US Gas Prices: U.S. gasoline prices dropped below $3 per gallon for the first time since May 2021, with Oklahoma having the lowest average at $2.42 and Hawaii the highest at$4.48. Prices have been steadily falling since summer, aided by slowing fuel demand growth and increased global refining capacity. Gasoline affordability is at its lowest non-COVID level since 2015, with further declines of 10 to 15 cents possible by Christmas, according to GasBuddy. U.S. oil refining capacity has grown for two consecutive years, while major new refineries in Nigeria and Mexico have also bolstered global supply. The 2022 spike in gas prices caused by Russia's invasion of Ukraine has since eased, supporting broader consumer spending despite ongoing inflation in other sectors.
Drilling Leases Offered in Alaska: The Biden administration will hold an oil and gas drilling lease sale in Alaska's Arctic National Wildlife Refuge (ANWR) on January 9, 2024, offering 400,000 acres for auction as required by a 2017 law. ANWR, a 19-million-acre refuge home to species like polar bears and Porcupine caribou, includes a 1.6-million-acre coastal plain estimated to contain up to 11.8 billion barrels of recoverable oil. While Alaska’s officials support drilling to boost jobs and revenue, environmental groups warn it would harm a vital ecosystem. The Biden administration previously canceled leases sold under the Trump administration, citing environmental review flaws. The Bureau of Land Management has pledged to avoid areas critical for polar bear denning and caribou calving in the upcoming sale.
China Crude Imports: China's crude oil imports rose 14.3% year-on-year in November, marking the first annual growth in seven months, driven by lower Middle Eastern prices and stockpiling efforts. Daily imports averaged 11.81 million barrels, the highest since August 2023, but year-to-date imports remain 1.9% lower, signaling a potential decline for 2024. Increased imports from Saudi Arabia and Iraq offset reduced Iranian oil shipments amid security concerns, while the new Yulong Petrochemical refinery ramped up production and prepared for further expansion. China's state oil firms were directed to boost emergency stockpiles, supporting increased imports from Russia and the Middle East. Meanwhile, natural gas imports fell 1.4% year-on-year, and refined fuel exports, including gasoline, rose 3% as refiners rushed to capitalize on export tax rebates.
Market Overview: Oil prices slipped on Tuesday as concerns about regional instability eased following the overthrow of Syria's President Bashar al-Assad, despite support from China's plans for economic stimulus. U.S. West Texas Intermediate dropped 0.6% to $67.97 per barrel, reversing Monday's gains. Market sentiment improved as the risk of a broader Middle East conflict disrupting oil supply appeared low, despite Syria's strategic ties with Russia and Iran. Prices could rebound if the U.S. Federal Reserve cuts interest rates as expected, boosting demand, while China's shift toward a looser monetary policy in 2025 may further support global oil demand. China's crude imports also rose annually for the first time in seven months, though analysts noted the increase was driven more by stockpiling than consumption growth.
Vladimir Putin is unlikely to stop his war in Ukraine unless he is forced to do so, as his troops will continue advancing if Ukraine's defenses collapse. While Russia's war economy is resilient, it faces mounting pressure from inflation, high interest rates, and falling oil prices, which could force Putin to make difficult choices like raising taxes and cutting social spending. Despite the strain on ordinary Russians, public opinion does not seem to demand peace at any cost, and Putin faces no significant political opposition. Western support for Ukraine, combined with potential economic shocks like a drop in global oil prices, could push Putin to negotiate a ceasefire. However, as long as Russia maintains access to cash and imports military equipment from allies like Iran and China, it will likely continue its war effort.
Oil prices settled mostly unchanged today as markets focused on China's growing demand and potential European supply tightness ahead of winter. U.S. WTI crude rose to $68.97 following a 1% increase on Monday. Reports of China's plans for "appropriately loose" monetary policy and rising crude imports, driven more by stockpiling than demand, supported the price uptick. Speculation of tighter European supply prompted hedge fund buying, while Syria's ongoing political shift was seen as a low-risk factor for oil supply disruptions. Rebel efforts to restore Syria's oil sector were noted, though the country is not a major oil producer. Market sentiment could be further influenced by the U.S. Federal Reserve’s potential interest rate cut later this month, which might stimulate oil demand. Overall, oil prices are being shaped by global economic conditions, geopolitical developments, and investor sentiment.
API Stats
IndustryStats
Estimates
(million barrels)
(Reuters Poll)
CL: +0.499
Dist: +2.450
Mogas: +2.850
CL: -0.901
Dist: +1.373
Mogas: +1.664