There are currently 179,783 Los Angeles residents still under evacuation orders amid the wildfires that continue to rage in the Los Angeles area, LA County Sheriff Robert Luna said on Thursday during a news conference. “That’s nearly 180,000 people in Los Angeles County that are currently under evacuation orders with another close to 200,000 residents that are under evacuation warnings,” Luna said. “I cannot emphasize enough that I urge residents that are asked to evacuate to follow our warnings,” he added. Earlier, the evacuation orders in Hollywood Hills were lifted after progress in controlling the fire in the area. Although officials confirmed at least five people died in the fires, the LA county sheriff stated he wants to be “more confident” before confirming the exact number. However, he noted that he believes the death toll is “going to rise.”
Oil Slips Below $74 Amid Resistance at Key Technical Level
Oil fell after a key technical level provided resistance to a rally that has been driven by continued signs of tightening US crude supplies. West Texas Intermediate futures slumped more than 1% to settle below $74 a barrel after earlier rallying close to their 200-day moving average of about $75.48. The inability to to breach the technical level, which has served as a ceiling for prices since October, pushed prices to settle almost $2 below its intraday high.
Despite the slump, the fundamental side of oil continues to signal tighter markets. Government data released Wednesday showed US crude stockpiles fell 959,000 barrels last week, the seventh straight drawdown and the longest streak of declines in three years. Traders are also bracing for frigid weather in the US, which has boosted demand for heating fuel and raised the risk of freeze-offs in production areas.
“Early indicators of oil demand suggest a strong start to January, likely driven by increased use of heating fuels in the Northern Hemisphere due to the cold weather,” JPMorgan Chase & Co. analysts including Natasha Kaneva said in a note on Wednesday. “We anticipate that oil demand will average 101.4 million barrels a day for the month, marking a 1.4 million barrel-a-day increase compared to the same period last year.”
Oil has had a strong start to 2025, with prices breaking out of a monthslong range, but many analysts continue to warn of a glut this year. The market is also bracing for Donald Trump’s second presidential term, with threats of tougher sanctions on Iran and tariffs on China.
In another sign of tightening supply, Russian data show that the country’s oil production was below its OPEC+ output target last month, after seaborne exports slumped to the lowest level since August 2023. Meanwhile, ports in the eastern Chinese province of Shandong, the top destination for Iranian crude, were urged to prevent US-sanctioned tankers from docking at their berths.
EIA Weekly Petroleum Data
Summary of Weekly Petroleum Data for the week ending January 3, 2025
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels from the previous week. At 414.6 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year. U.S. crude oil refinery inputs averaged 16.9 million barrels per day during the week ending January 3, 2025, which was 44 thousand barrels per day more than the previous week’s average. Refineries operated at 93.3% of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production decreased last week, averaging 5.2 million barrels per day. U.S. crude oil imports averaged 6.4 million barrels per day last week, decreased by 497 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.6 million barrels per day, 1.4% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 455 thousand barrels per day, and distillate fuel imports averaged 200 thousand barrels per day. Total motor gasoline inventories increased by 6.3 million barrels from last week and are about 1% below the five year average for this time of year. Finished gasoline inventories decreased last week while blending components inventories increased last week. Distillate fuel inventories increased by 6.1 million
barrels last week and are about 4% below the five year average for this time of year. Propane/propylene inventories decreased by 2.5 million barrels from last week and are 9% above the five year average for this time of year. Total commercial petroleum inventories increased by
5.0 million barrels last week. Total products supplied over the last four-week period averaged 20.2 million barrels a day, up by 0.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.6 million barrels a day, up by 1.2% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 9.1% from the same period last year. Jet fuel product supplied was up 8.8% compared with the same fourweek period last year
Trump weighs declaring economic emergency for tariffs
United States President-elect Donald Trump is contemplating the declaration of a national economic emergency to legally support the imposition of extensive universal tariffs, CNN reported on Wednesday, citing four people familiar with the matter. According to the outlet, the proclamation would enable Trump to develop a fresh tariff initiative through the use of the International Economic Emergency Powers Act, referred to as “IEEPA.” This act grants the president the unilateral authority to regulate imports in times of national emergency. Before assuming office, Trump declared his intention to implement a 25% tariff on all products imported from Mexico and Canada. Additionally, he committed to imposing “huge tariffs” on the European Union and proposed a 10% tariff on imports from China.
