ASX rallies; demand for crude oil is expected to rise; NSW Government approves ‘energy highway’

The ASX rallied on the back of energy stocks, gaining 0.21% or 14.40 points after yesterday’s bloodbath to climb to 6,843.00.

Most other sectors are still in the red, but energy gained 3.61% as a booming Chinese economy put pressure on oil and gas forecasts. Other sectors in the green were finance, up 1.12% and industrials, up 0.39%.

The best performers were unsurprisingly coal stocks, with Coronado Global Resources Inc – a metallurgical coal company – gaining 8.85% and New Hope Corporations Ltd – an oil, gas and agricultural company – up 6.01 %.

The index has been virtually unchanged for the past five days, but is down 8.07% year-to-date.

In the news

Crude oil demand is expected to rise

The International Energy Agency (IEA) raised its estimate of global oil demand growth for this year by 380,000 barrels per day, saying “the gains mask relative weakness in other sectors.”

The agency also revised its forecast for 2022 to 99.7 million barrels per day and its forecast for 2023 to 101.8 million barrels per day, indicating that prices could continue to rise next year.

“Natural gas and electricity prices hit new highs, prompting a switch from gas to oil in some countries,” the August oil market report said.

“With several regions experiencing searing heat waves, the latest data confirms an increase in oil consumption in power generation, particularly in Europe and the Middle East, but also across Asia.

“For now, the deteriorating economic environment and recurring COVID lockdowns in China continue to weigh on market sentiment.

“Nevertheless, global oil demand is expected to increase by 2 million barrels per day in 2022 and 2.1 million barrels per day next year. Jet fuel dominates growth, while demand for road transport declines.

The report cited global stockpiling as a reason prices could stabilize, but could not discount prices rising further due to a growing risk of supply disruptions.

EnergyConnect Riverina Transmission Line Approval

The New South Wales government has given planning approval for the eastern part of a 900 kilometer power transmission line to be built through the Riverina region in the south of the state, intended to connect South Australia, Victoria and New South Wales.

The energy shortages earlier this year highlighted a severe lack of energy infrastructure between states, as each state was forced to go it alone and negotiate separately with its energy markets – with more or less success.

Developer Transgrid claims the transmission line would be able to supply 8% of NSW’s electricity needs.

“We are building the energy highway,” said Transgrid CEO Brett Redman.

“The interconnector will for the first time enable power sharing between NSW and South Australia and Victoria, enable the integration of renewable energy generation and help the Federal Government meet its climate change goals. .”

A map of the proposed EnergyConnect transmission line between South Australia, Victoria and NSW.

The NSW portion of the transmission line would run from Wagga Wagga to Buronga and beyond if construction was approved by the Federal Government, but met resistance from local stakeholders.

Earlier this year, 42 objections to the project were lodged with the NSW Planning Department, prompting a successful re-imagining of the energy highway to avoid the Riverina Wetlands.

Map of the eastern section of the proposed transmission line (purple with blue usage dots) including Tier 1 (orange) and Tier 2 (red) constraints to development, which take into account social, environmental and environmental considerations. land use, network resilience and cost.

The project is expected to generate some 1,500 jobs in the NSW region and could be a vital part of the energy infrastructure needed to decarbonise Australia’s economy.

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