Daily Energy Standup Episode #260 – Copper Supply Concerns, LNG Cruise Ships, and Geopolitical Shifts in the Oil Trade

Michael Tanner: [00:00:15] What is going on, everybody? Welcome to another edition of the Daily Energy News Beat Stand up here on this gorgeous Thursday, November 30th, 2023. As always. I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show that prepared the show and the director and publisher of the world’s greatest website energynewsbeat.com. Stuart Turley, my man, how are we doing today? [00:00:38][23.1]

Stuart Turley: [00:00:38] You know, it’s a beautiful day in the neighborhood and I am exhausted being nice to investors, asking about our deal. You know, the deal of the spotlight. Spotlight deal. Oh, my goodness. It’s been crazy. [00:00:51][12.6]

Michael Tanner: [00:00:51] It’s it’s tiring doing your job. The world. Who would have who would have thought? So I appreciate Stu you nonetheless putting together a crazy and good lineup for us today. First up on the menu, dwindling copper supply from Panama and Peru could wipe out global surplus in 2024. This next one, This creeps me out. Cold Weather Prompts National Grid to Activate Energy Blackout scheme. Oh, that’s nice. This next one. This will just make you laugh. Royal Caribbean takes delivery of LNG powered giant in Finland. I’ve got a lot to say about this one. And then finally, probably the spookiest of all the stories. UAE officially stops using the dollar for oil trade. Not good, stupid. Dive into what’s going on over there. He’ll toss it over to me. How quickly cover what happened in the oil and gas finance space cover what’s going on in Venezuela. An interesting little border dispute there with Guyana, which I think has some long term effects on supply and then always will touch on what the EIA said, the crude oil inventory numbers were, and then we’ll let you get on out of here and start your day before we do all that. Guys, remember, as always, the stories and analysis you are about to hear is brought to you by the world’s greatest website, www.energynewsbeat.com has become the best place for all your energy news Stu in the team do a tremendous job of making sure that website stays up to speed with everything you need to know to be the tip of the spear. When it comes to the energy business. You can check out the description below. See all of the timestamps and links to all of the articles. You can also email the show questions@energynewsbeat.com Connect with Stu and I on LinkedIn. Follow the show, Apple Podcasts, Spotify wherever you get your podcast, energy news beat on YouTube. Great way to support the show there. You can also check out dashboard.energynewsbeat.com the best place for all your data and news combo we really work at. You’re going to push that product early 2024 I’m out of breath though. Stu where do you want to begin? [00:02:39][108.1]

Stuart Turley: [00:02:40] Hey, let’s start down in South America. Dwindling copper supply from Panama and Peru could wipe out global surplus in 2024. Michael if you think Biden is worried about his next meal, he or his next ice cream cone, he’s going to be really worried if he’s trying to do anything about his EVs, because copper, you got to have copper and you got to have a lot of copper for the grid and getting those updates. Okay, Here it is. Reduced supply from major producers in Panama and Peru may just totally wipe out the market. Panama’s top court Tuesday ruled that the Canadian miner first Quantum’s contract to operate Cobra Panama Mine is unconstitutional retro. While a union representing half the workers at Peru’s Las Bombas mine went on strike. This is nuts. If the Cobra Pantami mine were to be permanently shut, the market could move into deficit in 2024. Listen to these numbers right now in Panama’s if it’s out of production until May, when the president election goes on in May of 2024, 40,000 tons of copper this year and 160,000 tons next year. It’s nuts. [00:04:06][86.1]

Michael Tanner: [00:04:07] It’s an absolute it’s a lot. Now, I do think and the article does go on to say that if that does happen where it’s only out of operation until May of 2024, it would only result in a small deficit this year, but the market would be able to absorb that loss next year and we’d be in a slight small surplus. So this could again, this is just going to support prices. We saw benchmark copper on the the CME, which the London Metal Exchange that was up about 1.5 percentage points to at $8,480 per metric tonne. And that forecast that’s on a forecasted oversupply of 302,000 tons of copper in 2024. So as that number shrinks, as that forecast oversupply shrinks, then we’re going to see that price rise. So could be interesting again, when we when we talk about the grid, we need to think it second order effects. What’s all the stuff that goes into the grid in order to keep it operational? We need to make sure those things are up. So not good for the the overall electricity market. Considering this next story we’re about to cover, Stu, National Grid is going to start burning shoes. [00:05:08][61.1]

Stuart Turley: [00:05:08] Oh yeah. And eating them just because we you know, never mind cold weather prompts. No. National Grid to activate energy blackout scheme. National grids in the UK. And I think that this is absolutely hilarious from the standpoint our forecasts show electricity supply margins are expected to be tighter than normal on Wednesday evening. It does not mean electric electricity supplies are at risk and people should not be worried. Ry precautionary measures to maintain the buffer of spare capacity. Why do they have problems? More than 1.6 million households and businesses have been involved in this because of Europe’s gas squeeze. And then all of the wind farm wind farm problems that they have had the scheme. Instead, they’re urged to shut down their appliances and wash machines. And the scheme is to save more than 3000MW of electricity across 22 activations. [00:06:12][63.6]

