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Aug 11 - By Liz Hampton

U.S. energy markets editor

Hello Power Up readers! Oil prices are up slightly to kick off the week as investors eye talks between the U.S. and Russia later this week over the war in Ukraine. U.S. President Donald Trump and Russian President Vladimir Putin are set to meet in Alaska on Friday following increased pressure from the U.S. and others to end the conflict. Global benchmark Brent futures were trading at $66.73 a barrel, up 14 cents, while U.S. West Texas Intermediate futures were trading at $64.03 a barrel, up 15 cents. The contracts had shed more than 4% last week. U.S. Henry Hub natural gas futures were at $2.955 per million British thermal units, off a little more than 1%.

ALASKA TALKS TAKE CENTER STAGE

And a critical look at clean jet fuel

The market appears in a holding pattern to start the week, as investors await the outcome of a meeting in Alaska between Trump and Putin on Friday to discuss ending the war with Ukraine. Trump had set a deadline of last Friday for Russia to agree to peace or have buyers of its oil face secondary sanctions.

Pressure has been mounting on Russia, with Washington pushing India - the biggest buyer of the country's oil - to reduce its purchases of Russian oil. Indian refiner Reliance Industries is likely to shift its imports back to traditional Middle Eastern crude sources following growing pressure from the U.S., Nidhi Verma reported last week.

Meanwhile, Canada on Friday said it would join allies in lowering the price cap for Russian oil.

The country said it would lower the price cap for seaborne Russia-origin crude to $47.60 a barrel, from $60 a barrel previously, bringing it in line with the European Union and Britain.

Oil prices had declined last week on expectations of a supply disruption.

In other news, we have an excellent deep dive in failures hobbling the sustainable jet fuel industry. While major airlines have touted sustainable aviation fuel (SAF) as a pathway to cut emissions and build cleaner operations, the projects needed to build the industry are faltering.

While airlines have announced some 165 SAF projects in the past 12 years, only 36 have materialized, a Reuters analysis found. Of those that remain, 23 have been abandoned, 27 are delayed or on indefinite hold, and 31 have yet to produce fuel. Four are credit deals, where no physical fuel is delivered.

SAF costs three to five times more to make than traditional jet fuel. Aviation accounts for 2.5% of global planet-warming emissions, and that figure is expected to rise as air traffic doubles from 2019 levels by 2050.

The industry's struggles could spell trouble not just for the environment, but airlines as well. Under new EU rules, for example, sustainable fuel must account for 2% of flights this year, rising to 6% by 2030 and 70% by 2050.

The International Air Transport Association estimates it will account for 0.7% of fuel use this year, up from 0.3% last year.

ESSENTIAL READING

U.S. oil and gas companies cut the number of drilling rigs operating for a third week in a row last week, oilfield services firm Baker Hughes said on Friday. The rig count fell by one to 539. In the Permian, the rig count declined by three to 256. Reuters reporter Georgina McCartney has a nice analysis on whether the rig count is soon approaching a tipping point where efficiency gains unlocked in recent years will no longer be able to keep supporting production growth.

Norway is preparing for its first major oil and gas licensing round since 2021, its energy minister said on Friday. The country had agreed to a four-year moratorium on frontier exploration, and limited awards of new acreage to areas in existing fields. Norway pumps around 4 million barrels of oil equivalent per day.

A competing bid has emerged in the federal court auctioning shares of refiner Citgo's parent, Marianna Parraga reports. The "unsolicited bid" follows a $7.4 billion bid by a group led by a subsidiary of Canadian miner Gold Reserve, which was recommended last month but has not yet been approved by a judge following objections from some creditors and competitors.

Argentina's state oil firm YPF on Friday said it will invest some $400 million in a new joint venture to produce and sell sustainable aviation fuel (SAF). The new venture will be called Santa Fe Bio and will operate out of its San Lorenzo refinery.

An Exxon Mobil-led consortium has started producing hydrocarbons at its fourth floating production, storage and offloading vessel at the Stabroek Block in Guyana, the group said on Friday. This brings total capacity from the oilfield to over 900,000 barrels of oil per day, roughly half of the 1.7 million barrels of oil equivalent per day it is targeting by 2030.

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(Editing by Marguerita Choy)

((liz.hampton@thomsonreuters.com))