Wall Street predicted a big surge for oil this year. But prices are now lower
Oil prices were rattled by the collapse of several U.S. and European lenders earlier this spring, which discouraged volatility-adverse investors from historically riskier assets, such as commodities.
Bloomberg | Bloomberg | Getty Images
A surprise decision by several OPEC+ producers to voluntarily cut output earlier this month had pushed analyst oil price forecasts near $100 per barrel, but stagnating prices now point to a deepening divide between macroeconomic sentiment and supply-demand fundamentals.
Oil prices have once again lulled near the $80 per barrel threshold, nearly revisiting territory walked in early April, before members of the OPEC+ coalition announced a unilateral cut totaling 1.6 million barrels per day until the end of the year.
The production declines prompted some analysts to warn prices could surge to triple digits, with Goldman Sachs adjusting its Brent forecast up by $5 per barrel to $95 per barrel for December 2023.
Analysts now flag that broader financial turmoil has so far obstructed this bullish outlook, as supply-demand factors are outweighed by recessionary concerns.
“Oil markets have completely faded the boost from the surprise OPEC+ cut earlier this month, and we think this primarily reflects deep pessimism about the macro outlook, with little evidence of incremental weakness in demand so far,” Barclays analysts said in a Wednesday note.
“Weaker refining margins and freight demand have been in focus recently, but we believe markets might be reading too much into the implications of these trends for the demand outlook. We also think that markets might be underestimating OPEC+’s resolve to keep the inventory situation in check.”
“People really bet on a China reopening,” Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets, told CNBC’s “Squawk Box” on Wednesday.
Beijing, the world’s largest importer of crude oil, reined in its purchases last year amid drastic “zero-Covid” restrictions that depressed transport fuel requirements. China has been progressively lifting its pandemic measures since the end of last year, and local crude oil demand is returning — but at a more “muted” pace, Croft noted.
“And the issue of the Fed is real. I think that is something that a lot of us got wrong in terms of the impact of, you know, the rate hikes, recession concerns,” she added.
“We have these OPEC cuts in place, we do have, you know, again, strong demand in India, China is reopening — this should be set up for a bullish story. People are still optimistic about the back half of the year, but the question is, can you get through the big macro wall of worry?”
Viktor Katona, lead crude analyst at Kpler, told CNBC by e-mail that oil prices have suffered from a “constant barrage of gloomy macroeconomic news that creates a negative sentiment background,” as well as market distrust in the implementation of the OPEC+ production cuts. Market participants often wait for a visible reflection — such as lower export rates — to factor in production cuts, which can create a disconnect when vessel loadings arise from stock inventories.
But Katona projected price-supportive tightness in the physical markets over the summer season:
“We still see July and August as being the tightest months of 2023, with demand surpassing supply by some 2 million b/d (barrels per day), so the overall direction is still the same,” he said, noting that, globally, consumers will be exiting their annual refinery maintenance periods that curb their intake by that time.
“Net length in crude futures contracts has fully recovered from the banking panic seen in March and net length in WTI is the highest since November 2022, so the belief that prices are to increase is definitely widely shared by the market.”
But China’s long-anticipated reopening may prove too little, too late. One trade source — who could only comment on condition of anonymity because of contractual obligations — said the market is waiting for concrete signs of physical inventory draws. Another pointed to generally poor refining margins in Asia and a “poor demand cycle.” Another said that China’s reopening has been fully factored into the current pricing, and Beijing’s needs are simply being met by Russian oil. Moscow has rerouted 20% of the oil it supplied to Europe to other markets such as Asia, Russian Deputy Prime Minister Alexander Novak said Wednesday, in comments reported by Reuters.
Kpler data indicates that China’s imports of Russian crude oil averaged 1.59 million barrels per day in March, up 68% from the same period in 2022. Croft says that Chinese buyers have been “beneficiaries of sanctions policies,” as Moscow’s slashed prices also pushed other sanctioned sellers, such as Venezuela and Iran, to discount their crude.
OPEC+ weight
Oil prices were rattled by the collapse of several U.S. and European lenders earlier this spring, which discouraged volatility-adverse investors from historically riskier assets, such as commodities.
OPEC+ sources told CNBC at the time that these sentiment-driven fears would likely be temporary and pushed aside by supply-demand realities. The group convenes to discuss policy at a ministerial level for one of two annual meetings in June — when Croft flags that Gulf producers will likely set the agenda.
