Monthly Newsletter

July 30, 2021

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

Introduction: This monthly newsletter is intended to be a monthly update on US-China interactions on energy and environment industry sectors. We believe that accurate, quantitative, updated data is key for decision making. Please note that data is from open sources and comments are personal opinion.

Overview:

Energy security is a national security issue, but it is also a geopolitical issue. Balance of supply and demand dominates the price and vice versa. Currently, the global demand side is clouded by the threat of COVID-19 virus and its variants. Many nations, including USA, must quickly reverse previous relaxation of pandemic control in July. It is going to negatively impact on the global recovery. Thus, global energy demand will be weak until COVID-19 pandemic is under control.

On the supply side, we notice the following issues:

1. OPEC+ has reached the consensus of relaxing oil production quota, in July.
2. The JCOPA negotiation with Iran is intensifying, once it is resolved, Iran will be able to export crude oil immediately. The reason is that Iran has been store crude on super tankers and they will be ready to go anytime.
3. US is pulling out of Iraq at the end of 2021, if Iraq destabilized then its oil production could be severely reduced. Iraq has already asked Exxon-Mobile to leave.
4. US shale oil-gas industry is slowly recovering, in general terms US shale oil industry can break even when WTI price is above US$65/bbl. When US Shale oil-gas roars back, we can expect the global oil and gas price stabilizing.
5. US natural gas, including Coal Bed Methane and Shale gas, may dominate the global LNG market.
6. In July, it was reported that China released three million tons of crude oil from her strategic petroleum reserve (SPR) as a tool to cool down the crude oil price. India could follow!

Background: The U.S. Energy Information Administration (EIA) is a principal agency of the U.S. Federal Statistical System responsible for collecting, analyzing, and disseminating energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. EIA programs cover data on coal, petroleum, natural gas, electric, renewable and nuclear energy. EIA is part of the U.S. Department of Energy.

The Department of Energy Organization Act of 1977 established EIA as the primary federal government authority on energy statistics and analysis, building upon systems and organizations first established in 1974 following the oil market disruption of 1973 due to the Arab oil embargo.

EIA conducts a comprehensive data collection program that covers the full spectrum of energy sources, end uses, and energy flows; generates short- and long-term domestic and international energy projections; and performs informative energy analyses.

EIA disseminates its data products, analyses, reports, and services to customers and stakeholders primarily through its website and the customer contact center.

Located in Washington, D.C., EIA has about 325 federal employees and a budget of $126.8 million in fiscal year 2021. Most importantly, by law, EIA’s products are prepared independently of policy considerations. EIA neither formulates nor advocates any policy conclusions. The Department of Energy Organization Act allows EIA’s processes and products to be independent from review by Executive Branch officials; specifically, Section 205(d) says:

“The Administrator shall not be required to obtain the approval of any other officer or employee of the Department in connection with the collection or analysis of any information; nor shall the Administrator be required, prior to publication, to obtain the approval of any other officer or employee of the United States with respect to the substance of any statistical or forecasting technical reports which he has prepared in accordance with law.

Some data with historical figures

1. Petroleum
   

1. 1. Weekly Petroleum Status Report (Data for Weekended: July 23, 2021)

Summary of Weekly Petroleum Data for the week ending July 23, 2021 U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending July 23, 2021 which was 132,000 barrels per day less than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.8 million barrels per day. Distillate fuel production decreased last week, averaging 4.7 million barrels per day. U.S. crude oil imports averaged 6.5 million barrels per day last week (See STH Notes,) decreased by 0.6 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 6.9% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 909,000 barrels per day, and distillate fuel imports averaged 188,000 barrels per day. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.1 million barrels from the previous week. At 435.6 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year. Total motor gasoline inventories decreased by 2.3 million barrels last week and are about 0% below the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories decreased by 3.1 million barrels last week and are about 7% below the five year average for this time of year. Propane/propylene inventories increased by 1.9 million barrels last week and are about 14% below the five year average for this time of year. Total commercial petroleum inventories decreased by 6.5 million barrels last week. Total products supplied over the last four-week period averaged 20.6 million barrels a day, up by 12.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.5 million barrels a day, up by 9.1% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 12.6% from the same period last year. Jet fuel product supplied was up 39.4% compared with the same fourweek period last year

