Offshore drilling ban: Last night U.S. President-elect Donald Trump said he will move quickly to revoke an offshore oil and gas drilling ban announced by outgoing Democratic President Joe Biden. Trump takes office on Jan. 20, but could find it difficult to reverse Biden's order to withdraw 625 million acres (253 million hectares) of ocean from new offshore oil and gas development. The 70-year-old Outer Continental Shelf Lands Act allows presidents to remove areas from mineral leasing and drilling but does not grant them the legal authority to overturn prior bans, according to a 2019 court ruling - meaning a reversal would likely require an act of Congress. Trump also said his administration would open up oil and gas development in the Arctic National Wildlife Refuge and would seek to block new wind projects.
Stranded Oil in China: Iran is pushing to recoup 25 million barrels of oil from China that has been stuck for six years in Chinese ports due to sanctions imposed by then-U.S. President Donald Trump. Trump is returning to power on Jan. 20, and analysts say he is expected to tighten sanctions again on Iranian oil exports to limit Tehran's income, as he did during his first term as president. China, which says it does not recognize unilateral sanctions, has been buying about 90% of Tehran's oil exports in recent years at discounts that have saved its refiners billions of dollars. But the stranded oil, worth $1.75 billion at today's prices, highlights the challenges Iran is facing with selling oil even in China. Despite some of the West's toughest sanctions, Iran has built a roaring global trade for its oil, relying on a shadow fleet of tankers that conceal their activity. Most Iranian oil sold to China is redocumented as non-Iranian when routed to Chinese ports.
US Labor Market: U.S. job openings unexpectedly increased in November while hiring softened, suggesting the labor market continued to slow at a pace that probably does not require the Federal Reserve to be in a rush to cut interest rates. There were 1.13 job openings for every unemployed person, up from 1.12 in October. The vacancies-to-unemployed ratio is just below its average of 1.2 before the COVID-19 pandemic. It was 1.43 a year ago. The U.S. central bank reduced rates last month for the third straight time since it kicked off it seasing cycle in September, but projected fewer cuts this year.
Market Overview: Crude is slightly up as we begin the day with the refined products of diesel and gas basically flat. Overall, the main headlines have not changed with cold weather still helping demand in the United States along with Europe, followed by tighter supplies from sanctions on Russia and Iranian exports. Some unexpected support did come from the U.S. labor market showing that it is steady showing Novembers numbers came relatively unchanged. With a report like this coming out it tends to lend support because demand will continue like it has in the United States. As we continue to look forward analysts predict oil prices to be on average down this year from 2024 due to production increases from non-OPEC countries.
Retail gasoline prices year on year
The U.S. retail price for regular grade gasoline averaged $3.30 per gallon (gal) in 2024, $0.21/gal less than in 2023. Lower crude oil prices and narrower refinery margins in 2024 than in 2023 both contributed to the decrease in U.S. retail gasoline prices, according to data from our Gasoline and Diesel Fuel Update. From the first week of 2024 through the last week, national average weekly gasoline prices decreased $0.08/gal.
The retail gasoline price was highest in 2024 during late April when it reached $3.67/gal, below last year’s high price of $3.88/gal in September 2023. The high preceded the summer driving season, when gasoline use peaks in the United States and which often sets the highest prices of the year. However, peak prices before the summer season this year reflected relatively lower prices for gasoline and other petroleum products through the second half of 2024. Retail gasoline prices decreased to an annual low of $3.01/gal in early December and remained at a similar level through the rest of 2024. The price range in 2024 was narrower than in 2023, reflecting relatively flat crude oil prices.
The break in upside came today. Oil prices fell today as a stronger dollar along with large builds in inventories pressure prices. This is reversing the gains we saw the past two days driven by tightening supplies due to sanctions. Inventories on Diesel saw a build of 6.1 million barrels vs the expected build of 600,000 barrels which the traders expected. Gasoline saw a build of 6.1 million barrels vs the expected build of 1.5 million barrels. Crude on the other hand did have a larger draw of 1 million barrels vs a draw of 200,000 barrels. Refinery Utilization continues to be high as refiners try to make any margin they can.