“When you think about Russia, Russia makes involuntary cuts. They basically rebrand the sanctions problem as a production cut. It’s really a question, I think, right now, about Saudi Arabia and the other Gulf producers, what they want to do. Again, Russia’s happy to have anything that raises prices, but they’re not in the driver’s seat.”
The weight of OPEC+ co-chair Russia within the group has been stifled by Western sanctions against its crude oil and oil product imports, in place since December and February, respectively.
As markets settle near $80 per barrel, Croft questioned what recourses still remain in the OPEC+ arsenal. “The question is right now, do they have more bullets to play, as we go into a June meeting?”
The latest cuts already spell a tight supply-demand balance that could hit households, the International Energy Agency warned in its latest monthly Oil Market Report.
“Our oil market balances were already set to tighten in the second half of 2023, with the potential for a substantial supply deficit to emerge. The latest cuts risk exacerbating those strains, pushing both crude and product prices higher. Consumers currently under siege from inflation will suffer even more from higher prices, especially in emerging and developing economies,” it said.
Biden’s bid
Historically a defender of curbing prices at the pump, the U.S. has repeatedly called on OPEC+ producers to lift supplies, waging a war of words with group Chair Saudi Arabia when the coalition instead opted for a 2 million barrels per day cut in October. The U.S.’ own shale production, “traditionally the most price-responsive source of more output, is currently limited by supply chain bottlenecks and higher costs,” the IEA warns.
Throughout Biden’s presidency, U.S. energy policy has been defined by a push toward climate awareness. Shortly after taking office, the head of state suspended new oil and natural gas leases on public lands and waters and kicked off a thorough review of existing permits for fossil fuel development. Biden has openly criticized the oil sector for raking in profit at the expense of consumers, in June last year claiming ExxonMobil “made more money than God.”
But crude oil supply shortages and soaring gasoline prices have pushed Biden — who on Tuesday announced his re-election campaign — to reconsider his tactic, Croft holds.
“You have President Biden coming into office, essentially saying, Keep the oil in the ground. And now when he is faced with higher retail gasoline prices, essentially they say to oil companies, no, put the money in the ground. So we have seen a significant pivot on oil policy from the Biden administration,” she said Wednesday.
“That said, the fully robust defense of the American oil and gas is usually on the Republican end of the House.”
Capable of delivering up to 1,200 kW of power to get electric commercial trucks back on the road in minutes, the new ABB MCS1200 Megawatt Charging System is part of an ecosystem of electric vehicle supply equipment (EVSE) that ABB’s bringing to this year’s ACT Expo.
ABB E-mobility is using the annual clean trucking conference to showcase the expansion of its EVSE portfolio with three all-new charger families: the field-upgradable A200/300 All-in-One chargers, the MCS1200 Megawatt Charging System for heavy-duty vehicles shown (above), and the ChargeDock Dispenser for flexible depot charging.
The company said its new product platform was built by applying a computer system-style domain separation to charger design, fundamentally improving subsystem development and creating a clear path forward for site and system expansion. In other words, ABB is selling a system with both future-proofing and enhanced dependability baked in.
“We have built a system by logically separating a charger into four distinct subsystems … each functioning as an independent subsystem,” explains Michael Halbherr, CEO of ABB E-mobility. “Unlike conventional chargers, where a user interface failure can disable the entire system, our architecture ensures charging continues even if the screen or payment system encounters issues. Moreover, we can improve each subsystem at its own pace without having to change the entire system.”
The parts of ABB’s new EVSE portfolio that have been made public so far have already been recognized for design excellence, with the A400 winning the iF Gold Award and both the A400 and C50 receiving Red Dot Design Awards.
New ABB chargers seem pretty, good
ABB says the systemic separation of its EVSE enhances both reliability and quality, while making deployed chargers easier to diagnose and repair, in less time. Each of the chargers’ subsystems can be tested, diagnosed, and replaced independently, allowing for quick on-site repairs and update cycles tailored to the speed of each systems’ innovation. The result is 99% uptime and a more future-proof product.
“The EV charging landscape is evolving beyond point products for specific use cases,” continued Halbherr. “By implementing this modular approach with the majority of our R&D focused on modular platforms rather than one-off products … it reduces supply chain risks, while accelerating development cycles and enabling deeper collaboration with critical suppliers.”