The West Texas Intermediate crude oil price was $72.24 per barrel on July 23, 2021, $0.48 above last week’s price and $31.01 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $2.292 per gallon, $0.049 more than last week’s price and $1.047 above a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $2.133 per gallon, $0.031 above last week’s price and $0.871 over a year ago. The national average retail regular gasoline price was $3.136 per gallon on July 26, 2021, $0.017 per gallon less than last week’s price but $0.961 over a year ago. The national average retail diesel fuel price was $3.342 per gallon, $0.002 below last week’s price but $0.915 over a year ago.

STH Notes: Even though the US is now a net energy exporter nation, imported heavy crudes are essential for mixing with local produced light crudes for efficient refinery operations.

1. 2. Weekly Imports and Exports (Thousand Barrels Per Day)

1. 3. Spot Prices (Crude Oil in US Dollars per Barrel, products per Gallon)

1. 4. Exports by Destination

ST Notes:  The data shows that US crude exports to China during the past half year experienced a large (almost 50%) reduction after President Biden took over from President Trump. The decrease could also be attributed to elevated crude oil price and slow global recovery from the COVID-19 pandemic. So there are plenty room for US-China crude oil trade to expand.

2. Natural Gas

STH Note: The spike of natural gas price on February 16 and 17, 2021 was due to the severe winter weather hitting Texas caused the collapsing of its energy supply network

2. 1. U.S. natural gas supply Week: (7/22/21 – 7/28/21)

	this week	last week	last year
Marketed production	104.5	105.0	101.2
Dry production	92.6	92.9	89.6
Net Canada imports	5.6	5.0	4.1
LNG pipeline deliveries	0.1	0.1	0.2
Total supply	98.3	98.0	93.9

U.S. LNG exports decrease week over week. Nineteen LNG vessels (seven from Sabine Pass, four from Corpus Christi, three each from Cameron and Freeport, and two from Cove Point) with a combined LNG-carrying capacity of 70 Bcf departed the United States between July 22 and July 28, 2021, according to shipping data provided by Bloomberg Finance, L.P.

2. 2. U.S. Natural Gas Exports and Re-Exports by Country (Volumes in Million Cubic Feet, Prices in US Dollars per Thousand Cubic Feet)

