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January 21, 2025
PRESENTED BY: EKT INTERACTIVE ENERGY TRAINING
Morning…
Doug Burgum and Chris Wright, Trump's picks for secretaries of interior and energy, were approved by the Senate yesterday. These were probably his least-controversial picks, so this wasn't really a surprise.
But the 'drill baby drill' team is in place.
Trump used his speech at the WEF (virtually) to try to talk down oil prices. He encouraged OPEC to pump more and asked Saudi Arabia to throw in $1 trillion to boot.
What's in this issue:
Energy Market Recap
Shadow Fleet
Headlines
| Crude Oil (Mar) | $74.62 | -0.82 | -1.09% |
| Natural Gas (Feb) | $3.945 | -0.015 | -0.38% |
| Copper (March) | $4.3285 | +0.0275 | +0.64% |
| S&P 500 | 6,118.71 | +32.34 | +0.53% |
| Dollar Index (DXY) | 107.863 | -0.10 | -0.01% |
ENERGY MARKETS
🛢️Oil prices continued their move lower ending down 1%. The gains from the sanctions announcement has almost been erased at this point.
The theme of decreasing crude and increasing gasoline inventories continued this week as the EIA reported a 1mm barrel draw in WTI. The Gulf Coast saw the bulk of the decline posting a draw of 2.2 mm barrels while Cushing drew 100,000.
WTI Spreads
Mar/Apr: +0.60
Mar/Dec: +4.84
Dec5/Dec6: +2.94
🔥Natural gas prices had rallied above $4 before selling off after the inventory report was released.
The EIA reported a draw in inventories of 223 bcf, a large draw by short of expectations around 251. Nat gas stocks are now below where they were last year at this time by 57 bcf and are sitting just 21 bcf above the 5-year average.
Source: EIA
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SHADOW FLEET
The sanctions imposed by the Biden administration on Jan 10 are biting, however the price action of crude tells us that a supply crunch is not imminent.
Although, in the cat-and-mouse game of chasing the shadow fleet of vessels moving Russia's crude around the world, it seems that the tactic of going after individual tankers has been a very effective twist.
Traders interviewed by Reuters point out both the skyrocketing cost as well as the pure reality of having less tankers available to move barrels.
"The cost of oil shipping from Kozmino port to China on Aframax tankers, which can carry some 100,000 metric tons, has jumped to $6.5 million-7.5 million from $1.5 million on average at the end of the last year,"
For a more in depth discussion on why this new round is working, I recommend this video by DW news:
The question is, how long until they figure out a workaround.
The CSIS points out that the game is afoot:
"Many or most of the sanctioned tankers—along with others—will be reassigned from transport duties to serve as floating storage—the practice of storing oil cargoes aboard ships at sea. This will buy time for various fraudulent oil laundering practices to be arranged"
HEADLINES
"In 2024, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments - offering tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects."
"The largest data centers operating now are less than 1 gigawatt, according to data provided by market intelligence firm DC Byte, which would make his several times larger than what’s on the market."
"Though it is still burning a lot of coal, China’s green energy shift looks, then, like a bet on the future, while the US is betting on the status quo."
ECONOMIC CALENDAR
MONDAY
TUESDAY
WEDNESDAY
THURSDAY - Weekly Crude Oil Storage Report, Weekly Natural Gas Storage Report, Jobless Claims
FRIDAY