OIL SURPLUS POSSIBILITY? Oil supply could possibly reach a surplus if OPEC+ decides to make due on their promise of restoring oil production in October, a new report from the International Energy Agency shows.
Earlier this summer, the oil bloc had outlined a plan to relieve some of their production cuts, starting in October. And while inventories are currently struggling to keep pace with the demand of the summer driving season, tipping the market into a deficit, supply is expected to stabilize in the coming months, according to the IEA’s August oil markets report.
This would likely create a surplus, as oil consumption in China has slowed, and non-OPEC+ countries such as the United States, Guyana, Canada, and Brazil are increasing their supply that would cover expected demand.
“Despite the marked slowdown in Chinese oil demand growth, OPEC+ has yet to call time on its plan to gradually unwind voluntary production cuts starting in the fourth quarter,” the report said.
OPEC+ had detailed a plan to restore production of 543,000 barrels a day during the fourth quarter, but the group warned these plans could be “paused or reversed” depending on market conditions. However, the report notes that even if the production boost is put on ice, the current balance suggests global supplies could build by an average of 860,000 barrels per day next year, as non-OPEC+ supply increases to around 1.5 million barrels per day in 2024 and 2025.
The uncertainty of OPEC+’s next move makes it hard to say whether oil prices will get further relief from the restoration of production. As the driving season slows down heading into the fall, gas prices are set to drop, but whether they will further decline remains to be seen. Plus, gas prices are an evergreen election issue, and will be closely watched heading into the November election.
“If OPEC [moves] ahead with restoring some of their production, that could put more downward pressure on that seasonal trend of declining prices,” said Patrick De Haan , the head of petroleum analysis at GasBuddy. “I don’t think it would be a significant boost to gas prices, which would likely already be falling.”
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RENEWABLES LEAD COAL IN POWER PRODUCTION: Wind and solar have produced more power than coal in the first seven months of the year – a first for renewables, E&E News reports.
With coal seeing a gradual retirement of plants across the country – and renewables getting hefty investment and seeing rapid growth – the milestone isn’t too surprising. Just last year, renewables were producing more power than coal through May before the summer energy demand allowed for fossil fuels to come out in the lead.
Winds of change: Renewables could outpace coal generation for the entirety of 2024 if the trend continues, with wind and solar maintaining their lead ahead of fossil fuels through the energy-guzzling summer months.
Some context: Solar production saw an explosion over the last year, with a 36 percent increase in power generation through July, compared to figures from last year. Wind production has been up 8 percent over 2023 levels.
It has happened before: The Energy Information Administration had previously reported that renewable generation eclipsed coal in 2020, 2022, and 2023 – but both those figures included other resources such as hydropower. Now, wind and solar are expected to overtake coal on their own.
Why this matters: These stats come at a time when more scrutiny is placed on the grid, with industry players calling for more resources to meet the skyrocketing demands of artificial intelligence data centers and heat waves. Read more on that here.
TRUMP TALKS ENERGY WITH MUSK: Former President Donald Trump and Tesla CEO Elon Musk sat down in a two-hour interview Monday night that streamed live on X – and the two at times diverged in their stances on energy and the environment, with Musk describing himself as a moderate who’s “pro-environment,” while Trump touted the importance of fossil fuels.
On oil: Throughout the interview, the former president repeated false narratives about pressuring China not to buy Iranian oil.
“Iran was broke because I told China … ‘If you buy oil from Iran, you’re not going to do any business with the United States,’” he told Musk. “They didn’t buy oil, other countries likewise” did not buy oil.
Fact-check: While China’s oil imports from Iran did decrease in 2019 under concerted efforts from the Trump administration to discourage such purchases, they never stopped. Industry experts have stated that China strategically evaded revealing the true number of imports it was receiving.
Hitting on electric cars: Trump stated that electric cars still rely on fossil fuels.
“Even to create your electric car and create the electricity needed for the electric car, you know, fossil fuel is what really creates that at the generating plants,” he said. “And so, you sort of can’t get away from it at this moment.”
The former president is correct in stating that fossil fuels are the primary source of electricity in the U.S. – although renewables have been making strides in the energy sector (see above). Musk, however, stated that the U.S. should “lean in the direction of sustainability." He said he believes “solar is going to be a majority of earth’s energy generation in the future.”
Where ambiguity comes in: Trump also talked about “nuclear warming,” but it’s unclear exactly what he was referring to. It could possibly be that he’s referring to nuclear war, which would be detrimental to the environment for obvious reasons.
CHEVRON BREAKS GROUND ON ANCHOR PROJECT: Chevron announced Monday that it started oil and natural gas production for its Anchor project in the Gulf of Mexico – marking a new technological breakthrough for deriving oil from the deep sea.
The $5.7 billion project would allow for oil to be derived from areas once believed to be impossible to develop – largely due to equipment not being able to cope with pressures of up 20,000 pounds per square inch. Now, the high-pressure technology is able to operate at those levels, reaching reservoir depths of 34,000 feet below sea level.
“The Anchor project represents a breakthrough for the energy industry,” Nigel Hearne, executive vice president of Chevron Oil, Products & Gas, said in a written statement. “Application of this industry-first deepwater technology allows us to unlock previously difficult-to-access resources and will enable similar deepwater high-pressure developments for the industry.”
The project is expected to produce oil for another 30 years.
The details: The semi-submersible floating production unit has a capacity to gross 75,000 barrels of oil a day, and 28 million gross cubic feet of natural gas per day. The field is estimated to be able to recover up to 440 million barrels of oil equivalent. The project will consist of seven subsea wells tied to the unit, and is located 140 miles off the coast of Louisiana.
Some history: BP had first initially discovered the Kaskida oil field in 2006, but technologies at the time could not handle the pressure of deep-sea development, with equipment capped off at 15,000 psi. Now, companies like BP and Beacon Offshore Energy are also looking to develop the field with new technologies.
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