Download Series History Definitions, Sources & Notes
Type – Area	Dec-20	Jan-21	Feb-21	Mar-21	Apr-21	May-21	View History
Export Volumes
Total	553,176	563,483	423,972	595,375	560,890	574,501	1973-2021
Pipeline	248,884	258,287	215,579	274,352	254,072	259,579	1997-2021
Canada	84,307	84,927	78,198	91,301	74,567	70,561	1973-2021
Mexico	164,577	173,360	137,381	183,051	179,505	189,018	1973-2021
LNG	304,263	305,196	208,394	321,023	306,818	314,922	1997-2021
Exports	304,263	305,196	208,394	321,023	306,818	314,922	2014-2021
By Vessel	304,209	305,113	208,331	321,004	306,755	314,855	2013-2021
Argentina	0	0	0	2,238	4,485	16,226	2015-2021
Bahamas	36	28	29	39	46	45	2017-2021
Bangladesh	0	3,148	0	3,566	10,219	6,948	2019-2021
Barbados	25	17	19	14	30	19	2015-2021
Belgium	0	0	0	3,484	0	2,100	2018-2021
Brazil	29,927	21,132	13,118	21,977	11,615	19,726	2015-2021
Chile	9,793	9,784	6,524	21,320	10,293	17,598	2015-2021
China	45,525	38,940	3,415	28,476	46,837	37,731	2011-2021
Colombia	0	0	0	0	892	0	2017-2021
Croatia	3,275	0	0	7,367	3,666	3,364	2020-2021
Dominican Republic	5,000	6,895	5,689	5,577	2,905	5,283	2016-2021
Egypt	0	0	0	0	0	0	2016-2021
France	3,752	3,587	14,851	33,678	36,120	11,926	2018-2021
Greece	3,382	600	0	6,805	0	6,796	2018-2021
Haiti	17	12	11	10	3	12	2018-2021
India	10,241	20,367	13,776	17,381	13,752	28,259	2015-2021
Israel	0	0	0	2,826	3,225	0	2017-2021
Italy	0	0	0	10,739	6,896	2,923	2016-2021
Jamaica	2,374	3,708	2,365	2,458	2,370	2,925	2018-2021
Japan	54,004	64,331	18,271	27,673	28,756	25,058	1973-2021
Jordan	0	0	0	0	0	0	2016-2021
Kuwait	0	0	0	3,821	3,705	0	2016-2021
Lithuania	6,291	0	6,851	3,228	3,078	3,049	2017-2021
Malaysia							2019-2019
Malta	0	0	0	0	2,928	0	2016-2021
Mexico	0	0	13,354	0	0	0	2016-2021
Netherlands	3,316	2,949	22,777	24,204	17,060	26,611	2016-2021
Pakistan	0	3,682	0	3,421	3,323	0	2016-2021
Panama	271	516	0	3,279	0	2,341	2017-2021
Poland	7,033	0	7,099	3,507	7,382	3,581	2016-2021
Portugal	3,711	0	3,360	0	7,358	10,765	2015-2021
Russia	0	0	0	0	0	0	2007-2021
Singapore	0	3,688	0	3,303	7,297	3,089	2018-2021
South Korea	39,617	55,936	18,094	32,203	21,683	46,033	2016-2021
Spain	13,583	7,377	3,733	13,900	22,974	5,234	2016-2021
Taiwan	12,470	10,319	0	13,450	6,594	10,157	2015-2021
Thailand	0	0	0	0	7,388	3,453	2016-2021
Turkey	20,188	26,659	20,652	3,619	0	3,017	2016-2021
United Arab Emirates	0	0	0	0	0	0	2015-2021
United Kingdom	30,378	21,436	34,343	17,440	13,877	10,586	2017-2021
By Truck	53	83	63	19	63	66	2013-2021
Canada	8	0	0	0	15	18	2007-2021
Mexico	46	83	63	19	48	48	1997-2021
Re-Exports	0	0	0	0	0	0	2013-2021
Argentina	0	0	0	0	0	0	2016-2021
Brazil	0	0	0	0	0	0	2010-2021
Chile							2011-2016
China	0	0	0	0	0	0	2011-2021
Egypt	0	0	0	0	0	0	2015-2021
India	0	0	0	0	0	0	2010-2021
Japan	0	0	0	0	0	0	2010-2021
Mexico	0	0	0	0	0	0	2012-2021
Portugal							2012-2016
South Korea	0	0	0	0	0	0	2009-2021
Spain	0	0	0	0	0	0	2010-2021
Turkey	0	0	0	0	0	0	2015-2021
United Kingdom	0	0	0	0	0	0	2010-2021
CNG	29	0	0	0	0	0	2011-2021
Canada	29	0	0	0	0	0	2011-2021
Export Prices
Average	4.84	4.62	12.68	4.71	4.47	4.91	1989-2021
Pipeline	2.85	2.89	18.64	2.91	2.72	3.02	1997-2021
Canada	2.80	2.99	4.03	2.86	2.58	2.84	1989-2021
Mexico	2.87	2.84	26.96	2.93	2.78	3.09	1989-2021
