U.S. Stocks: U.S. crude and distillate inventories declined in the week ending December 13, as exports surged, while gasoline stockpiles increased, according to the Energy Information Administration (EIA). Crude inventories fell by 934,000 barrels to 421 million barrels, missing analysts' expectations of a 1.6 million-barrel draw. U.S. crude exports spiked by 1.8 million barrels per day to 4.89 million barrels per day, driven by a widening price gap between Brent and U.S. West Texas Intermediate (WTI) futures, which encouraged more export flows. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 108,000 barrels to 23 million barrels. Refinery crude runs decreased by 48,000 barrels per day, and utilization rates fell by 0.6 percentage points to 91.8%. U.S. gasoline stocks increased by 2.3 million barrels, while distillate stockpiles dropped by 3.2 million barrels. Distillate demand surged to its highest level since March 2022, with both heating oil and gasoline futures rising following the report.

Federal Reserve: On Wednesday, the Federal Reserve reduced its key interest rate by a quarter of a percentage point and revised its 2025 forecast, now expecting only two rate cuts instead of the four projected in September. This marks the third rate reduction of the year, bringing the benchmark target to a range of 4.25% to 4.5%. The change impacts various forms of consumer debt, including auto loans and mortgages. The central bank also predicts an unemployment rate of 4.3% and inflation at 2.5% for the coming year, as consumer-price growth shows signs of sticking. Following the announcement, all three major stock indexes, Dow Jones, S&P 500, and Nasdaq Composite saw declines.

China Demand: China's oil consumption is expected to peak by 2027, with demand reaching no more than 800 million metric tons (16 million barrels per day), according to Sinopec. This marks a delay from previous projections, which predicted peak consumption between 2026 and 2030. The slowdown in demand is attributed to weakening diesel and gasoline usage, along with the growing adoption of electric vehicles and LNG-powered trucks. Sinopec also highlighted the uncertainty in China's energy sector due to potential trade tensions under President-elect Donald Trump's return to office, which could affect Iranian oil exports. In 2024, China's oil demand is expected to fall by 10 million tons, marking just the second decline in two decades.

Market Overview: Oil prices remain bullish on Thursday after the U.S. Federal Reserve cut rates and signaled it would slow cuts in 2025, raising concerns about economic growth and reduced fuel demand. U.S. West Texas Intermediate crude increased 46 cents to $71.04. The Fed's projections for two quarter-pointcuts in 2025, less than previously expected, suggested a stronger dollar, which could create headwinds for oil. A stronger dollar makes oil more expensive, while higher interest rates may reduce economic activity and demand for oil. Meanwhile, Sinopec forecasted that China's oil consumption would peak by 2027, and analysts noted that global oil demand growth in December has been lower than expected, with a forecasted shortfall of 200,000 barrels per day.

The 2024 Atlantic hurricane season, which lasted from June 1 to November 30, was more active than usual, featuring 18 named storms and 11 hurricanes, including five major hurricanes. Among the storms, Hurricanes Francine, Helene, and Rafael notably disrupted U.S. energy infrastructure, particularly affecting the Gulf Coast and Southeast. Five hurricanes made landfall in the U.S., with two—Helene and Milton—intensifying into major hurricanes. Despite their severity, the major hurricanes' paths avoided major oil and natural gas production areas in Texas, Louisiana, and Mississippi, though precautionary shutdowns were made. The energy impact included significant unplanned outages of crude oil and natural gas production in the Gulf of Mexico, with September outages averaging 295,000 barrels per day of oil. By November, outages decreased to 110,000 barrels per day of oil, with no major storm-related outages in October.

Oil prices dropped on Thursday as central banks in the U.S. and Europe indicated caution on further easing of monetary policy, raising concerns about weaker demand for oil in 2025. U.S. West Texas Intermediate crude for January delivery fell 1%, settling at $69.91 per barrel. The Federal Reserve cut rates by a quarter percentage point but signaled caution due to persistent inflation, affecting expectations for future rate cuts. Meanwhile, the U.S. dollar reached a two-year high, making oil more expensive for foreign buyers. In the UK and Japan, central banks held rates steady, with debates over how to manage slowing economic activity.