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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! So we’re getting close to the big U.S. Memorial Day holiday, when everyone gets out in their cars, and boy hey howdy do the recent figures on oil inventories show it, with refiners getting ready for that weekend. But first let’s talk about the Saudi oil minister, who is very annoyed. Power Up will not publish on the holiday so we’ll be back in a week! 

Today’s top headlines:

• Shale R&D cuts cast shadow on future of US oil production
• COLUMN: The ‘Big 4″ drivers of coal imports and power emissions
• Australia’s Santos rejects allegations of human rights violations

That’s Saudi Arabia’s Abdulaziz bin Salman, and he doesn’t like short sellers.

The last refuge of anyone unsatisfied with an asset’s price is to blame short-sellers, so that’s where Saudi Arabia’s Energy Minister Abdulaziz Bin Salman went on Tuesday more than a week ahead of the next OPEC+ meeting, saying short-sellers could face more pain if they don’t cut it out.  

Speaking at the Qatar Economic Forum, he told speculators that “they will be ouching, they did ouch in April, I don’t have to show my cards I’m not a poker player… but I would just tell them watch out.” Take what you will of that – it is true that speculative positioning has hit a pretty extreme level, at its most bearish in about five years, as Maha El Dahan and Andrew Mills report.  

Still, what the Saudis and the rest of OPEC cannot be all that thrilled about is that OPEC cut production by surprise in April and yet the markets continue to trade lower. “So-called speculators are not the problem – underlying market conditions are simply far weaker than most analysts expected,” writes Edward Morse of Citigroup. 

What’s the reason for that? Demand just hasn’t been as expected, especially out of China, the world’s biggest importer of crude, and the result of that is, prices just keep sort of sinking. The minister wasn’t done with the blame game either, saying the International Energy Agency freaked markets out by suggesting Russia’s production would fall by 3 million barrels per day (it hasn’t). For what it’s worth, Russia has downplayed the idea of more OPEC+ cuts, so maybe we’re all getting excited over nothing here.  

Texas, man.

Oil prices haven’t really managed to move much beyond the mid-$70s range, but if the recent U.S. demand figures are any kind of harbinger, they might as the summer wears on. U.S. crude stocks slumped by a surprising 12.5 million barrels in the most recent week as refiners ramped up output, pulling gasoline and distillate stockpiles lower too ahead of the big Memorial Day holiday, where lots of people get on the roads.  

On the other hand, production hasn’t been great. U.S. crude output is about 12.3 million bpd – up about 3.4% from the year ago period, which is a steady, slow increase, but nothing to brag about.

“The rate of growth is disappointing given the low price of oil and the fact that producers are slowing down on their capital spending for drilling,” said Andrew Lipow, president of Lipow Oil Associates in Houston.   

China’s President Xi Jinping (right) shaking hands with Turkmenistan’s President Serdar Berdimuhamedov at the China-Central Asia Summit in Xi’an in China. Mark Cristino/Pool via REUTERS

China’s been looking all around for energy connections, and while it has become a big importer of Russian oil and products, it is ramping up plans to build a long-delayed Central Asian pipeline to source gas from Turkmenistan – which could end up meeting about 20% of China’s demand, as Chen Aizhu and Marat Gurt report.  

The project in question was part of China’s plans to bolster ties with countries in Central Asia, but the line has been mired in discussions that go back and forth – and because the pipe would cross three other nations. Still, as Russia is trying to push for a pipe from Siberia to China, that’s giving the latter some leverage to get the line to Turkmenistan going.  

“Central Asian pipelines are considered a cornerstone investment in China’s energy and geopolitical space. It’s a supply channel with strategic value that supersedes commercial concerns,” a state-oil official familiar with China National Petroleum Corp’s (CNPC) global strategy told Reuters. 

That’s the trajectory of production. Down.

The only gas field in the Philippines is going to run dry in four years – so the country is looking at importing liquefied natural gas (LNG), but that’s likely to make things hard for a government already dealing with high inflation, as Emily Chow and Enrico Dela Cruz report. 

The Malampaya field supplies about a fifth of the electricity requirements on the country’s main Luzon island, or about 13% of capacity nationwide. But without it, the country will have to buy LNG on the market, and that’s going to be an adjustment for a nation that was not used to getting everything from imports. The result is likely to be higher power prices.  

The country isn’t the only one in this position – Hong Kong and Vietnam are all first-time LNG buyers, and supply is likely to be strained again, with Europe scrambling to fill storage without Russian supply and very little in the way of new LNG projects coming online until next year. 

“Go to hell, Shell, and don’t you come back no more.”  

A choir of about a dozen protesters at Shell’s annual meeting as executives watched. 

Overall investment in clean energy continues to rise – and the International Energy Agency now says solar projects are set to outpace outlays on oil production for the first time ever, as Noah Browning reports here. 

Most clean energy spending, however, is dominated by the biggest, most advanced economies, including China, while poorer countries are still trying to deliver power to everyone, regardless of the type of energy it provides.  Annual investment in renewable energy is up by almost 25% since 2021, compared with a 15% rise for fossil fuels, the IEA said. 

Around $2.8 trillion is set to be invested in energy worldwide in 2023, of which more than $1.7 trillion is expected to go to renewables, nuclear power, electric vehicles, and efficiency improvements. 

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