Key markets ABB is chasing
- PUBLIC CHARGING – with the award winning A400 being the optimal fit for high power charging from highway corridors to urban locations, the latest additions to the A-Series All-in-One chargers offer a field-upgradable architecture allowing operators to start with the A200 (200kW) with the option to upgrade to 300kW or 400kW as demand grows. This approach offers scalability and protects customer investment, leading to Total Cost of Ownership (TCO) savings over 10 years.
- PUBLIC TRANSIT AND FLEET – the new Charge Dock Dispenser – in combination with the already in market available HVC 360 – simplifies depot charging with a versatile solution that supports pantograph-, roof-, and pedestal charging options with up to 360kW of shared power and 150m/490 ft installation flexibility between cabinet and dispensers. The dispenser maintains up to 500A output.
- HEAVY TRUCKS – building the matching charging infrastructure for commercial vehicles and fleets represents a critical innovation frontier on our journey to electrify transportation. Following extensive collaboration with industry-leading truck OEMs, the MCS1200 Megawatt Charging System delivers up to 1,200kW of continuous power — 20% more energy transfer than 1MW systems — providing heavy-duty vehicles with purpose-built single-outlet design for the energy they need during mandatory driver breaks. To support other use cases, such as CCS truck charging, a dual CCS and MCS option will also be available.
- RETAIL – the award winning C50 Compact Charger complements the family as the slimmest charger in its category at just 9.3 inches depth, optimized for convenient charging during typical one-hour retail experiences. With its large touch display, the C50 takes the award-winning A400 experience even further — setting a new standard for consumer experience and very neatly echoing our own take on that “Goldilocks” timing zone for commercial charging.
ABB says that the result of its new approach are chargers that offer 99% plus uptime — a crucial statistic for commercial charging operations and a key factor to ensuring customer satisfaction. The new ABB E-mobility EVSE product family will be on display for the first time at the Advanced Clean Transportation Expo (ACT Expo) in Anaheim, California next week, then again at Power2Drive in Munich, Germany, from May 7-9.
Electrek’s Take
The ACT Expo is one of – if not the most important sustainable trucking event in North America, featuring all the big names in heavy trucks, construction equipment, material handling, infrastructure – even Tier 1 suppliers. Mostly, though, it’s many fleet buyers’ only chance to test drive these zero emission trucks before writing a big PO (which just makes it even more important).
Electrek will be there again this year, and we’ll be bringing you all the latest news from press events and product reveals as it happens.
SOURCE | IMAGES: ABB E-mobility.
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Along with Tennessee Tech, Tennessee-based ultralight aircraft company Whisper Aero has secured a $500,000 grant to help advance the company’s innovative electric jet motor concept off the drawing board and onto the testing phase.
Earlier this month, the Tennessee Department of Economic and Community Development (TNECD) announced plans to award $500,000 to Tennessee Tech and Whisper Aero through the Transportation Network Growth Opportunity (TNGO) initiative.
“We look forward to using these award dollars to place students in internships working directly with Whisper Aero leaders,” said Tennessee Tech President Phil Oldham. “By learning from an electric propulsion innovator like Whisper Aero, our students will gain invaluable perspective and can take what they have learned in the classroom and apply it right here in Tennessee.”
The grant will see a Whisper Aero glider fitted with a pair of the company’s eQ250 electric-powered jet “propulsors” for UltraQuiet flight. Tennessee Tech faculty and students will carry out copper-bird ground testing to ensure the safe integration of engines, batteries, and controllers, and kickstart Tennessee Tech’s new Crossville Mobility Incubator.
Those propulsors, by the way, are super cool.
Whisper Aero’s main claim to fame is its innovative UltraQuiet WhisperDrive (above). It’s effectively an electrically spun ducted fan jet engine that uses a large number of stiff composite fan blades inside a lightweight, acoustically treated duct. With so many blades, the Whisper Aero propulsor can push more air than a conventional prop while spinning much more slowly. As such, the “blade passage frequency” moves up to more than 16,000 Hz – outside the range of most human hearing but not, supposedly, high enough to freak out the beagles.
The Whisper Aero ultralight is effectively an Aériane Swift3 glider fitted with a pair of Whisper’s eQ250 propulsors, each capable of up to 80 lbs. of thrust. The Ultralight has a wingspan of over 40 ft with a maximum L/D of 35:1 and can be stressed to a design loading of +6/-4g, making it capable of some pretty impressive acrobatic feats.
