Science & Environment
A ‘tidal wave’ of LNG supply will reshape global markets, says RBC Capital
Liquefied natural gas (LNG) storage units.
Dan Kitwood | Getty Images News | Getty Images
The biggest influx of liquified natural gas (LNG) supply is coming online and it will transform the global market, bringing about wide and enduring effects, said RBC Capital Markets.
“A wave of new LNG supply —the biggest yet— is set to reshape the global market in the coming years, with broader implications than prior growth given increasing inter-linkages between regional gas markets following the Russia-Ukraine conflict,” analysts from the investment bank wrote in a note.
The supply injection is likely to thrust the market into an extended period of oversupply by the end of 2026, which will remain until 2030, with prices possibly moving below double-digits, analysts such as RBC’s Anan Dhanani have projected.
Futures for the Dutch Title Transfer Facility (TTF) hub, a European benchmark for natural gas transactions, were trading at $12.78 per mmbtu on Wednesday on the New York Mercantile Exchange.
Throughout the year, a growing chorus of analysts have warned that tepid demand growth coupled with looming waves of export capacity could lead to a massively oversupplied market. As a stream of planned infrastructure continues to flood the market, it’s unclear if demand will increase to absorb each wave.
Oversupply and depressed prices underscore the bearish sentiments in the LNG sector, said Rystad Energy senior analyst Masanori Odaka. Suppliers are now increasingly prioritizing LNG used for shipping utilization over arbitrage opportunities, i.e. profit margins.
Commodity arbitrage involves the simultaneous or sequential buying and selling of commodities across different markets to profit from the price difference.
Global LNG trade has doubled in the last decade, growing from around 240 metric ton in 2014 to more than 400 metric ton last year, largely caused by the disruption of Russian pipeline gas to Europe, according to RBC Capital. Some had perceived the geopolitical risk as an opportunity in the market.
The investment bank projected that global liquefaction capacity, the total amount of LNG that can be produced annually, will grow by around 50% by the end of the decade. The U.S. and Qatar will hold onto their position as the world’s biggest suppliers, with a combined market share of almost 50% in 2030, RBC added.
Many private companies and state-owned entities have plans to boost capacity, “not only to backstop European consumption but to also capture an expected growth in consumption rates, particularly in Asia,” RBC’s analysts said.
But demand from the Asia-Pacific region, the biggest importer of LNG, is only expected grow by an average of 5% annually. Around 70% of this growth will stem from China, India and South Korea.
Meanwhile, LNG prices have not seen major fluctuations despite escalating geopolitical tensions. “Surprisingly quiet” was how Meg O’Neill, managing director and CEO of Woodside Energy, described the market.
“For me, maybe that’s a sign that there’s sufficient supply sources around the world to help mitigate any temporary supply disruption coming out of the Middle East. And that’s probably true for both oil and LNG,” O’Neill told CNBC on the sidelines of the annual Singapore International Energy Week conference.
There are other looming challenges to the LNG sector that could affect global markets. The 2024-25 Northern Hemisphere winter is in sight and existing contracts of Russian gas deliveries to Europe through Ukraine are set to expire at the end of 2024, the International Energy Agency pointed out.
“This could mean an end to all piped gas deliveries to Europe from Russia through Ukraine,” the IEA wrote in a recent note. “This in turn would require higher LNG imports into Europe next year, resulting in a tighter global gas balance.”
From 21 October until 1 November, delegates are meeting in Cali, Colombia to take stock of national pledges to protect nature, amid concerns countries are back-sliding on their promises.
Recent analysis suggests, external most countries are set to miss the deadline to submit new national action plans for preserving nature.
Key issues include the scale of ambition in meeting specific targets, finance for biodiversity projects in poorer countries and making sure profits from genetic resources are shared fairly.
Colombian environment minister, Susana Muhamad, who is overseeing the meeting, has set the theme, ‘Peace with Nature’, a call to rethink our relationship with the natural world.
Several presidents are expected to attend, including Brazil’s Luiz Inacio Lula da Silva and Mexico’s incoming president, Claudia Sheinbaum.
The Phillips 66 Carson refinery is shown after the company said it will shut its large Los Angeles-area oil refinery late next year, delivering a blow to California’s fuel supply, in Carson, California, U.S., October 17, 2024.
Mike Blake | Reuters
U.S. crude oil futures extended gains on Tuesday, after rising nearly 2% in the previous session.
Oil prices have bounced back somewhat after selling off steeply last week. Traders increasingly view a supply disruption in the Middle East due to Israel-Iran tensions as unlikely.
Weak demand in China has also weighed on prices recently. Beijing cuts its benchmark lending rates on Monday, lending some support to the futures market.
Here are Tuesday’s energy prices:
- West Texas Intermediate November contract: $71.22 per barrel, up 66 cents, or 0.94%. Year to date, U.S. crude oil has fallen slightly.
- Brent December contract: $74.85 per barrel, up 56 cents, or 0.75%. Year to date, the global benchmark has declined nearly 3%.
- RBOB Gasoline November contract: $2.0342 per gallon, up 0.97%. Year to date, gasoline has pulled back about 3%.
- Natural Gas November contract: $2.318 per thousand cubic feet, up 0.26%. Year to date, gas has fallen nearly 8%.
Science & Environment
Solving Stephen Hawking’s black hole information paradox has raised new mysteries
In March 1974, Stephen Hawking published the paper that made his name. It contained the revelation that black holes – gravitational giants from which nothing, not even light, can escape – don’t grow and grow until the end of time, but instead slowly shrink as they release particles in a phenomenon now called Hawking radiation.
