Getting It Together. The Energy Report 12/03/2024

This comes as China reacts to the Biden administration putting export controls on computer chip-making equipment, software and high-bandwidth memory chips to China. China struck back by banning some exports of gallium and germanium, that can be used for military purposes.

Gallium and Germanium are rare metals that are essential in producing semiconductors and other high-tech products like semiconductor wafers for solar cells, LEDs, fiber optics, dentistry, Integrated circuits, airport security scanners, infrared optics, Infrared sensors. China is the world’s largest producer of gallium and germanium, and it would be hard to replace those supplies.

Reuters reported that on Saturday Iraq halted all operations at the Shuaiba refinery in Basra following the overloading of fuel oil storage tanks, according to three refinery officials. The disruption occurred after no ships arrived at the Khor al-Zubair port to load exported fuel oil since mid-last week. The officials, who spoke on condition of anonymity, said the backlog of fuel oil at the refinery led to the suspension of operations.

Natural gas has pulled back hopes for a December warm up but in Europe an energy crisis is developing. Javier Blass from Bloomberg pointed out that, “European natural gas storage withdrawals in November were the 2nd largest since at least 2011 (and about double the long-term average). The reason? Strong gas-fired electricity generation to offset low wind, plus a cold start of the winter season.

In the US cold was the natural gas story last week but hopes for a warmup is pressuring us. Fox Weather reported that, “Winter weather is making its presence known across the U.S. as millions of people deal with the onslaught of a long-duration, lake-effect snowstorm that has paralyzed communities downwind of the Great Lakes. And to make matters worse, rounds of arctic air will continue to invade the country and send temperatures tumbling below freezing in cities as far as the Southeast.

The FOX Forecast Center said the arctic blast from Canada has been sweeping across the central and eastern U.S.. Temperatures in cities in the northern Plains plummeted below zero over the weekend, and wind chills made it feel even colder.

Cheap corn, more ethanol. DTN reports that US Ethanol production is hot and at an all-time high! DTN Energy says that overall ethanol production in the United States averaged 1.119 million barrels per day (bpd) in the week ended Nov. 22, a fresh record high, up 9,000 bpd week-on-week, the Energy Information Administration reports. Domestic ethanol production for the week was 108,000 bpd, or 9.7%, higher than in the same week last year while four-week average output at 1.112 million bpd was 81,000 bpd above the same four weeks last year. Midwest ethanol production averaged 1.048 million bpd, up 10,000 bpd week-on-week and 98,000 bpd, or 9.4%, higher than in the same week last year.

The fundamental outlook for oil is looking pretty solid here as we get into winter demand. We should start hitting on all cylinders now we’re going to really test the thesis that the market is oversupplied. We’re probably going to find out very shortly whether that’s the case.

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