Clean Fuel Tax Credit: The Biden administration will not finalize guidelines for new clean fuel tax credits aimed at the airline and biofuel industries before leaving office in January, delaying a key climate agenda initiative. The program, intended to boost sustainable aviation fuel (SAF) production to 3 billion gallons by 2030, was set to take effect on Jan. 1, but the lack of detailed guidance from the Treasury Department leaves it inactive. The Treasury stated it expects to issue guidance by Jan. 20 to enable credit access in 2025, but biofuel companies worry about the program's future under President-elect Donald Trump, who has vowed to repeal Biden's 2022 Inflation Reduction Act. Ethanol producers view SAF as a growth opportunity amid stagnant demand for ethanol as a gasoline additive. Policy debates between agriculture lobbyists and environmentalists over climate targets and unresolved elements like life cycle analysis are contributing to the delay. The biofuel industry is urging lawmakers to extend blender tax credits set to expire at year-end to mitigate the uncertainty.

India's Imports: India's crude oil imports rose 2.6% year-on-year to 19.07 million metric tons in November, driven by a 9.3% surge in demand to 20.43 million metric tons, its highest since May, due to robust economic and travel activity. However, imports fell 3.2% compared to October, while imports of crude oil products jumped 10.8% year-on-year, and exports of refined fuels dropped 5.5%. Middle Eastern oil imports reached a 9-month high, while Russia's share dropped to a three quarter low due to maintenance at Indian refineries and commitments to Middle Eastern contracts, while petrol exports in India increased by over 42%.

U.S. Crude Inventories: U.S. crude oil and fuel stockpiles are expected to have fallen last week, according to a preliminary Reuters poll of three analysts. The poll estimated a 2-million-barrel decrease in crude inventories for the week ending Dec. 20. Gasoline stockpiles were projected to have dropped by 2.7 million barrels, and distillate inventories, including diesel and heating oil, were expected to have decreased by 1.1 million barrels. The EIA's weekly report is delayed until Friday due to the Christmas holiday, following an earlier report from the American Petroleum Institute. In the prior week ending Dec. 13, crude inventories fell by 934,000 barrels to 421 million barrels, below analysts' expectations of a 1.6-million-barrel draw. Refinery utilization was estimated to have declined slightly, decreasing by 0.4 percentage point from 91.8% capacity.

Market Overview: Yesterday’s movements down bounced back as the markets are rising early today. Analysts expect oil prices to remain near current levels in the short term as market activity slows during the holiday season and participants await clarity on 2024 and 2025 global oil balances. They noted that recent supply and demand trends have supported a less bearish outlook, with potential supply disruptions posing risks of price spikes. Growing oil demand and shifting forecasts also signal tighter future markets. Energy futures are bullish this morning with crude up by $0.77 to $70.01, HO is up $0.0082 to $2.2345, and RBOB moving up at $0.0157 to $1.9540.

Crude oil production in the U.S. Lower 48 states reached a record 11.3 million barrels per day in November 2024, despite fewer active rigs in most major producing regions, showcasing gains in operational efficiency. The active rig count in the Lower 48 declined 18% from its January 2023 peak, with notable decreases in the Permian Basin and Eagle Ford regions, although the Bakken region saw an increase. Improved well productivity has enabled companies to lower production costs per barrel, as reflected in data from 34 publicly traded exploration and production companies. Technological advancements, such as artificial intelligence, electronic hydraulic fracturing, and automated drilling, have been instrumental in optimizing operations. These innovations have enhanced drilling and completion processes, minimized rig downtime, and provided advanced analytics for better planning. Despite a smaller rig count, producers have increased operational efficiency and output. This demonstrates the growing role of technology in sustaining oil production growth while reducing costs.

The energy sector saw minimal movement for the second straight day as Crude Oil prices rose on Tuesday, reversing earlier losses, as the short-term market outlook improved due to expectations of slightly tighter supplies and thinner holiday trading. U.S. inflation rose to 2.4%, below forecasts, while the energy market was also shaped by expectations of a crude oil surplus in 2025 and ongoing tensions overseas. Trading will pause on December 25th for the Christmas Holiday and resume as usual on December 26th. The release of EIA data is delayed until Friday. At the end of today crude oil was up $0.86 to $70.10 a barrel, HO down to $2.2215,and RBOB went up to $1.9589.