LNG	6.48	6.08	6.52	6.25	5.92	6.46	1997-2021
Exports	6.48	6.08	6.52	6.25	5.92	6.46	2014-2021
By Vessel	6.48	6.08	6.51	6.25	5.92	6.46	2013-2021
Argentina	—	—	—	6.55	6.25	6.11	2015-2021
Bahamas	10.39	10.39	10.39	10.39	10.39	10.39	2017-2021
Bangladesh	—	2.95	—	6.07	5.56	7.01	2019-2021
Barbados	10.39	10.39	10.39	10.39	10.39	10.39	2015-2021
Belgium	—	—	—	4.65	—	7.35	2018-2021
Brazil	6.59	7.35	7.51	6.53	5.81	6.08	2015-2021
Chile	5.99	5.91	6.97	6.15	5.95	6.55	2015-2021
China	6.33	6.09	4.46	6.39	5.76	6.43	2011-2021
Colombia	—	—	—	—	6.25	—	2017-2021
Croatia	6.75	—	—	6.58	6.25	6.67	2020-2021
Dominican Republic	6.32	6.23	8.99	6.14	5.90	6.59	2016-2021
Egypt	—	—	—	—	—	—	2016-2021
France	7.12	6.09	6.72	6.75	5.76	6.95	2018-2021
Greece	6.08	5.56	—	5.33	—	6.11	2018-2021
Haiti	10.39	10.39	10.39	10.39	10.39	10.39	2018-2021
India	6.33	6.10	6.62	6.07	5.48	6.36	2015-2021
Israel	—	—	—	6.46	5.11	—	2017-2021
Italy	—	—	—	6.65	6.88	6.11	2016-2021
Jamaica	6.27	6.09	6.43	6.55	6.22	6.63	2018-2021
Japan	6.78	6.20	6.60	7.01	6.06	6.94	1973-2021
Jordan	—	—	—	—	—	—	2016-2021
Kuwait	—	—	—	6.64	5.75	—	2016-2021
Lithuania	6.28	—	6.14	7.08	6.16	6.61	2017-2021
Malaysia							2019-2019
Malta	—	—	—	—	6.22	—	2016-2021
Mexico	—	—	5.68	—	—	—	2015-2021
Netherlands	8.37	5.57	5.87	5.81	6.18	6.30	2016-2021
Pakistan	—	4.54	—	8.42	6.00	—	2016-2021
Panama	6.08	6.09	—	6.07	—	7.35	2017-2021
Poland	7.25	—	6.95	6.55	6.15	6.61	2016-2021
Portugal	7.12	—	5.37	—	5.96	4.70	2015-2021
Russia	—	—	—	—	—	—	2007-2021
Singapore	—	6.11	—	4.37	4.77	6.67	2018-2021
South Korea	6.20	6.01	6.64	5.48	6.21	6.81	2016-2021
Spain	6.94	6.31	6.48	5.95	6.34	6.77	2015-2021
Taiwan	6.19	5.17	—	5.59	5.42	6.65	2015-2021
Thailand	—	—	—	—	4.08	6.66	2016-2021
Turkey	6.22	6.13	7.00	6.59	—	6.42	2016-2021
United Arab Emirates	—	—	—	—	—	—	2015-2021
United Kingdom	6.23	5.74	6.16	6.47	6.91	5.78	2017-2021
By Truck	8.67	9.16	9.52	10.39	11.53	10.71	2013-2021
Canada	9.99	—	—	—	11.14	11.34	2007-2021
Mexico	8.45	9.16	9.52	10.39	11.66	10.47	1992-2021
Re-Exports	—	—	—	—	—	—	2013-2021
Argentina	—	—	—	—	—	—	2015-2021
Brazil	—	—	—	—	—	—	2010-2021
Chile							2011-2016
China	—	—	—	—	—	—	2011-2021
Egypt	—	—	—	—	—	—	2015-2021
India	—	—	—	—	—	—	2010-2021
Japan	—	—	—	—	—	—	2010-2021
Mexico	—	—	—	—	—	—	2012-2021
Portugal							2012-2016
South Korea	—	—	—	—	—	—	2009-2021
Spain	—	—	—	—	—	—	2010-2021
Turkey	—	—	—	—	—	—	2015-2021
United Kingdom	—	—	—	—	—	—	2010-2021
CNG	3.81	—	—	—	—	—	2011-2021
Canada	3.81	—	—	—	—	—	2011-2021

STH Notes:

1. From the US data, it seems that the US-China LNG trade has been steady for the past half year, as of May 2021 (last data available) China Imported 37,731 Million Cubic Feet over the US total of 314,992 Million Cubic Feet or almost 12%. China’ import is only next to South Korea which is at about 15%. Overall, Asia is the major destination of US LNG at 37.7%.
2. China’s import price at US$6.43 per Thousand Cubic Feet which is rather fair as Japan must pay US$ 6.94 and South Korea must pay US$6.91 respectively.
3. Further, the US data shows that there is no Re-Exports anywhere in the world. It seems that LNG spot market is not well developed.

Conclusions: More LNG activities are expected.

Contact Information
Cell phone: 6262-276-7460

Email: [email protected]