Oil
Optimism in Oil Markets as a New Year Begins
Oil markets started the year with a renewed sense of optimism, driven by stock draws in the U.S. and China’s attempts to stimulate its economy.
The gradual return of oil market participants from the New Year’s Eve holidays has been marked with tacit optimism as US stock draws tightened product availability just as cold snaps are threatening both Europe and the US. Meanwhile, China’s vows to be more proactive with stimulus measures have lifted the spirits of those who gave up on more robust policy coming from Beijing, even if temporarily, pushing ICE Brent futures closer to $76 per barrel.
Outgoing US President Joe Biden is reportedly preparing to issue a decree that would permanently ban offshore drilling in US coastal waters that are to be considered biodiversity-sensitive, under the 1953 Outer Continental Shelf Lands Act.
The Greater Tortue Ahmeyim liquefaction terminal offshore Senegal and Mauritania achieved first gas this week, with the BP(NYSE:BP) operated 2.7 mtpa project expected to load its first cargo at some point in the first quarter of this year.
Norway’s state oil firm Equinor (NYSE:EQNR) expects its 4.7 mtpa Hammerfest LNG export terminal to be shut down at least until January 9 following the failure of a key compressor this week, halting flows from the country’s only LNG facility.
China’s Ministry of Commerce proposed additional export restrictions on battery and critical mineral processing technologies, with a particular focus on lithium processing in a move that could also hinder the overseas expansion of CATL or Gotion.
Indonesian authorities have mandated a 40% mix of palm oil-based fuel in diesel sales starting January 1, but Jakarta has halted the nationwide rollout of the new biodiesel because there’s still no government regulation specifying the pace of its roll-out.
Nigeria will from now on require that applicants for exploration blocks show evidence of lowering carbon emissions and embracing renewable energy in line with the country’s 2060 net zero emissions target, with enforcements starting from January 1, 2025.
Sales of new energy vehicles from China’s largest EV carmaker BYD (SHE:002594) reached all-time highs in 2024, rising by 41% year-over-year to 4.304 million units and accounting for exactly one-third of the country’s total electric vehicle sales.
Spain’s oil major Repsol (BME:REP) has resumed oil exploration in Libya after a 10-year hiatus, drilling an exploration well in the Murzuq basin across the country’s southwest regions, following in the footsteps of ENI and BP that resumed drilling in 2024.
De Beers, the world’s largest producer and distributor of diamonds, has reportedly built up its largest stockpile of diamonds since the 2008 financial crisis, with 2024 annual sales down 20% on the back of weaker Chinese demand and lab-grown competition.
US President Joe Biden is set to block the sale of US Steel Corp. (NYSE:X) to Japan’s Nippon Steel, putting an end to a proposed $14.1 billion deal, derailed because the sale of a storied American company to a foreign competitor was deemed a national security risk.
Following the expiry of the 5-year gas transit contract between Russia and Ukraine, Russia’s gas giant Gazprom halted natural gas supplies through Ukraine, with the halt in pipeline supplies triggering an energy crisis in Moldova and the breakaway region of Transnistria.
Nickel prices hit their lowest level since 2020 with cash settlement quotes falling below $15,000 per metric tonne as the market still waits for Chinese stimulus measures to trickle into demand dynamics, with copper seeing similar negative pricing dynamics.
The Nymex ULSD futures contract rose to $2.36 per gallon this week, hitting a three-month high as forecasts indicate a series of Arctic cold snaps across the United States that should lift diesel and heating oil demand beyond seasonal patterns over the course of January.