A major oil company needs to borrow to cover dividends and share buybacks.

A major oil company has to take out loans to finance the buyback of its own shares.

– Oil majors reported lower third-quarter profits, suggesting the era of earnings windfalls is coming to an end, with the top five companies averaging a 12% quarterly decline.

– ExxonMobil, Chevron, Shell, TotalEnergies and BP will collectively earn $24.4 billion in the third quarter, leaving all but Shell unable to cover their dividends and share buybacks with free cash flow.

– The need to borrow to cover buybacks is not necessarily an issue for the U.S. oil majors, which have debt-to-equity ratios well below historical averages: ExxonMobil and Chevron have ratios of 13.5% and 12.6%, respectively.

– BP, on the other hand, is on the other side of the spectrum, being the worst-performing major oil stock this year, down 15% in 2024 alone, as its debt-to-equity ratio stands at a whopping 44.4%. .

Never since German reunification has energy demand been so weak

– Energy consumption in Germany this year will fall to its lowest level since the two Germanys reunited in 1990, although Europe’s top economy avoided a technical recession in the third quarter.

– Energy demand in Germany will fall again by 1.7% year-on-year to 2,904 TWh as production struggles to recover amid rising natural gas prices (up 25% in 2024) and then electricity.

– Since Germany closed its last nuclear power plant…

A major oil company has to take out loans to finance the buyback of its own shares.

– Major oil companies report lower profits in the third quarter. offering that the era of windfall earnings is coming to an end, with the top five companies averaging a 12% quarterly decline.

– ExxonMobil, Chevron, Shell, TotalEnergies and BP will collectively earn $24.4 billion in the third quarter, leaving all but Shell unable to cover their dividends and share buybacks with free cash flow.

– The need to borrow to cover buybacks is not necessarily an issue for the U.S. oil majors, which have debt-to-equity ratios well below historical averages: ExxonMobil and Chevron have ratios of 13.5% and 12.6%, respectively.

– BP, on the other hand, is on the other side of the spectrum, being the worst-performing major oil stock this year, down 15% in 2024 alone, as its debt-to-equity ratio stands at a whopping 44.4%. .

Never since German reunification has energy demand been so weak

– Energy consumption in Germany this year is expected to be drop to its lowest level since the reunification of the two Germanys in 1990, although Europe’s leading economy avoided a technical recession in the third quarter.

– Energy demand in Germany will fall again by 1.7% year-on-year to 2,904 TWh as production struggles to recover amid rising natural gas prices (up 25% in 2024) and then electricity.

– Since Germany closed its last nuclear power plant, coal has been the biggest laggard, with coal and lignite output falling 15% between January and September 2024, displaced by rising renewable energy production.

– Described by German Economy Minister Robert Habeck as a “ray of hope,” the German economy grew 0.2% in the third quarter, led by government and household spending, while inflation rebounded to 2.4%.

Clean energy development in the US is hampered by weak hydropower

– A scorching heat wave has gripped much of the western United States. brought U.S. hydroelectric power production hit a 23-year low this year, prompting grid operators to use record volumes of natural gas to balance system demands.

– Total US hydro generation in January-August was 171,046 GW, down 3% from last year, with most of the production capacity concentrated in just three Western states – California, Oregon and Washington.

– The share of hydropower has fallen to its lowest level this century, as it now accounts for only 5.2% of national electricity production, and droughts are being exacerbated by changes in water use patterns.

– While wind and solar energy continues to grow across the US, clean dispatchable energy, which is not intermittent and can be quickly limited, is declining.

The European gas market is nervous due to speculation about transit through Ukraine

– European natural gas prices have fluctuated spectacularly recently as traders assess the likelihood that Ukraine, Russia and the European Union will reach a new transit agreement that would include gas swaps from Azerbaijan.

– The European TTF futures contract has lost almost 10% this week amid intense speculation over a transit deal, with the December 24 contract now trading just above €39/MWh.

– At the same time, expectations for an improved supply-demand balance in 2025 are being pushed back even further due to delays in the implementation of the LNG project with TTF contracts in the summer of 2025. growing to a rare bonus for the winter of 2025-2026.

– Hedge funds benefited from European gas volatility, first increasing their net long positions to a record 268 TWh in early September and then sale it will be turned off in the coming weeks.

Europe unleashes bitter battle over electric vehicle markets

– Joining the Biden administration in imposing a 100% tariff on Chinese electric vehicles, the European Union raised tariffs on Chinese-made electric vehicles to 45.3%, citing government subsidies.

– As the cost of imported cars has risen, Chinese automakers have lost ground in Europe for the third month in a row, capturing just 8.5% of electric vehicle sales on the Old Continent.

– The decline in electric car sales in China fits perfectly with the EU’s introduction of temporary tariffs, with state-owned SAIC seeing the biggest drop in sales and its flagship MG brand down 42% compared to last year.

– All electric cars made in China will be subject to European tariffs, including those made by Western brands, which explains why Germany was one of the rare EU countries to vote against raising tariffs.

India aims to become new engine of gas demand growth

– With 8% annual economic growth and rapid population growth, India will become a new focus for natural gas markets as consumption of this fuel will double from 65 billion cubic meters. m last year to almost 115 billion cubic meters. m by 2040.

– India has sought to increase domestic gas production to cushion its import needs, having had some success with a 51% increase in production since 2020, bringing the national total to just shy of 37 billion cubic meters by 2025.

– The Indian government is ramping up production of urea for use as fertilizer, which will require significant volumes of natural gas, while Delhi’s ongoing push to become petrochemical feedstock self-sufficient will also increase the country’s gas needs.

– India, known for its aversion to long-term contracts, will nevertheless need to lock in LNG volumes soon if it does not want to miss out on benefits, and will also need to improve its power grid – poor infrastructure remains a key constraint at home as most terminals are located in the western regions.

Falling lithium prices cause Chinese producers to lose money

– China’s lithium industry is set to remain stubbornly unprofitable in 2024 as the country’s top producers reported third-quarter results and the world’s largest hard rock lithium producer Tianqi Lithium reported a net loss of $70 million.

– Lithium prices are now 88% cheaper than at the 2022 peak, with lithium carbonate selling for 72,000–74,000 yen per metric ton (just above $10,000 per ton), back to levels last seen at the beginning of 2021.

– Chinese lithium producers are hoping supply growth will slow in other regions, particularly in Australia, where regional producer Pilbara Minerals announced this week it would halt production at its level. Ngungaju website.

– In China itself, lithium producers have been the first to cut production because current lepidolite mining prices are above breakeven levels, and spodumene has not seen a massive production cut simply because its pricing mechanisms are based on formulas.