Michael Tanner: [00:06:14] Yeah, I’m sure they’re not going to Kensington Palace and asking the Queen to turn down her or turn off some of her lights. You mean the king? King? Whatever. Who who gets King Queen? It might as well be used to. Well, now I’m too. I don’t think you want to be the king. I think he’s invited. He’s got some stuff up his sleeve. [00:06:31][17.7]

Stuart Turley: [00:06:32] Oh, yeah. No. [00:06:33][0.7]

Michael Tanner: [00:06:34] Not Andrew. Right? Yeah. Who was the guy who’s affiliated with Epstein? [00:06:37][3.6]

Stuart Turley: [00:06:38] Oh, no, that’s actually somebody else. [00:06:41][2.5]

Michael Tanner: [00:06:41] But we’ll just live for one. I’m sorry. [00:06:42][1.3]

Stuart Turley: [00:06:43] Yeah, well, we’ll leave the royals. He’s. He’s just as creepy, but we’ll leave the Royals alone. Speaking of Royal. [00:06:48][4.9]

Michael Tanner: [00:06:48] Asking him to turn off the lights, though. [00:06:50][1.6]

Stuart Turley: [00:06:50] Oh, no. Speaking of royals, let’s go to Royal Caribbean. Takes delivery of LNG power plant in power giant in Finland. Michael, you were kind of funny when we were chit chatting about the show ahead of time. A unit of Royal Caribbean. This is Royal Caribbean International. I just did my podcast with Sean Strawbridge and we were talking about the LNG, gigantic cargo ships that are being rolled out from China and they’re already bought. These things were bigger than the Empire State Building. Now, this is van tastic news because it is less carbon footprint than just about anything else they can. This is 365m long. Icon of the seas. It is just amazing. The first cruise line that can be powered by LNG. Now, I did not know this, Michael. You’re limited on where you can fill these bad dogs up. You just don’t drive up and go ding, ding, you know, across the little air line on the floor on a gas station, used to have the guys run out and fill, you know, nobody’s going to be in a monkey suit standing there to fill you up on this thing. You got to go to where there’s LNG. And Sean Strawbridge was really apt to say, hey, we’re years away from this. So this could be limiting in the ports of call that you could go to with this bad dog. [00:08:21][90.5]

Michael Tanner: [00:08:21] Well, two things. One, I hate cruises, so I’m going to be completely skewered on this. I think people that takes cruises or bumps, to be honest with you, and I apologize if you do take cruises, but not a fan of cruises. Second of all, I do find it hilarious. Royal Caribbean, the place where probably the most amount of admission, the amount of food that gets eaten on a cruise is disgusting. You walk by all those buffets. It’s just seven day old hot dogs. The nice part is now that it’s LNG powered and we’re quote unquote net zero, you actually eat those hot dogs and it won’t cause an uptick in carbon. So thank you, Royal Caribbean, for keeping us net zero by allowing us to take on more of your disgusting hot dogs. I, I have I hate cruises still, so I will not be trying this new LNG powered icon of the seas. I forget I went on a it was a Royal Caribbean cruise. I went and I think it was it was tradition of the seas. It was one of the of the seas brand horrible. I hate it. [00:09:15][53.6]

Stuart Turley: [00:09:15] I guarantee you went on the Disney Royal Caribbean they trust. [00:09:19][3.8]

Michael Tanner: [00:09:19] If it was a Disney cruise, I wouldn’t have come back because it would have jumped off. And you. You just left me at sea? Oh, yeah. [00:09:24][4.4]

Stuart Turley: [00:09:24] Because I could see the kids running up to you and going, Mickey. [00:09:27][2.8]

Michael Tanner: [00:09:28] You think Mickey was making me pancake? Ooh. [00:09:30][2.5]

Stuart Turley: [00:09:31] Oh, wait. Let’s go to the UAE. UAE stops buying using the petrodollar. The U.S. dollar for oil trades. This is about as big as it gets, you know. [00:09:45][13.9]

Michael Tanner: [00:09:46] Disastrous. [00:09:46][0.0]