Iran: US made big ‘miscalculations’ about us
Iranian Supreme Leader Ayatollah Ali Khamenei said on Wednesday while holding a speech that the United States made grave “miscalculations” about Tehran in the past couple of decades. “The US had brought Iran under its possession, but the country was wrested out of its grip and control. Therefore, its grudge towards the Islamic Republic and the Revolution is long-standing,” Khamenei remarked. He went on to say that Iran’s public opinion mustn’t be influenced by the “enemy propaganda.”
Euro area consumer confidence deteriorates in December
The consumer confidence indicator in the euro area and the entire European Union in December 2024 went down by 0.7 and 1 percentage points, reaching negative 14.5 and negative 13.4 respectively, the European Commission shared in its final report on Wednesday. Both figures were in line with the preliminary readings. NN: Makes it hard to see with deep slow down coming where the EU will import more oil.
Markets Sound Alarm Over Deflationary Spiral in China…..German factory orders down 5.4% in November
Investors in China’s $11 trillion government bond market have never been so pessimistic about the world’s second-largest economy, with some now piling into bets on a deflationary spiral mirroring Japan’s in the 1990s. Yields on Chinese sovereign bonds maturing in 10 years have tumbled in recent weeks to all-time lows, creating an unprecedented 300-basis-point gap with US peers, despite a slew of economic stimulus measures announced by President Xi Jinping’s government. The plunge, which has dragged Chinese yields far below levels reached during the 2008 global financial crisis and the Covid pandemic, underscores growing concern that policymakers will fail to stop China from sliding into an economic malaise that could last decades.
If the bond market is right, the implications would be profound. An extended bout of deflation would hobble one of the world’s biggest economic growth engines, add new strains on social stability in the second-most populous country and exacerbate capital outflows that led to a record exodus from Chinese financial markets at the end of last year.
In a sign of how seriously investors are taking the risk of Japanification, China’s 10 largest brokerages have all produced research on the neighboring country’s lost decades. Richard Koo, an economist well-known for drawing parallels between the two countries, said he has been approached by Chinese companies and think tanks to share his views. Goldman Sachs Group Inc. this week said Japan’s case offers a “valuable playbook” for Chinese stock investors who’ve been rattled by the worst start to a year in nearly a decade. While an echo of post-bubble Japan is far from certain, the similarities are hard to ignore. Both countries suffered from a real estate crash, weak private investment, tepid consumption, a massive debt overhang and a rapidly aging population. Even investors who point to China’s tighter control over the economy as a reason for optimism worry that officials have been slow to act more forcefully. One clear lesson from Japan: Reviving growth becomes increasingly difficult the longer authorities wait to stamp out pessimism among investors, consumers and businesses. “It’s a downward spiral that will keep getting worse if it’s not corrected,” said Xin-Yao Ng, a Singapore-based investment director at abrdn Plc, which oversees $494 billion globally. “There’s a psychological element to Japan’s lessons where the longer this persists, the weaker business and consumer confidence gets.” China’s markets have entered 2025 on a knife edge. With the benchmark 10-year yield falling below 1.6% for the first time, pundits have floated the once-unthinkable prospect of yields near zero. The CSI 300 Index of equities lost 3.5% in the first four sessions of the year, while the offshore yuan is trading near a record low — prompting authorities to push back against declines this week. NN: Makes it hard to see with deep slow down coming where China will import more oil.
German factory orders down 5.4% in November
Seasonally and price-adjusted new factory orders in Germany fell by 5.4% in November compared to the previous month, the country’s Federal Statistical Office Destatis revealed in its report on Wednesday. New orders declined by 1.7% compared to the same month in the previous year. Domestic orders rose by 3.8% in the reported month compared to October, while foreign orders dropped by 10.8%. New orders from the euro area decreased by 3.8%, while orders from outside the Eurozone tumbled by 14.8%. According to the report, the main contributor to the decrease in factory orders in November was a sharp fall of 58.4% in orders for other vehicle construction, including aircraft, ships, trains, and military vehicles, due to October orders in this sector not materializing. Meanwhile, new orders for intermediate goods increased by 1.8% in November month-on-month, while the orders for consumer goods and capital goods were down by 7.1% and 9.4%, respectively. NN: Makes it hard to see with deep slow down coming where Germany/EU will import more oil.
