Russian Tankers: Spilled oil has affected tens of kilometers of the Russian Black Sea coast following a weekend storm that damaged two tankers, with a third vessel also in distress. The first tanker, the Volgoneft 212, split in half in the Kerch Strait, and the second, the Volgoneft 239, ran aground near the port of Taman. These ships, both over 50 years old, were carrying around 9,200 metric tons of oil products, sparking fears of a significant environmental disaster. The spilled oil has washed ashore between the towns of Temryuk and Anapa, leading to a state of emergency in several nearby settlements. Authorities are concerned about the environmental impact on marine life, particularly in the Kerch Strait, a key migration area for dolphins and sea mammals. Additionally, the disaster has raised concerns over the safety of older tankers in busy shipping routes, which could contribute to further accidents and pollution.

P66: Phillips 66 announced it would sell its 25% stake in the Gulf Coast Express pipeline in Texas to an affiliate of ArcLight Capital Partners for $865 million, helping the company surpass its $3 billion asset sale target. Despite a decline in refining profits, Phillips 66 has focused on reducing costs while maintaining stable investor payouts. Prior to this sale, the company had raised $2.7 billion by selling fuel terminals, pipelines, and a stake in a Swiss retail joint venture. CEO Mark Lashier stated that the company will continue to optimize its portfolio by divesting non-core assets. Phillips 66 also forecast a reduction in its refining segment expenditure to $822 million in 2025, down from $1.07 billion in 2024. The company expects overall expenditures to decrease slightly to $2.1 billion next year, compared to the $2.2 billion initially projected for 2024. U.S. refining margins are projected to stabilize next year, supported by increased industrial demand and refinery closures, including the shutdown of Phillips 66's Los Angeles area plant, according to data from the Energy Information Administration.

Ukraine: Ukrainian Prime Minister Denys Shmyhal announced that the gas transit agreement with Russia will not be extended beyond January 1, 2025. He emphasized that Ukraine is open to discussing the transit of non-Russian gas if the European Commission officially requests it. Shmyhal clarified that Ukraine's agreement with Russia would not be renewed, highlighting efforts over the past year to ensure sufficient energy supplies for the EU. Slovakia, along with other countries reliant on Russian gas via Ukraine, is in discussions to avoid disruptions once the current agreement expires. Slovakia has expressed a desire to maintain Russian gas flows, as its long-term contract with Gazprom expires, and it aims to secure supplies at reasonable rates. Meanwhile, Moldova and other EU nations are exploring alternative routes and sources, including potential gas deliveries from Azerbaijan through Ukraine.

Market Overview: Oil prices fell on Tuesday due to concerns over Chinese economic data and investor caution ahead of the U.S. Federal Reserve's interest rate decision. Profit-taking after last week's 6% rally and weak consumer spending data from China contributed to the price decline. Despite strong industrial output in China, consumer spending data surprised to the downside, impacting oil prices. Investors were also in a holding pattern ahead of the Fed's policy meeting, where a quarter-point rate cut is expected. The meeting will provide insights into the Fed's future rate cuts and its response to potential higher inflation under the incoming Trump administration.

In the second quarter of 2024, 34 publicly traded U.S. oil exploration and production (E&P) companies reported improved well productivity, which has helped reduce production costs per barrel and freed up cash for dividends and share repurchases. U.S. crude oil production has averaged a record high of 13.1 million barrels per day in 2024, positioning the country to remain the top global oil producer for the seventh consecutive year. Advances in horizontal drilling and hydraulic fracturing technologies have boosted well productivity, allowing more oil to be extracted from both new and legacy wells. In the Permian region, output from new wells has steadily increased despite a decline in the number of active drilling rigs. Although publicly traded E&P companies were slower to return to pre-pandemic production levels compared to private companies, they have focused on increasing shareholder returns and managing costs while boosting production over the past two years.

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Brent futures fell by 1.0% to $73.19 a barrel, while U.S. West Texas Intermediate crude dropped by 0.9% to $70.08, marking the lowest close for Brent since December 10. This narrowed the Brent-WTI premium to a 12-week low of $3.54 per barrel, making it less economically viable for energy firms to export U.S. crude. In China, industrial output growth accelerated slightly in November, but disappointing retail sales fueled calls for more stimulus as trade tensions with the U.S. persist. In Germany, business morale worsened more than expected, reflecting concerns over geopolitical risks and an industrial downturn in the country. Meanwhile, U.S. retail sales exceeded expectations in November, but this had little effect on the outlook for a Federal Reserve rate cut, as investors continue to await indications of the Fed's future policy direction.