Oil Prices See-Saw

By Clyde Russell, Asia Commodities and Energy Columnist

Hello Power Up readers! Crude oil prices are swinging this week, flipping between bullish signals from the United States, the world’s biggest consumer, and bearish tones from China, the top importer. Prices are rising for a second session on Thursday, buoyed by a larger-than-expected decline in U.S. stockpiles, which slipped by 4.9 million barrels last week, massively more than the 30,000 barrels forecast by analysts in a Reuters poll. Benchmark Brent futures were up 0.4% to $85.40 a barrel in Asian trade. Earlier this week, Brent prices had slipped after data showing China’s imports fell 2.9% in the first half of 2024 from the same period a year earlier. China is also boosting inventories, with 1.48 million barrels per day being added to stockpiles in June alone.

Solar panels are seen along with a view of the neighborhood and lower Manhattan from the rooftop of Timber House, the city’s first mass-timber condo building, in the Park Slope neighborhood of Brooklyn, New York, U.S., August 16, 2022. REUTERS/Brendan McDermid

The United States is seeing a surge in the construction of solar-manufacturing plants by Chinese companies, even as other American factories struggle to compete despite federal subsidies. Chinese companies will have at least 20 gigawatts’ worth of annual solar panel production capacity on U.S. soil within the next year, enough to serve about half the U.S. market, according to a Reuters analysis of corporate statements, government documents, and interviews with eight companies and researchers.

The projected rapid increase in U.S. solar panel construction by Chinese-owned companies has not previously been reported and represents a worrying result for President Joe Biden’s climate agenda. While his administration is keen for new investment that creates U.S. jobs in clean energy, his government is also desperate to prevent over-reliance on geopolitical rival China as the economy transitions from oil and gas to renewables.

Chinese-backed companies have distinct advantages over competitors in the U.S., such as heavily subsidized supply chains for raw polysilicon and unfinished solar modules, as well as low-cost government financing. Like non-Chinese companies, they also collect U.S. subsidies for clean energy manufacturing embedded in the 2022 Inflation Reduction Act, Biden’s signature climate law.

“You have a stacked deck here. It’s hard to imagine that anyone, particularly a greenfield manufacturer, can do it as quickly as a Chinese manufacturer,” said Paula Mints, founder of solar industry research firm SPV Market Research, referring to new factories.

U.S. imports of crude oil from Canada rose last week to the highest on record, data from the Energy Information Administration showed, buoyed by the startup of the newly expanded Trans Mountain (TMX) pipeline. Imports rose by 807,000 barrels per day to 4.4 million bpd in the week to July 12, the largest gain since March 2023, according to the data.

The United Arab Emirates is considering building a second nuclear power plant to meet growing demand for electricity in the oil-rich Gulf state, a government official told Reuters. The country of some 10 million people has become a proponent of nuclear power, a low-carbon energy source, as it seeks to diversify its economy and attract foreign investment. Its first plant started commercial operations in 2021.

The extension of a multilateral deal by Singapore to import hydropower from Laos is stuck due to disagreements over how the energy will be transmitted through Malaysia and Thailand, two regional government sources familiar with the matter said. The Lao PDR-Thailand-Malaysia-Singapore (LTMS) Project to supply up to 100 megawatts (MW) of electricity from Laos via Thailand and neighbouring Malaysia was hailed by Singapore as “historic” when it was signed in 2022.

A sell-off in the shares of some European carmakers and renewable energy firms is continuing on growing concerns over potential U.S. policy risks after an assassination attempt boosted Donald Trump’s chances in the presidential race. Trump’s choice of J.D. Vance as his running mate for the top job in Washington added to the worries, driving traders to sell shares perceived to be at risk.

The European Union’s goals to produce and import green hydrogen fuel are unrealistic and unlikely to be met despite billions of euros in funding, the European Court of Auditors said on Wednesday.  The European Commission has set out targets to produce up to 10 million tonnes of renewable hydrogen by 2030 and import a further 10 million tonnes. While not binding, the goals are part of the bloc’s plans to end its reliance on Russian energy imports.

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