Stuart Turley: [00:09:46] It is. You and I have been on the story for BRICs for a long time, and the UAE just gave the double barrel finger to the Biden administration with this move, the BRICs, which is Brazil, Russia, India, China and South Africa. They expanded it to the UAE, Saudi Arabia, Egypt, Ethiopia, Iran and Argentina. And you’re going to see a major. Rise of the U.S. dollar. Who’s going to buy our debt when the US petrodollar is not being used? You just had Michael we covered on the podcast last week. Russia and China also shifting and exchanging $3 billion worth of their gold currency in order to make more trades. Wow. Okay. This gets even uglier coming down into here. The new era in global oil trade. This is just absolutely this isn’t about diversifying trade. It’s about making a statement on the global stage. That’s exactly what the quote out of the article was. And they are dead on, right. The UAE and Saudi Arabia have every right to give the United States the devil finger the way we treated them. [00:11:05][78.9]

Michael Tanner: [00:11:06] It’s it’s true. I don’t want to be a shill for for Saudi Arabia or the UAE, but they’re doing what’s in the best interests of their country. So you can’t knock. I mean, if I was if I was, you know, running UAE or running Saudi, I’d be doing the same thing. So I can’t sit here and and blame them if the United States this is it. Good. As you mentioned, this is going to cause a huge strain financially on us long term. This is what we call long. And I’m listening to a book on the 2008 financial crisis. This guy named Thomas Horney, who was one of the few guys that dissented all the rate increases from 2008 to 2016 from a few people that said we should raise rates and not keep rates low because why? The effects? Financial effects have long and variable lags. He said that thousands of times in the speeches of the Fed. And I love that phrase long, invariable acts. Something like this. We don’t know the outcome. We’re not going to see the effects of them switching to a currency today. All of a sudden tomorrow, we’re not going to see it. But in ten, 15, 20 years, what are those long and variable effects? It’s another way of thinking of when I talk about second order, third order effects, it’s the same thing. And this is that second, third order effect. When in ten years when nobody’s using the dollar to trade oil, that puts us in a huge strategic disadvantage around the rest of the world. As you mentioned, our debt back a lot by oil and gas. [00:12:26][80.1]

Stuart Turley: [00:12:26] I’ll tell you what, Michael, I think you’re right in many ways, but I’m going to disagree with you, which I think that makes the show kind of fun, is that you’re always smarter and better looking than I am. But I’m going to disagree with you. Yeah, we get that feedback all the time. I’m the homely guy with a big hump, you know, for our podcast listeners. So when you sit back and take a look, this is really a problem and it’s not going to be ten years, Michael, that we feel this. You alluded to it. It’s going to be a year. We have lost the stage for diplomacy in the world. And diplomacy is alarmed around energy. [00:13:03][37.3]

Michael Tanner: [00:13:04] We’ll call it an even five years. And I don’t think it’s going to be a year. It may not be ten long. And variable effects. [00:13:10][5.8]

Stuart Turley: [00:13:11] I’m going to go short variable. I’ll see your long end variable and raise you a short and variable. [00:13:19][7.9]

Michael Tanner: [00:13:21] Enough. [00:13:21][0.0]

Stuart Turley: [00:13:21] All right. No, that’s all I got. Dude, back to you. [00:13:23][1.9]

Michael Tanner: [00:13:24] I will pop over to finance now, guys. S&P 500 dropped about a 10th of a percentage point. Nasdaq about 50 or about five. I can’t say my name today, guys. 15, not 15 percentage point. 15 percentage points. That’s on the Nasdaq, really all over the place in terms of a trading day, guys. Specifically in a move down to oil and gas, oil after the EIA drops their numbers, which we’ll cover shortly, drops all the way just below $76 after opening right above 76, 50 was up to 77. EIA news drops down to below 76 at then currently trading as we stand here about 525 Central time 7772 mainly again off the back of two things that wild price swing. First off was the fact that the EIA crude oil inventories coming out a 1.6 million barrel bill. We were expecting the 800,000 barrel draw. We got an 81. 6 million barrel bill. So that could tank the markets. As I said, we were about 77, 71 when that news dropped that at 9:30 a.m. Central Time drove us all the way down below 76 to about 7580. Then again, this as we get closer to this OPEC virtual meeting, which will be taking place today. As you’re listening to this, deeper cuts are coming, or at least that’s what the market thinks. They’re reading routers. They would tell you that, you know, oil rose more than one dollars a barrel on Wednesday as investors focus their attention on an expectation of fresh supply cuts from OPEC. And look past the jump in crude gasoline and diesel stockpiles. Word out point is there is the sentiment out there that we believe that OPEC is going to cut a little bit. How much are they going to cut? I don’t know. How big of a effect is it going to have? I don’t know. It remains to be seen. Now, what is interesting, Stuart, we did see Brant oil jump today. That crack spread between crude oil and Brant has now increased crude oil down today. Brant oil was actually up about 1.6 percentage points. What does that tell you? It tells you that cuts could be in coming that. Is a signal in my mind, at least when we’re seeing the markets open right now. Because remember, Brent’s open already for Thursday, Our Thursday markets just open. As we record this as we record this on Wednesday. So that spread tells me that difference of a Brant going up, crude oil staying the same. That means there’s an expectation and there should be. Our people are sensing some cuts. So it’ll be interesting to see what OPEC does decide. As always, we will cover it. But they’ll be meeting virtually tomorrow. I thought this was interesting, Stu, just before we go. Venezuela is currently preparing for a vote on border dispute with Guyana over oil rich territory. This drop late in the afternoon will get this run on Newsbeat. But this is crazy, Stu. Guyana is is is the discovery out there that that that could be doing upwards of 2 million barrels of oil a day once fully developed Exxon, Chevron, Hess all in on it. And now Venezuela wants to go to war with that. So the conflict between Venezuelan Guyana has been rekindled since international companies such as Exxon announced the exploitation of oil deposits in maritime areas that get this do have not yet been delineated between country. How stupid can we be? You’re talking here and this is what boggles my mind. Exxon Mobil, they pay hundreds of millions of dollars a year to risk management people. [00:16:28][184.1]

