Another Take on global oil supply & demand - July 17

[dan_s]

Notes received from Keith Kohl this morning (7/17):
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Prepare for a Demand Surge

You can’t say we didn’t see this one coming…

Recently, the IEA reported that global oil demand will climb by 2.2 million barrels per day this year, hitting a new record of 102.1 million barrels per day.

That’s an incredible amount of oil consumption, and it’s China that’s leading the way. Even though U.S. demand is higher this year, the IEA believes China will account for 70% of demand growth in 2023.

But here’s the real problem…

While the IEA does project global production to climb 1.6 million barrels per day this year, it’s banking on strong gains in U.S. output. Even though U.S. crude oil production briefly rose to around 12.6 million barrels per day earlier this year, our output has fallen back to around 12.2 million barrels per day recently.

More importantly, our production is set to fall further as the number of active rigs declines.

That leaves the world relying more and more on supply from OPEC+, which is already immersed in its latest round of production cuts.

Saudi Production Falls, but Prices Will Climb

If you want an idea of just how serious the Saudis are about raising crude prices, this is it.

After announcing a new round of voluntary output cuts recently, Saudi Arabia’s crude production is projected to fall to around 9 million barrels per day this month and next — the lowest it's been in more than a decade if we exclude its production during the COVID-19 pandemic.

This single move would put Russia above Saudi Arabia in crude production, something that may not sit well with the Saudis and, in doing so, would crown Russia as the largest oil producer inside OPEC+. Keep in mind that the Russians intend to slash crude exports by 500,000 barrels per day next month.

Exxon Bets Big on Carbon Capture

Have you ever wondered what Big Oil was going to do with the enormous amounts of cash that were generated while oil prices were at record highs in 2022?

Well, we know that Exxon is betting big on carbon capture after last week’s announcement that it would purchase Denbury Resources for approximately $5 billion. Although Denbury does have some oil and gas operations, the company controls a huge CO2 pipeline transport network that runs along the U.S. Gulf Coast.

We’re talking about a huge network here, consisting of roughly 1,300 miles of pipeline infrastructure, as well as 10 onshore carbon sequestration sites. In total, Exxon believes it can reduce CO2 emissions in the region by more than 100 million metric tons per year.

Is the Next Lithium Boom Finally Upon Us?

We need more lithium.

That message was ringing loud and clear after the IEA released a new report projecting that lithium demand tripled between 2017 and 2022. The report also showed a huge 70% jump in cobalt demand, as well as a 40% increase for nickel. < I have been contract by a nickel company that wants to host a webinar for EPG members.

The bigger takeaway from this report, however, is that in order for renewable energy to finally overtake coal within the next few years, demand for minerals critical to operations for renewable energies such as wind and solar will surge higher.

Lithium will play a significant role in developing this technology, too.

Unfortunately, the biggest issue right now is that China controls nearly all of the world’s lithium processing, and that monopoly won’t change in the near future. You see, China accounts for half of planned lithium chemical plants that are being built worldwide.

[aja57]

How about a take on US government oil supply?

https://www.zerohedge.com/energy/massive-us-oil-caverns-are-now-empty-will-take-decades-refill-thanks-biden

[dan_s]

This should concern all Americans: "The Strategic Petroleum Reserve (SPR) now sits at 346.8 million barrels - a level unseen since 1983 - out of a total authorized storage capacity of 714 million. Since taking office, Good Old Joe Biden has drained over 45% of the oil that was in the SPR at the beginning of 2020."