carbon credits under the Paris Agreement, though key questions remain about how countries can use these credits to meet emissions reduction targets. Meanwhile, the Biden administration is looking to push forward its goal of tripling US nuclear power capacity by 2050, a move that has garnered bipartisan support.
India’s Energy Ambitions and Slowing Coal Demand
India has reiterated its ambition to increase its oil refining capacity by 80% by 2040, aiming for 9 million barrels per day of refining capacity. The country is also targeting a net-zero emissions goal by 2070. However, India’s coal demand appears to be slowing, with thermal coal imports falling by a third year-over-year, a sign of progress in renewable energy and hydropower generation.
Energy Commodities Face Volatility
Copper prices have seen a steep decline, with COMEX front-month futures dropping to $9,320 per metric ton. The fall, amounting to a 6% decrease, has been attributed to fears of a global economic slowdown following Trump’s re-election, with the potential for new tariffs on Chinese goods.
Angola Seeks Oil Investment
Angola is attempting to attract new oil investments by offering 10 dormant offshore oil fields that were once explored by major oil companies but were never developed. These fields, spread across four offshore blocks, contain proven reserves estimated at 500 million barrels of oil.
As global energy markets continue to navigate these shifting dynamics, demand concerns and geopolitical uncertainties remain central to the ongoing challenges facing the sector.
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