Crude Draw, Major Jump in Fuel Inventories…… WTI Climbs as US Freeze Fuels Demand
The American Petroleum Institute (API) estimated that crude oil inventories in the United fell by 4.022 million barrels for the week ending January 3. Analysts had expected a 250,000 barrel draw. For the week prior, the API reported a draw of 1.442-million-barrel in U.S. crude oil inventories in the midst of build season. In 2024, crude oil inventories dropped by more than 12 million barrels, according to the API’s inventory data. Brent crude was trading at $77.49— the same price as this time last year. U.S. WTI was trading at $74.70 at 1:30 AM est. Surprising Gasoline inventories rose this week by 7.331 million barrels after last week’s 2.163-million-barrel increase. As of last week, gasoline inventories are slightly above the five-year average for this time of year, according to the latest EIA data. Distillate inventories rose by 3.201 million barrels, after last week’s large 5.719-million-barrel increase. Distillate inventories were about 6% below the five-year average as of the week ending December 27, the latest EIA data shows. Cushing inventories—the benchmark crude stored and traded at the key delivery point for U.S. futures contracts in Cushing, Oklahoma—fell by 3.115 million barrels, according to API data, after increasing by 305,000 barrels in the previous week.
WTI Climbs as US Freeze Fuels Demand
Oil pushed higher as a cold front in the US and signs of a tighter market countered technical signals that crude’s rally may be overdone. West Texas Intermediate advanced almost 1% to settle above $74.92 a barrel, buoyed by frigid weather in the US that’s boosting demand for heating fuel and increasing the risk of freeze-offs in production areas. Adding to signs of a tighter supply-demand balance, Middle Eastern oil markets have been firmer in recent weeks as refiners in China sought alternatives to Iranian and Russian crude. At the same time Russian data show that its oil production was below its OPEC+ output target last month, another sign of limited supplies. Meanwhile in China, ports in the eastern province of Shandong, the top destination for Iranian crude, were urged to prevent US-sanctioned tankers from docking at their berths. Crude markets have witnessed a robust start to the year as a result of technical buying after prices broke out of a months long range. Still, the relative strength index shows prices are trading at overbought levels, a reading that indicates crude was due for a pullback, and many analysts continue to warn of an oversupply later in the year. “Whilst renewed strength cannot be ruled out in the immediate future should freezing temperatures persist, the sudden change in sentiment yesterday afternoon insinuates that a protracted rally will be difficult to sustain without fundamental changes in economic prospects or the global oil balance,” said Tamas Varga, an analyst at brokerage PVM.
NN: this is a sell
Trump answers questions about Canada, Greenland, Panama Canal, Gulf of Mexico
President-elect Donald Trump held his second pre-inauguration press conference from Mar-a-Lago on Tuesday. Trump called the press conference to announce a major investment in data centers in the United States, and discussed a wide range of topics when taking questions from reporters. During the question and answer portion, Trump refused to rule out the use of military force to try to take control of the Panama Canal and Greenland. Trump also addressed several foreign affairs, including Ukraine’s war with Russia and the latest on a hostage deal between Israel and Hamas. The former president will be inaugurated for his second term on January 20.
Trump vows to reverse Biden’s offshore drilling ban
United States President-elect Donald Trump vowed on Tuesday to “immediately” reverse current President Joe Biden’s ban on offshore drilling. Speaking at a press conference at Mar-a-Lago, Trump insisted Biden’s action “will not stand” and added that “we will drill, baby drill.” He asserted that the move will also bring energy prices “way down” to a “very low level.” Earlier this week, Biden announced a decision to ban any upcoming offshore oil and natural gas drilling along the East and West coasts of the US.