Stuart Turley: [00:16:29] Oh, yeah, yeah, yeah, yeah, yeah. [00:16:30][1.3]

Michael Tanner: [00:16:30] They didn’t think to ask, Well, is this in Guyana or Venezuela? So say. [00:16:35][4.6]

Stuart Turley: [00:16:35] So. Salesman What’s the deal? Some salesman wanted the deal and just rush the paperwork through. [00:16:42][6.4]

Michael Tanner: [00:16:42] Or they’re just saying, Hey, there’s, there’s, there’s no way they’re ever going to take this from us, so screw it. We’re just going to. We’ll drill. And if it if Venezuela rules, it’s theirs. Well, so be it. Which is hilarious considering Exxon and Chevron were two of the companies trying to help Venezuela produce oil. It’s really interesting. Wow. You know, obviously, you know, the US came out, said we support a diplomatic solution while the international court justice process continues. But get this in Guyana, all defense, corporations and capable building activities are with U.S. military personnel. So we know what we’re coming in. We know where we stand. I yes, Gary, centuries. [00:17:17][35.1]

Stuart Turley: [00:17:18] Go to. [00:17:18][0.1]

Michael Tanner: [00:17:18] War. We don’t know. We were going to a border dispute over one of the largest oil fine and probably one of the few things that could actually theoretically move world oil production. Insane to me that we didn’t think about. [00:17:29][11.4]

Stuart Turley: [00:17:30] I just said countries go to war over energy. [00:17:33][2.6]

Michael Tanner: [00:17:34] And they’re trying to to to confirm the legal validity and binding effect of the award relating the boundaries between the colony of British Guiana and the United States and Venezuela, dated October 3rd, 1899. Sweet. So the agreement we’re referencing was written on cowhide one. [00:17:52][18.2]

Stuart Turley: [00:17:54] On. [00:17:54][0.0]

Michael Tanner: [00:17:55] Or I mean, you were around then, so maybe you could just call back. It was memory bank. You were you were what, 55 around that time? [00:18:02][6.7]

Stuart Turley: [00:18:02] Oh, no, I was younger than that. But it was actually a papyrus when I came over on the rock from Egypt. It was actually then. [00:18:11][8.8]

Michael Tanner: [00:18:12] So thank goodness you made it over on the Mayflower. We would have never had any of this. [00:18:16][4.1]

Stuart Turley: [00:18:16] I went back on the Mayflower the first time, so. [00:18:18][2.2]

Michael Tanner: [00:18:18] There and back. We got to love it. Anything else do? I’m done for the day. [00:18:21][2.6]

Stuart Turley: [00:18:21] Oh, no. It’s just a wildly crazy news story. We got more coming. We got cop 28 stories coming out. I’m hearing some wild rumblings around the world. Dude, it’s crazy. [00:18:32][10.1]

Michael Tanner: [00:18:32] Who’s the interview? People here Friday. We got Friday. We drop in. What interview do we have? [00:18:37][5.0]

Stuart Turley: [00:18:38] It’s going to be George McMillan. We finally have that one rolling. And I mean, that’s a two hour mind boggling CIA World energy. Geopolitical. Oh, hey, don’t. Don’t you me doing me that way. Here you are. I’m an old dog. I finally get to talk to somebody that knows something and you’re over there. Give me this kind of flak for our podcast listeners. He’s holding his hands up, going, Is it just like a little millennial? Oh, my gosh. Just came on good today, dude. [00:19:10][32.2]

Michael Tanner: [00:19:10] Unfortunately I am. But no, that’ll be great. Saturday we’ll have the weekly recap will take Sunday off and we will see you guys back in early Monday here in December. But with that, guys, we’re going to go and get here for Stuart Turley. I’m Michael Tanner. Folks, we’ll see you tomorrow. Have a great weekend. [00:19:10][0.0][1105.7]

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