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Nov 21 - By Clyde Russell Asia Commodities and Energy Columnist
Welcome to Power Up! Europe’s struggling economies are facing more headwinds in the form of rising power prices. Wholesale prices across key economies in mainland Europe are at the highest levels in more than a year, and as Gavin Maguire writes, the onset of winter could make matters worse. Meanwhile, crude oil prices edged higher on Thursday amid fresh geopolitical tensions, but probably not by enough to allow the OPEC+ group of exporters to consider increasing output. More on that story below…
OPEC+ To Stand Pat Despite crude oil prices trending higher so far this week, they are unlikely to have risen enough to encourage OPEC+ to reinstate its delayed plans to boost output in 2025. The exporter group, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, still has little room to manoeuvre on oil policy when it meets early next month. OPEC+ has already delayed a plan to gradually lift production as world demand for crude fell short of what the group, and other analysts had been forecasting earlier in 2024. It may push back output increases again when it meets on Dec. 1 due to weak global oil demand, according to three OPEC+ sources familiar with the discussions. Ministers last shelved the increase for a month when they met virtually on Nov. 3. OPEC+ had planned to slowly roll back production cuts with small increases over many months in 2024 and 2025. But a slowdown in Chinese and global demand, and rising output outside the group, have put a dampener on that plan. This has left OPEC+ maintaining output cuts for longer than it had thought. The group has cut output by 5.86 million barrels per day, or about 5.7% of global demand, in a series of steps agreed since 2022 to support the market. OPEC+ may also be wary of signs that China’s crude imports may have risen in November to the highest in three months, as the gain is more likely to have been driven by weakening oil prices at the time when cargoes arriving in November were arranged over August and September. Imports may reach around 11.4 million bpd this month, the most since August and the third-highest month so far in 2024, according to vessel-tracking and port data compiled by commodity analysts Kpler and LSEG Oil Research.
China's refiners have in the past shown that they will buy more crude than they need when they deem prices to be low, and cut back on imports when they view prices as having risen too high, or gained too rapidly.
Essential Reading Peru's indebted state-run oil firm PetroPeru could consider offering a minority stake to private investors in the second half of 2025, when the company hopes to emerge from a crisis and post profits, Chairman Alejandro Narvaez told Reuters in an interview. Britain announced on Thursday a doubling of funds available to help people switch to environmentally friendly heat pumps to keep their homes warm as well as a relaxation of planning rules to make installing the units easier. Ukrainians are enduring long power blackouts as Russia unleashes air strikes, including a recent attack that was the biggest in three months, which killed seven people and renewed fears over the resilience of the power system this winter. A reworked version of South Africa's long-term power plan will soon be presented to cabinet, designed to help draw a line under the electricity blackouts that have crippled the country for a decade, officials said. The U.S. Department of Energy said it has awarded up to $2.2 billion to centers on the Gulf Coast and in the Midwest to develop hydrogen, an emerging source of energy that is expensive to produce using renewable power.
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(Editing by Marguerita Choy)
((clyde.russell@thomsonreuters.com))
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