Good morning and welcome back!
At this moment in 1977, the incomparable Stevie Wonder was atop the Billboard album charts with "Songs in the Key of Life," so he's got today's intro tune...
Illustration: Rebecca Zisser/Axios
Apple's big reveal yesterday that China's economic slowdown will dampen revenues shows one reason why oil prices face headwinds despite OPEC's move to dial back production.
Why it matters: The tech giant's warning points to economic clouds that could also affect other sectors — including oil, which is already under pressure from rising U.S. supplies.
"The slowdown in China and turmoil in stock and currency markets appears to be making investors nervous, including in oil markets," Reuters notes.
Where it stands: China is the world's largest oil importer, and this report comes on the heels of data showing a slowdown in manufacturing.
But, but, but: Prices are rising this morning after declining in the pre-dawn hours. WTI crude is trading at around $47.33 and Brent moved up to $56 as we sent this newsletter.
The big question: One thing to watch is whether the OPEC efforts can overcome worries about the global economy.
“We really do need a sustained effort from some of the OPEC producers to take supply out of the market in order for prices to recover,” Jefferies analyst Jason Gammel tells Bloomberg. “Now we’re starting to see that."
Threat level: Another factor that could influence oil markets are signs that President Trump is picking up where he left off last year — pressuring OPEC to keep prices low, even though Saudi Arabia and other petro-states want higher returns.
Be smart: A note from the Rapidan Energy Group flags Trump’s penchant for verbal and Twitter remarks toward OPEC as something to watch in oil markets, alongside the possibility that he could back “NOPEC” legislation to go after the cartel using U.S. antitrust laws. The note states...
Trump’s shift in policy and rhetoric, from preventing oil price spikes to pursuing low pump prices (which he views as an extra ‘tax cut’), constitutes an important and related development that will induce OPEC+ producers to accept lower prices than they would otherwise prefer — closer to $60 average Brent than $70 or higher.
What's next: The Energy Information Administration (EIA) will release its latest data on domestic oil stockpiles late Friday morning.
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Speaking of oil, my Axios colleague Steve LeVine came this close to winning the annual #OilPriceBet among analysts and journalists. Read his account here.
I entered this year's bet, which will be settled on Dec. 31, but now I'm feeling queasy about being too bullish. You can see all the entries here.
Editor's note: This post has been updated to note that the EIA release will take place Friday morning, not Thursday morning.
A fascinating Financial Times story cites analysts who believe worldwide sales of internal combustion engine (ICEs) vehicles may have peaked forever in 2018.
Why it matters: In part because it uses the delightful term "peak ICE." But more importantly, it suggests an inflection point.
But going forward, even when the sales environment improves, electric vehicles that are now just a tiny fraction of the market are displacing enough ICE sales to prevent them from ever rising again.
The bottom line: Peak ICE, ICE — maybe.
What makes the present situation unique is that even if overall car sales pick up slightly in 2019 or 2020, electric cars are predicted to grow fast enough to shrink the portion of combustion engines sold.— Financial Times
Axios' Amy Harder writes that the prices people pay to power their homes vary widely depending on government policies and the type of power, per IEA.
The big picture: Western European nations are saddled with the highest electricity prices in the world due to high fees and taxes. Other countries, such as the U.S., are far lower — partly because of lower taxes.
Middle Eastern nations, which aren’t represented on this chart because most don’t have complete data with the IEA, have even lower prices because many of them subsidize electricity prices for their citizens
Interior: Ryan Zinke is now officially the former Interior secretary and David Bernhardt is running the show on an acting basis. Via the Washington Examiner...
Bernhardt, a former lobbyist who represented energy interests, showed up Wednesday at a White House Cabinet meeting after former Interior Secretary Ryan Zinke penned a farewell note in red marker that he posted on Twitter after officially stepping down.
Offshore drilling: The Beltway standoff over border funding is apparently affecting Interior plans to expand offshore oil and gas leasing into the Atlantic and Arctic oceans. S&P Global Platts reports...
The ongoing partial shutdown of the federal government has indefinitely delayed the Trump administration's release of a proposed plan for offshore oil and natural gas leasing sales from 2019 through 2024, industry sources familiar with the plans said Wednesday.
Congress: Last night, the Senate confirmed a suite of nominees, including...
A detailed new Wall Street Journal probe finds that thousands of oil wells in Texas and North Dakota shale basins are often producing less than energy companies have forecast — sometimes much less.
What they found: The WSJ compared company estimates to investors with third party analyses, and found that two-thirds of the industry projections made between 2014 and 2017 "appear to have been overly optimistic."
Why it matters: Shale basins have driven nearly all of the U.S. boom over the last decade that has sent overall domestic production far above previous records to roughly 11.5 millions barrels per day — and growing.
The bottom line: "[C]urrent production levels may be hard to sustain without greater spending because operators will have to drill more wells to meet growth targets," the story states.
Speaking of shale, this new commentary by the International Energy Agency has a cool graphic on their projections about the growth of tight oil, which originates from shale basins.
Why it matters: It's a helpful window onto the vast amount of industry activity that will be needed to sustain production growth from the behemoth resource, given the steep decline rates from completed wells.
By the numbers: "[I]n 2017, around 8,500 tight oil wells were completed in the United States and nearly 70% of these were needed simply to compensate for declines at existing wells," IEA notes.
The intrigue: The broader commentary explores the various reasons why the shale oil boom has been a largely U.S. story thus far, despite resources that could be tapped in other nations.
Illustration: Aïda Amer/Axios
Many experts say China could be first to deploy autonomous vehicles at scale — and one sign is how they've snagged the global lead in electric vehicles thanks to government policies and consumer attitudes, Axios' Joann Muller reports.
The big picture: Sales of EVs are growing quickly in China, where consumers are also open to innovations like car-sharing. By loosening regulatory guidelines and swinging open the door to autonomous vehicle testing, China is pulling away from other countries on disruptive new mobility initiatives, a recent study finds.
Details, from German consultancy Roland Berger, which tracks and scores countries on 26 indicators of auto industry disruption:
Why it matters: If China pursues AV technology as intently as it sought and achieved leadership in electrics, it could be first to see widespread adoption of AVs.