The Swift3 glider is designed for a low speed, low power cruising speed of 45–55 knots with “just” 6.5 hp. Power-off glides from a few hundred feet showed a low sink rate, and a climb rate of 1,250 ft/min with full self-launching power (in other words: the Whisper glider doesn’t have to be towed by a launch vehicle, like a conventional ultralight glider).
Quiet cool
Range under full power is about 109 miles with current battery tech, but it’s expected that range under the latest EPiC 2.0 energy batteries would rise to nearly 170 miles.
Nathan Millecam, CEO of Electric Power System, said, “EPiC 2.0’s leap in energy density and thermal performance has enabled a significant increase in range, a clear validation of our next-gen cell technology. We are impressed by what the Whisper team continues to achieve in advancing electric aviation.”
The press release concludes explaining that flight tests are expected to show that the Whisper Aero glider can be flown, “a few hundred feet away from neighborhoods without any disturbances, while carrying a 220 lbs. payload with full range,” which is all kind of ominous in today’s political climate, but still pretty neat from a purely tech perspective.
The TNGO grant follows a separate grant from NASA awarded last year, though that grant aims to develop the eQ250s – not as a propulsion system, but as a key component in future spacecraft ventilation systems.
Tennessee Tech announces TNGO grant
With support from TNECD’s Transportation Network Growth Opportunity (TNGO) initiative, Tennessee Tech University and Whisper Aero are partnering to advance next-generation propulsion technology in the aerospace industry. This collaboration will enhance aerospace research and workforce development, ensuring Tennessee remains a leader in cutting-edge mobility solutions.
SOURCE | IMAGES: TNECD; via eVTOL Insights, New Atlas.
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A Tesla Cybertruck owner believed Elon Musk’s claims that the Cybertruck would be able to “act as a boat” and “cross rivers”, and he got his $100,000 stuck because of it.
Elon Musk has often made claims about how Tesla vehicles could float and briefly serve as a boat in the past.
We have never been taken too seriously because Tesla’s warranty states something different about taking the vehicle into water.
However, the CEO doubled down on the claim specifically for the Cybertruck.
Ahead of launching the production version of the Cybertruck, Musk claimed the vehicle would be “waterproof enough” to serve as a boat and cross rivers:
Cybertruck will be waterproof enough to serve briefly as a boat, so it can cross rivers, lakes and even seas that aren’t too choppy.
The CEO added that the goal is for a Cybertruck to be able to cross the water between SpaceX’s Starbase and South Padre Island in Texas, which is about 360 meters (1,100 feet).
We have been taking the Cybertruck more seriously with water because we learned that Tesla built a ‘wade mode’ for the truck to be able to go into the water. Tesla says the mode increases the ride height to the max and temporarily “pressurizes the battery pack.”
The problem is that it is activated through the off-roading mode, which is not covered under Tesla’s warranty – so we are taking everything with a grain of salt.
Whenever Tesla’s warranty contradicts what Musk says, it is better to follow to the warranty.
A Tesla Cybertruck owner in Truckee, California, appears not to have received this sage advice since they activated the wade mode and attempted to get into the water.
The Cybertruck owner quickly got stuck. The local California Highway Patrol (CHP) shared some pictures of the aftermath (via Facebook):
CHP Truckee helped with the recovery and commented on the incident:
Cybertruck activated “Wade Mode”… and waded a bit too far… We’re all for testing boundaries… but maybe not the waterline. Remember folks, “Wade Mode” isn’t “Submarine Mode.” If your plans include exploring the great outdoors, make sure to know your limits and the terrain.
There’s no detail on the damage to the Cybertruck, if any.
As we recently reported, repair costs for the stainless steel electric pickup truck can increase rapidly.
This Cybertruck owner is also not the first one to get stuck in water. We previously reported on a Tesla Cybertruck sinking into the water when launching a jet ski.
Electrek’s Take
At the risk of stating the obvious, this is clearly more of a user error than a Cybertruck problem.
I think the verdict is clear: Cybertruck is far from the best electric pickup truck for off-roading.
However, in general, you shouldn’t expect a truck to get out of water on a muddy bank.
I think a lot of Cybertruck owners are new to trucking and off-roading, and they are making the truck look worse than it is at off-roading.
If you want to take your Cybertruck off-road, I recommend to first go with an off-roading guide that can help avoid some simple mistakes like this.
Also, in general, don’t take Elon Musk’s claims at face value when he says that Tesla vehicles can do something that sounds like an exaggeration. It probably is an exaggeration.
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