BlackMask Breaking News

Oil settled at a three-month high as the US ratcheted up sanctions against Russia, adding to a run of bullish developments that have propelled crude to a strong start to 2025. Brent futures rose 3.7% to settle above $79 a barrel while West Texas Intermediate closed above $76. The sweeping sanctions target two firms that handle more than a quarter of Russia’s seaborne oil exports, as well as vital insurers and a vast fleet of tankers. Brent earlier surged 5% to top $80 as speculation about the measures rippled through the market.

President Biden opted to go big on energy sanctions his team has been considering over the past several weeks, which caught traders largely complacent about sanctions-related disruption risks,” said Bob McNally, founder of the Rapidan Energy Group and a former White House official.

Crude is up more than 6% this year, a robust start that has taken some market participants by surprise as many banks and agencies had forecast a significant supply glut that would weigh on prices. Now, Citigroup and Morgan Stanley have been among the first to increase price forecasts. Hedge funds have been getting increasingly bullish on crude in recent weeks, with money managers’ net-long positions in Brent at the highest in almost eight months. While the market had been anticipating additional sanctions on Russia, the potential scope of the restrictions was unclear, and targeting a large number of tankers threatens to significantly constrain the nation’s ability to access vessels. Traders had also been bracing for tougher sanctions on Iranian oil, which would tighten a market already facing dwindling US stockpiles. The tighter fundamental picture, alongside the cold weather and lower Russian seaborne exports, has buoyed the recent rally.Under increasingly bullish conditions, “no one wants to be short here,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. Brent’s prompt spread — the price difference between its two nearest contracts — widened to as much as $1.02 in backwardation, a bullish pattern. A month ago, the spread stood at just 29 cents. Meanwhile, WTI’s prompt spread rallied to 85 cents, helping propel a measure of market volatility to the highest in more than a month.

Still, market participants caution the rally may be short-lived. Technical gauges, such as the relative strength index, signal that crude futures are overbought, and some traders warn the sanctions could be reversed once Trump takes office.

The prices of oil futures continued to rise on Friday, driven by reports from Indian refining sources that indicated that the US Treasury is planning to enforce new sanctions targeting over 180 tankers carrying Russian oil and Russian insurance companies, aiming to disrupt the country’s oil income. West Texas Intermediate (WTI) for February’s deliveries soared by 4.03% at 9:04 am ET to sell for $76.90 per barrel. A minute later, Brent for March’s settlements surged by 3.81% to go for $79.79 per barrel. Despite the recent rise in prices, traders remain cautious about balancing tightening supply and uncertain demand signals. Supply Constraints Drive Upward Pressure Supply-side factors were critical in shaping crude oil’s price movements this week. OPEC production dropped by 50,000 barrels per day (bpd) in December, largely due to maintenance in the UAE and declining Iranian output. These reductions align with OPEC+’s broader commitment to cut production, ensuring supply remains constrained. Saudi Arabia and Iraq maintained steady production levels, adhering to the cartel’s strategy to limit global availability. Adding to the supply squeeze, Western sanctions on Russian crude shipments continued to bite. Efforts by the Biden administration to restrict Russian exports, coupled with expectations of a 300,000 bpd decline in Iranian production, amplified concerns over global supply. These geopolitical factors have reinforced support for prices, even as demand uncertainties loom. Colder-than-expected weather across the U.S. and Europe has sharply increased demand for heating oil

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 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.

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

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.

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.”

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.

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