Hello crew - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air.

Here’s what dropped today:

• ⬇️ A large draw in US crude stocks

• 😳 First US GoM wind auction flops

• 🟥 Stuttering economic activity in China

plus lots more. Here goes…

📈 The numbers

Crude price have ticked up further as a large draw in US commercial crude inventories outweighed sluggish economic data from China.

🗞️ Well-headlines

 🇺🇸 North America

• US crude inventories fell by 10.6 mmbbls last week, according to the EIA. The analyst consensus had been for a 3.3 mmbbls decline. Gasoline stocks fell by 0.2 mmbbls, compared with an expectation of -0.9 mmbbls. Refinery utilization rates remained high at 93.3% as we near the end of the US summer driving season when gasoline demand peaks.

🇪🇺 Europe

• German utility RWE has began dismantling wind turbines to make way for a further expansion of a coal mine in western Germany. What a poetic depiction of the inevitable collapse of idealism when it eventually meets reality. Despite hundreds of billions invested into Energiewende, Germany is retreating to coal to keep the lights on this winter.

• AkerBP has commenced construction of the infrastructure for three gas and condensate discoveries in the Skarv field in the Norwegian Sea. The company said the project is "the largest development in the Norwegian Sea in recent years".

🇸🇦 The Middle East

• GKP has warned about its future amid the ongoing suspension of Kurdistan crude exports through Turkey. Turkey shut the crude pipeline, through which most of GKP’s production flows, in March following a dispute between Turkey and Iraq over crude exports.

• Oman LNG has signed deals to supply Shell and OQ Trading with LNG. Shell, which is a 30% shareholder in Oman LNG, will become the largest LNG offtaker from Oman from next year.

🇨🇳 Asia

• India’s largest O&G producer, ONGC, has said it will invest $24.2bn in the coming years to meet its 2038 corporate net-zero target. Low carbon investments include hydrogen, green ammonia, wind and solar. “We have financial muscle to invest both in hydrocarbon and new energy”. said chairman Singh.

• Australia’s grid operator, AEMO, has warned of “reliability gaps”, aka power shortages, in the coming years as the country retires its coal and gas fleet without sufficient replacement capacity and as demand grows. Yeah, it helps to have a solid plan in place before you start dismantling your existing system…

• Petronas will permanently shut part of its Sabah Sarawak Gas Pipeline due to various ongoing technical issues including leaks. The pipeline system, which runs through mountainous jungle terrain, is a feeder into its Petronas LNG facility.

📍Everywhere else

• Petrobras has signed agreements with various Chinese firms including CNOOC, Sinopec, CEIG, and Citic to develop Brazil’s energy sector. The collaborations will involve oil & gas E&P, renewables, hydrogen, and other “joint projects”.

• Ecopetrol will invest ~$1.3 billion in producing cleaner gasoline over the next seven years. The investment is mainly directed towards reducing the sulfur content in the gasoline and follows $450m the company has already spent on this objective in recent years.

• Shell has begun drilling its first appraisal well in Namibia’s emerging Orange basin at the Jonker prospect. Shell and others have made a number of large offshore discoveries in the region, spurring hopes that Namibia could develop into a significant hydrocarbon producer.

• Brazil’s oil & gas production hit a new monthly record high in July, reaching 4.48 mmboe/d. This reflects a ~15% year on year increase and, with large ongoing investment, production growth is set to continue for years to come.

🌍 Geopolitics & macro

• China’s manufacturing PMI (an index that measures industrial activity) for August came in at 49.7, showing that activity contracted for the fifth straight month, albeit very slightly. The results were slightly better than expected, though.

• Barclays has increased its 2024 Brent crude price forecast by $8 to $97/bbl, citing slowing supply growth from both OPEC and non-OPEC producers.

💨 Carbon, Climate & other energy stuff

• The US’s first offshore wind auction for the Gulf of Mexico attracted just a single bid. RWE acquired the rights to develop an area offshore Louisiana, but the two other areas on offer, offshore Texas, received no interest. Low wind speeds in the GoM and poor wind industry market conditions are said to be responsible for the lackluster demand.

🛢️Bottom of the barrel

Despite continued sharp falls in US commercial crude stocks, current levels are still above the recent average for this time of the year, and well above minimum levels:

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