2024.11.22

Oil Prices Climb 2% Amid Escalating Russia-Ukraine Tensions and Supply Concerns

Oil prices surged nearly 2% on Thursday as escalating tensions between Russia and Ukraine stoked fears of supply disruptions. Russia launched hypersonic missile strikes, warning the West against military support for Ukraine, while Ukraine targeted sites within Russia using U.S. and British missiles. Brent crude rose by 1.95% to $74.23 per barrel, and WTI crude increased by 2% to $70.10.

Analysts are concerned about potential risks to Russian energy infrastructure and how Moscow might retaliate. As the world’s second-largest crude exporter, disruptions in Russian supply could significantly impact global markets.

Additional factors influencing the market include:

• U.S. crude inventories: A rise of 545,000 barrels exceeded expectations.

• China’s trade policies: Announced measures to boost trade, including support for energy imports.

• OPEC+ considerations: Discussions about delaying output increases due to weak demand.

Uncertainty persists as global economic activity faces headwinds from slower-than-expected interest rate cuts and geopolitical risks.

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U.S. Gasoline Imports Drop to Post-Pandemic Low Amid Domestic and Global Shifts

U.S. gasoline imports in October plunged to their lowest levels since April 2020, driven by declining shipments from Europe and Asia. Imports fell to 335,000 barrels per day (bpd), a 37% year-on-year drop, with Northeast U.S. imports from Europe hitting an all-time low of under 100,000 bpd.

Key factors include:

• Weak global demand: Economic slowdowns and rising adoption of electric vehicles are dampening gasoline consumption.

• Domestic production: High refinery output in the U.S. has increased local supply, reducing dependence on imports. Gulf Coast refiners have boosted waterborne and pipeline deliveries to the East Coast.

• European margins and maintenance: European refiners faced weak profit margins and seasonal maintenance, limiting exports to the U.S. Northeast. Margins could improve post-maintenance, potentially boosting shipments.

• Asian market strength: Regional refinery outages and robust demand from Vietnam, Malaysia, and Indonesia diverted Asian gasoline away from the U.S.

Despite current low imports, tighter U.S. gasoline stocks—6% below the five-year average—could encourage a rebound. However, global dynamics such as refinery outages, China's export policies, and seasonal festivities may shape supply and demand in the months ahead.

[SLOW] Trade Flow _ From World To United States Monthly (CPP/CHEM)

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China's November Crude Oil Imports Surge, Driven by Price Dynamics, Not Demand

China’s crude oil imports are set to rebound in November, reaching approximately 11.4 million barrels per day (bpd), the highest in three months and the third-highest month of 2024. However, the increase reflects opportunistic buying driven by earlier low prices, rather than a recovery in demand.

Key insights include:

• Price-driven imports: November's arrivals were purchased during September's price slump, with Brent crude dropping to a 33-month low of $68.68 per barrel. Chinese refiners often over-purchase when prices are favorable.

• Weak domestic demand: Refinery throughput remains subdued, and China’s economy continues to struggle for growth momentum.

• Stable crude prices: Current prices, fluctuating between $70 and $75 per barrel, may prompt refiners to maintain import levels aligned with immediate needs rather than stockpiling.

Potential Market Impacts:

1. Iran sanctions uncertainty: The anticipated hardline stance of U.S. President-elect Donald Trump on Iranian sanctions could reduce China’s imports of Iranian crude, forcing a shift to other Middle Eastern grades.

2. Regional price changes: A pivot to alternative Middle Eastern oil may drive up regional crude prices, evidenced by a narrowing Brent-Dubai premium, which has dropped to $1.44 per barrel from $2.98 in August.

China’s import trends underline the delicate balance between market prices and geopolitical factors shaping the global oil landscape.

[SLOW] Trade Flow_From World To China Monthly (CRUDE)

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Russian Gas Flows to EU via Ukraine Remain Stable Amid Austria Supply Dispute

Despite a contractual dispute with Austria's OMV, Russian natural gas flows to Europe through Ukraine have remained stable, according to Gazprom. On Thursday, Gazprom reported shipping 42.4 million cubic meters of gas, consistent with daily volumes since November 12.

Key developments:

• Austria supply halt: Gazprom ceased gas deliveries to OMV on Saturday due to a contractual issue. The destination of the redirected gas volumes remains unclear.

• Nominations data:

  • Gas nominations from Slovakia to Austria are stable but 12% lower than November levels before the supply halt.

  • Nominations into Slovakia from Ukraine and flows to the Czech Republic have shown no significant changes.

The stable flows underline the continued reliance on Ukraine as a transit route for Russian gas to the European Union, even amid geopolitical tensions and isolated supply disruptions.

[SLOW] Flow_Gas Pipe Line

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"US Sanctions Gazprombank to Squeeze Russian Gas Exports".

The US has sanctioned Gazprombank, a key Russian financial institution previously exempt from penalties due to its role in facilitating energy payments from Europe. The move aims to cut off Russian oil and gas profits, tightening sanctions on Russia amidst the Ukraine war. Although the bank has helped Europe pay for Russian gas, the US sanctions increase the risk of disruptions to gas flows, especially for Central European countries like Hungary and Slovakia. The sanctions also coincide with Europe’s efforts to reduce reliance on Russian energy, including increasing US LNG imports. Gazprombank’s role in processing payments for Russian gas exports may cause further disruptions, raising the risk of higher prices and potential supply cuts as Europe prepares for winter.

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Greek Owner Marios Gialozoglou Profits from Product Tanker Sales Amid Muted Market

Greek shipowner Marios Gialozoglou, through IMS, has turned significant profits in a subdued tanker sale-and-purchase market, capitalizing on the sustained demand for clean carrier-sized vessels.

Key Sales:

1. MR2 Bruno (46,000-dwt, built 2004):

   • Sold for $17.5 million to China's Haona International Group, renamed Seaway.

   • Originally purchased in 2018 for $9.9 million from Transpetrol Maritime, yielding a substantial profit.

2. Butterfly (46,000-dwt, built 2004):

   • Sold in October for $18 million to Shanghai Wanhe Marine Shipping, renamed Starway.

   • Acquired in 2017 for $11.2 million, showcasing a strong return on investment.

3. Sunflyte (37,000-dwt, built 2001):

   • Sold for $11.5 million to an undisclosed buyer, aligning with valuation estimates.

   • Previously purchased for $12.4 million in 2022 by Flyte Logistics from UAE's Tehama Shipping, which had acquired it for $4.55 million earlier that year.

Fleet Overview:Gialozoglou’s IMS controls 28 vessels, predominantly tankers, and continues to leverage market opportunities, even amidst lukewarm trading conditions.

This trend reflects the resilience and profitability of clean carrier sizes in a market constrained by muted activity but buoyed by steady valuation growth.

 [SLOW] Flow