2024.12.23

"Oil Prices Steady Amid Rate Cut Hopes, Chinese Demand Concerns"

Oil prices remained stable on Friday as markets balanced expectations of U.S. Federal Reserve rate cuts with concerns over Chinese demand. Brent crude closed at $72.94 per barrel, and WTI crude settled at $69.46 per barrel, both down 2.5% for the week. The U.S. dollar showed strength, gaining for the third consecutive week, but cooling inflation and Fed policy supported optimism for rate cuts, potentially boosting oil demand.

China's Sinopec forecasted a peak in the country's crude imports by 2025 and overall oil consumption by 2027 due to declining demand for diesel and gasoline. Meanwhile, OPEC+ emphasized the need for supply discipline as it lowered its 2024 global oil demand growth forecast for the fifth consecutive month. JPMorgan predicted a shift from market balance in 2024 to a surplus in 2025 due to rising non-OPEC+ production.

Additionally, U.S. President-elect Donald Trump warned the EU of tariffs if it does not increase oil and gas imports from the U.S. The G7 is considering stricter measures on Russian oil price caps, while money managers increased their long positions in U.S. crude futures, reflecting market uncertainty.

------------------------------------------------------------------------------------------------

"US Drillers Maintain Rig Count as Oil and Gas Markets Stabilize"

U.S. energy firms held the oil and natural gas rig count steady for the second consecutive week, according to sources. The total rig count stood at 589, 5% lower than the same time last year. Oil rigs rose by one to 483, marking the highest count since September, while natural gas rigs decreased by one to 102.

The rig count has declined by 20% in 2023, reflecting lower oil and gas prices, inflation-driven costs, and a shift in company focus toward debt reduction and shareholder returns. Despite this, U.S. crude output is projected to grow from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024, according to the EIA.

On the gas side, reduced drilling activity, driven by historically low spot prices earlier this year, is expected to cause a decline in U.S. natural gas production to 103.2 billion cubic feet per day (bcfd) in 2024, down from 2023’s record high of 103.8 bcfd. Independent producers plan to maintain steady spending in 2024 after significant increases in previous years.

------------------------------------------------------------------------------------------------

"Technical Glitch Halts Oil via Russia’s Druzhba Pipeline to Europe"

Oil flows through Russia's Druzhba pipeline to Hungary, Slovakia, the Czech Republic, and Germany have stopped due to technical issues at a pumping station in Russia. The disruption, affecting 300,000 bpd, may last days or weeks, with Belarus relying on reserves to maintain refinery operations. Hungary and the Czech Republic report no immediate supply concerns. Russian operator Transneft has yet to comment.

------------------------------------------------------------------------------------------------

"Volatility Persists in Tanker Rates as VLCCs and Aframaxes Eye Gains"

Crude tanker rates showed mixed results this week, with some optimism for VLCCs and aframaxes to close out 2024 on a positive note. sources reported VLCC fleet-weighted averages at $24,300 per day, up 3% weekly but down 44.1% from last month. Suezmax rates fell 6.2% week-on-week to $32,700 per day, while aframaxes averaged $35,700 per day, showing a 29% increase month-on-month.

sources noted VLCC rates have been flat, but owners might push for higher rates during the holiday season, aiming for Worldscale 40s. Aframax rates remain steady, with suezmax tonnage influencing their trajectory. Suezmax markets are considered buyer-friendly, with limited upward pressure on January bookings, especially in routes like Black Sea to the Mediterranean and West Africa. The tanker sector faces a challenging close to the year, with hopes for better momentum in 2025.

------------------------------------------------------------------------------------------------

"VLCCs Return to Algerian Oil Market After Four-Year Absence"

VLCCs have resumed operations in Algeria’s crude export market after a four-year gap, with three tankers loading barrels in 2024. The most recent, the 300,000-dwt Maran Mira (built 2020) from Angelicoussis Group, carried nearly 2 million barrels of Saharan Blend crude to South Korea.

This marks South Korea's second VLCC cargo of Algerian crude this year, following a previous full load and a partial shipment by DHT Holdings' DHT Europe in October. The resurgence in VLCC activity provides some relief to tanker owners facing weak rates, with Baltic Exchange assessments for Middle East Gulf to Asia routes down 50% month-on-month.

Algeria's crude exports remain stable, averaging 482,714 barrels per day in December 2023, close to the country’s four-decade average of 479,805 bpd.

------------------------------------------------------------------------------------------------

"Glencore Acquires Middle East Aframax Cargoes for Pulau Bukom Refinery Operations"

Commodities giant Glencore has secured multiple aframax-sized crude cargoes from the Middle East to supply its newly acquired Pulau Bukom refinery in Singapore. Trading sources reported purchases of at least four 500,000-barrel shipments, including Qatar’s Al-Shaheen and Abu Dhabi’s Upper Zakum crude for February loadings.

The Pulau Bukom plant, previously owned by Shell, includes a 237,000 barrels-per-day crude distillate unit. This marks a strategic move by Glencore to solidify its role in oil markets, following the hiring of former BP trader Aditya Ravavarapu to lead its Asia oil trading team.

The trend of commodities traders acquiring refineries mirrors moves by Trafigura and Vitol, allowing them to secure crude supplies and ensure consistent demand. Aframax rates have risen 31% over the past month to $35,400 per day, reflecting increased market activity.

------------------------------------------------------------------------------------------------