2024.11.21

Oil Settles Down on Strong U.S. Supply, Losses Capped by Ukraine Escalation

Oil prices fell on Wednesday as U.S. crude and gasoline stocks rose more than expected, but losses were limited by escalating geopolitical risks. Brent crude settled at $72.81, down 0.68%, and WTI at $68.87 for December, down 0.75%. Data from the U.S. Energy Information Administration showed an unexpected increase in crude and gasoline inventories. Additionally, Norway's Johan Sverdrup oilfield restored full output capacity, boosting supply.

Meanwhile, weak demand from China continued, despite stimulus efforts. However, geopolitical tensions, especially the ongoing conflict between Russia and Ukraine and escalating concerns in the Middle East, helped provide support, as risks to oil supply persisted. The U.S. vetoed a U.N. Security Council resolution for a Gaza ceasefire, further adding to concerns over potential disruptions. OPEC+ may also delay output increases when it meets on Dec. 1 due to the weak global demand outlook.

[SLOW] Oil Market

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OPEC+ Likely to Extend Oil Output Cuts Amid Weak Demand, Deeper Cuts Unlikely

OPEC+ is expected to extend its current production cuts into 2024 as weak global demand and rising output from non-OPEC producers dampen prospects for increasing supply. The group, meeting on Dec. 1, faces internal pressures from members like the UAE and Iraq, seeking higher quotas, making deeper cuts unlikely.

• OPEC+ has already reduced output by 5.86 million barrels per day since 2022.

• Oil prices have remained in the $70-$80 range despite cuts.

• Falling market share and lessons from a failed 2014 price war make a new "price war" strategy improbable.

• Analysts suggest OPEC+ will maintain or slightly adjust cuts but avoid drastic moves to support prices sustainably.

[SLOW] EIA - OPEC Oil Supply Out Look

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Iraq's Fuel Oil Exports Head for Record Year After October Volumes Surge

Iraq's fuel oil exports are set for a record high in 2024, with October shipments reaching over 2.15 million metric tons, the highest monthly volume ever. Boosted by increased output, particularly from the Karbala refinery, exports are on track to exceed 18 million metric tons (380,000 bpd) this year. The rise in fuel oil exports supports Iraq’s oil revenues and helps ease high prices in Asia. With lower domestic demand and improved refining margins, Iraq has ramped up its exports, though future volumes may taper as winter stockpiling begins.

[SLOW] Trade Flow _ from Iraq to World Monthly Trade Flow 

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China’s Fuel Oil Imports Surge to Five-Month High in October

China’s October fuel oil imports rose to 2.06 million metric tons, up 3% month-on-month and 14% year-on-year, driven by lower crude prices and increased demand for refinery feedstocks. Exports fell 37% month-on-month due to reduced domestic supply and lower marine fuel quotas.

[SLOW] Trade Flow _ from World to China Monthly Trade Flow 

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Asia's Jet Fuel Imports from India Reach Multi-Year Highs in November

Asia’s jet fuel imports from India are set to hit 2.7 million barrels in November, a multi-year high and a 40% increase from October, driven by seasonal demand, refinery outages, and reduced exports from China. Most shipments are bound for Singapore, Hong Kong, and Malaysia.

• Indian refiners leveraged cheap Russian crude and shifted exports to Asia due to closed arbitrage to Europe.

• Tight regional supplies from Japan’s kerosene stockpiling and Malaysian refinery outages created opportunities.

• Sustainability in December depends on European demand and changes in Chinese export policies.

Weaker Indian domestic aviation fuel demand and strong arbitrage economics are shaping trade flows.

 [SLOW] Trade Flow - From India To Singapore / Hong Kong / Malaysia Monthly Trade Flow

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Nigeria’s Dangote Plant Buys US Oil for First Time in 3 Months

Nigeria’s Dangote refinery has purchased its first shipment of US crude in three months, securing around 2 million barrels of WTI Midland oil from Chevron. The cargo is set to be delivered next month to the refinery near Lagos. After a period of prioritizing local Nigerian crude under a deal paying in local currency, Dangote is again tapping into the US and European oil markets. This move intensifies competition for crude in these markets. The refinery is also expanding its influence by exporting gasoline beyond Nigeria, including a shipment to Togo earlier this month.