The Energy ReportPhil Flynnhttp://www.pricegroup.com/ pflynn@pricegroup.com It’s Lights Out In Europe. The Energy Report 12/13/2024 Unplanned power outages in Europe today are raising the alarm that the major energy crisis in the continent may be under way. Europe has mainly avoided some of the worst-case scenarios the last two years because of the warm winters but this year they may be running out of luck. Bloomberg is reporting that the power links that connect the UK with France and Norway started partial unplanned outages overnight, according to remit notices posted on the Elexon platform. Bloomberg says that the 2,000MW IFA interconnector to France is running at 50% capacity until later on Friday morning. The 1,400MW North Sea Link operates at 50% capacity until 11pm on Saturday. They say the causes of both outages are under investigation, but it comes as power prices in Europe are surging and gas consumption soaring. Wind and solar is failing, leaving Europe vulnerable to major problems because of short sighted and misguided energy policies. In fact just yesterday it was reported by OIL Price that, “Intraday power prices in Germany jumped and natural gas-fired electricity generation rose to a two-year high this week as low wind speeds continue to depress wind power output. Natural gas use for power generation rose on Wednesday to its highest level since December 2022, as a wider power supply gap had to be filled by fossil fuels amid very weak wind power generation. Intraday power prices have jumped for the peak Wednesday hours, according to EEX data cited by Bloomberg. Germany’s power margin, the available electricity supply to meet demand, has dropped this week to the lowest level so far this winter, as low wind speeds and colder weather are straining the power system. This week, wind speeds in Germany have dipped again, while colder-than-usual temperatures have settled over much of northwest Europe. Since early November, the so-called ‘Dunkelflaute’, German for “dark wind lull”, have often resulted in wind farms in Europe’s biggest economy generating only a fraction of their nameplate capacity, leading to day-ahead electricity prices for peak demand hours to high levels not seen since the peak energy crisis in 2022 according to Oil Price. The sad part about this is that the people in Europe could really suffer. Not only will they be facing record high prices but being in the depths of winter, many could lose power because the government basically made unrealistic policies to appease global climate alarmists and the very rich green energy lobby. Oil is continuing its upside breakout after a shaky start in yesterday’s trade, the hotter than expected producer price index which seemed to come out of left field, cause a sharp selloff and a lot of commodities like gold and silver were dragged down oil. Yet a report from the Jerusalem post that said, “The Israel Defense Forces believes that following the weakening of Iranian proxy groups in the Middle East and the dramatic fall of the Bashar al-Assad regime in Syria, there is an opportunity to strike Iran’s nuclear facilities, military officials said Thursday.” Now today the Wall Street Journal is reporting, “Trump Team Weighs Options, Including Airstrikes, to Stop Iran’s Nuclear Program” “Advisers to president-elect, concerned economic pressure isn’t enough to contain Tehran, consider military action” The Wall Street Journal wrote “President-elect Donald Trump is weighing options for stopping Iran from being able to build a nuclear weapon, including the possibility of preventive airstrikes, a move that would break with the longstanding policy of containing Tehran with diplomacy and sanctions.” That should put some more premium back into the market and now we have to worry about the fact that global supplies are a lot tighter than the International Energy Agency, the group that helped foster Europe’s energy crisis, led us to believe. The International Energy Agency had to fess yesterday showing that global oil inventories fell by 39.3 mb in October, led by an exceptionally sharp decline in oil products (-82.3 mb) as low refinery activity coincided with a rise in global oil demand. OECD industry stocks declined by 30.9 mb to 2 778 mb, 91.6 mb below the five-year average. World oil demand growth is set to accelerate from 840 kb/d in 2024 to 1.1 mb/d next year, lifting consumption to 103.9 mb/d in 2025. I wanted to remind everybody that the IEA was trying to put a bearish spin on their report, but the truth is the numbers are what they are The war between Russia and the Ukraine still is very hot. We are seeing reports that Russia carried out a massive missile attack on Ukraine and hit energy targets. We’ll have to wait to see what those energy targets are. If it happens to be natural gas pipelines that could be a big problem for Europe and might explain in part why we’re seeing power outages in Europe. So those in the green energy movement who decided to become more dependent on Russia do you think they’re having second thoughts? Reuters is reporting that Moldova’s parliament voted early on Friday to impose a national state of emergency for 60 days starting on Dec. 16 due to an expected cut-off of Russian gas supplies from Jan. 1. Fifty-six members in the 101-seat chamber backed the measure in the vote just after midnight following Prime Minister Dorin Recean’s call for approval to ensure Moldova’s separatist Transdniestria region secured the gas it needed. The US natural gas market of course is dependent on weather. Subzero temperatures and big parts of the country is definitely giving us some support. Potential production freeze offs are happening. The key thing is when we will warm up. And how warm for how long. The EIA reported that the U.S. benchmark Henry Hub daily natural gas price fell to $1.21 per million British thermal units (MMBtu) on November 8 and November 11, 2024, an all-time low in inflation-adjusted dollars. Four of the record-low daily prices when adjusting for inflation occurred in November 2024, and the remaining six occurred in 2024 as well. The Henry Hub spot price in November averaged $2.12/MMBtu, the lowest average price for that month ever when adjusting for inflation. Robust supply and constraints on demand contributed to record-low prices. Mild autumn weather persisted in the first half of November, limiting natural gas consumption for heating. U.S. inventories ended the injection season on October 31 at 3,922 billion cubic feet, and the U.S. natural gas market enters the winter of 2024–25 with the most natural gas in storage since 2016. Flat U.S. net natural gas exports and limited U.S. liquefied natural gas capacity additions this year also curbed demand and weighed on prices, while we forecast marketed U.S. natural gas production to average 113 billion cubic feet per day in 2024, relatively unchanged from 2023’s record high. Make sure you download the Fox Weather Ap to keep up with the latest weather. Stay tuned to the Fox Business Network. Invested in you. Open your futures trading account. Call Phil Flynn at 888-264-5665 or email me at pflynn@pricegroup.com. There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. PLACING CONTINGENT ORDERS SUCH AS "STOP LOSS" OR "STOP LIMIT" ORDERS WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS. SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com. |
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