The implications were mystifying. Hawking’s calculations showed that the radiation should be random, offering no way to predict what types of particles will emerge. The problem was that anything that falls into a black hole contains information – what sorts of particles it is made of, their configurations, their quantum states – and if what comes back out is random, that information is lost forever as soon as the object is sucked in. But physics operates on the idea that, if we know all the information about a system, we can reconstruct its past and predict its future.
Can black holes really do the impossible, destroying anything and everything they pull in? That prospect is called the black hole information paradox. It has occupied physicists for decades, not only because it highlights the profound disconnect between general relativity, Albert Einstein’s theory of gravity, and quantum theory – but also because it offers the hope of a reconciliation.
Now, 50 years after its inception, the paradox is all but solved. And yet physicists aren’t celebrating as you might expect because their solution hasn’t resulted in a long-sought quantum theory of gravity. In many ways, it has only deepened the mystery of what happens inside black…
Chris Larsen, the co-founder and chairman of Ripple, contributed nearly $9.9 million to Future Forward in September, in addition to more than $800,000 to the Harris Victory Fund, according to FEC data compiled by Breadcrumbs crypto market and blockchain analyst James Delmore and independently verified by CNBC.
Including Larsen’s August contribution of $1 million worth of XRP tokens, the billionaire has given more than $11.8 million to PACs supporting the Harris campaign, making him one of the crypto industry’s largest individual donors this cycle.
Larsen, who’s backed candidates across the aisle the last few years, told CNBC in an interview that his comfort level with Harris comes from conversations he’s had with people inside the campaign and what he’s seen from the vice president since she replaced President Biden at the top of the ticket in July.
It helps that Harris is from the Bay Area.
“She knows people who have grown up in the innovation economy her whole life,” Larsen previously told CNBC. “So I think she gets it at a fundamental level, in a way that I think the Biden folks were just not paying attention to, or maybe just didn’t make the connection between empowering workers and making sure you have American champions dominating their industries.”
Larsen’s affection for the Democratic nominee isn’t new. In February, he gave the maximum personal contribution of $6,600 to Harris (which would cover the primary and general election), about five months before she became the Democratic presidential nominee, FEC filings show. At the same time, he contributed $100,000 to the Harris Action Fund PAC.
Larsen, 64, has a net worth of $3.1 billion, according to Forbes, primarily from his ownership of XRP and involvement in Ripple, which provides blockchain technology for financial services companies.
He’s part of an industry that’s become suddenly prominent in political fundraising, though more heavily in support of Republicans. Nearly half of all the corporate money flowing into the election has come from the crypto industry, according to a recent report from the nonprofit watchdog group Public Citizen.
The Trump PAC has raised about $7.5 million crypto donations since early June.
Fairshake, which is one of the top spending PACs this year, is targeting close House races. The committee gave out nearly $29 million in September.
Of that sum, $20 million went to two affiliated PACs — $15 million to the Defend American Jobs PAC, a single-issue committee focused on cryptocurrency and blockchain policy that’s favored Republicans, and $5 million to Protect Progress, which has only supported Democrats.
The remaining $8.8 million spent by Fairshake last month mostly went to House races in New York, Nevada and California, according to FEC data compiled by crypto market and blockchain analyst James Delmore and verified by CNBC.
Several of those races are considered toss-ups by the Cook Political Report. Among the recipients were Southern California Republicans David G. Valadao and Michael Garcia, who are in tight contests to keep their seats. They’ve received $1.3 million and $1 million, respectively.
For the 2024 cycle, political donations from or supporting the crypto industry reached around $190 million and so far, crypto groups have spent over $130 million of that cash in congressional races for this year’s election, including the primaries.
A mathematical pattern links the major equations of physics
Andresr/Getty Images
A strange pattern running through the equations of physics may reveal something fundamental about the universe or could be a sign that human brains are biased to ignore more complex explanations of reality – or both.
This insight comes from a physicist’s version of Zipf’s law, an observation by linguists that the most common word in a language appears twice as often as the second most common word, three times as often as the third, and so on. In…
U.S. crude oil futures jumped more than 2% on Monday, reclaiming some of the losses from last week’s steep sell-off.
The U.S. benchmark finished last week more than 8% lower as traders increasingly believe Israel-Iran tensions will not lead to an oil supply disruption in the Middle East.
Prices rose Monday after China cut its benchmark lending rate. Saudi Aramco CEO Amin Nasser said he remains “fairly bullish” on demand in the world’s second largest economy.
Here are Monday’s energy prices:
- West Texas Intermediate November contract: $70.82 per barrel, up $1.60, or more than 2%. Year to date, U.S. crude is oil has fallen about 1%.
- Brent December contract: $74.50 per barrel, up $1.44, or 2%. Year to date, the global benchmark has declined more than 3%.
- RBOB Gasoline October contract: $2.043 per gallon, up 2.1%. Year to date, gasoline has pulled back nearly 3%.
- Natural Gas October contract: $2.326 per thousand cubic feet, up 3%. Year to date, gas has tumbled more than 7%,
The oil market has shifted focus back to supply and demand fundamentals, with consumption in China softening as supplies are expected to rise.
Morgan Stanley is forecasting a surplus of 1.3 million barrels per day in 2025 as demand in China softens, OPEC plans to bring barrels back to the market in December, and the U.S. continues to produce crude at a strong clip.
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