BlackMask Breaking News

Solid economic growth figures from the U.S. and news about China’s economic stimulus combined this week to push oil prices higher. Benchmarks could post their biggest weekly rise since October this week, Reuters said, with supply uncertainty in the Middle East contributing to the bullish sentiment. U.S. GDP in the fourth quarter of last year expanded by 3.3%, which was substantially higher than what analysts had expected, which was 2% growth. Meanwhile, in China, the central bank said it would inject the equivalent of $140 billion into the economy to stimulate faster growth by cutting the amount of reserves local banks need to hold. In the Middle East tensions continue running high, with the Yemeni Houthis striking a U.S.-owned cargo vessel this week following the second round of attacks on targets in Yemen by U.S. and UK forces. Earlier this week reports emerged that Washington had asked Beijing to talk to Tehran and get the Iranians to convince the Houthis to stop attacking ships in the Red Sea. These reports were followed by news, based on unnamed sources, that Chinese officials had approached Iran’s leadership with a request to tell the Houthis to dial down the anti-ship violence. “Basically, China says: ‘If our interests are harmed in any way, it will impact our business with Tehran. So tell the Houthis to show restraint'” one source from the Iranian government told Reuters. Chinese vessels are not targets for the Houthis but the disruption of traffic in the Red Sea has hurt Chinese exporters by significantly lengthening the time needed for their goods to reach their end destination in Europe, adding to costs. Oil traders appear to have finally started noticing these developments and have factored the disruption into their trading decisions. On Thursday, Brent crude topped $80, jumping above $82 before retreating somewhat, and West Texas Intermediate reached a two-month high of some $77 per barrel on Thursday. Prices fell back slightly on Friday morning but remained elevated for the week.

Negotiators reportedly closer to reaching Gaza hostage deal

An uncertain supply picture has oil markets on edge, with disruptions and geopolitical risks being counterbalanced by rising production in Norway and Libya. Economic uncertainty is adding downward pressure to oil prices. The continued rerouting of ships from Asia to Europe has been greatly reducing the availability of spot tankers that could be chartered, lifting the price of shipping, especially when it comes to clean products. As Bloomberg reports, the day rate for shipping a cargo of gasoline from northwest Europe to the US East Coast has tripled since the start of the year, nearing $38,000 per day this week. US and UK forces conducted strikes on eight Houthi targets late Monday, making it even more likely that Red Sea disruptions will be longer than expected as the previous attack on January 11 had triggered a round of retaliatory strikes. Routing tankers carrying refined products through the Cape adds $1 million to freight costs, equivalent to a $1.5/bbl premium, despite the fact there is no canal passing along the way (the Suez Canal has just hiked its 2024 prices to roughly $500-600,000 per passage). Fitch Ratings estimated on Wednesday that the ongoing shipping disruptions in the Red Sea will maintain the oil price premium, as well as premiums in the wider commodity markets, including gas, chemicals, and fertilizers. Many companies are choosing to reroute vessels via the Cape of Good Hope in the very south of Africa to avoid possible attacks by Houthis in the Red Sea.However, Fitch is currently keeping its 2024 Brent oil price projection of $80 per barrel barring any “material disruptions to actual oil production, or a wider escalation of attacks to more vital oil transport routes in the region.” The ratings agency said it expects the global oil market to remain well-supplied in 2024, which should “cushion any impact from potentially protracted or escalated disruptions.” Its TTF gas price assumption for 2024 is also unchanged at $12/mcf.

Saudi Arabia’s crude oil exports inched up in November from October to reach a five-month high, data from the Joint Organizations Data Initiative (JODI) showed on Monday. Crude oil exports from the world’s top crude exporter rose by 39,000 barrels per day (bpd) to around 6.34 million in November, up from October’s 6.3 million bpd level, according to the latest available data in JODI, which compiles self-reported data from many countries. Yet, Saudi crude oil production fell in November by 122,000 bpd to 8.82 million bpd—the lowest level so far for 2023, per the data in JODI, as the Kingdom continues to cut production as part of the OPEC+ agreement and reduces voluntarily output by an extra 1 million bpd. Saudi Arabia’s crude oil production in November was below the five-year average range for the period 2018 through 2022, the data showed. The volume of direct burn of crude fell slightly in November, and so did refinery runs, according to JODI. Saudi crude oil and oil products closing stocks fell by 4.05 million barrels to 230.4 million barrels in November. Of these, product inventories dropped by 4.19 million barrels, while crude inventories increased by 140,000 barrels. Saudi Arabia’s crude oil production and exports in early 2024 are expected to be around the levels reported in the most recent JODI datasets as the Kingdom has pledged to continue its voluntary production cut of 1 million bpd by the end of the first quarter of the year.   Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said at the end of 2023 that the OPEC+ production cuts could extend beyond March 2024 if the market requires it. The Saudi energy minister also criticized in early December commentators for failing to understand the group’s output agreement and suggested that this would change once “people see the reality of the deal.”

Houthi spokesperson Yahya Sarae stated on Monday that the militia targeted the United States military cargo ship Ocean Jazz in the Gulf of Aden with naval missiles as a response to the US and UK assaults on Yemeni Armed Forces installations. “The Yemeni Armed Forces continue to take all defensive and offensive procedures within the right to defend dear Yemen and in confirmation of the continued Yemeni position in support of Palestine. The Yemeni armed forces continue to respond to any American or British aggression against our country by targeting all sources of threat in the Red and Arab Seas,” the statement posted on Telegram said. In addition, the spokesperson warned that any future act of aggression will not be left “unanswered and unpunished.”

Houthis reportedly seek more weapons from Iran

West Texas Intermediate (WTI) climbed over 2.3% on Wednesday as rising tensions in two conflict zones outweighed supply and demand fundamentals that should have put downward pressure on crude prices. At 12:37 p.m. ET on Wednesday, WTI was up 2.59%, trading at $75.31, for a $1.90 gain on the day, while Brent crude was up 1.90%, trading at $80.05, for a $1.49 gain on the day. Overall, weakening demand and slowing economic growth have kept oil prices from soaring on geopolitical developments, Wednesday’s gains reflect an intensification of Israel’s war in Gaza, rising tension across the MIddle East, new developments on the Russia-Ukraine battlefield, and continued attacks on shipping in the Red Sea. This week has seen some of the most intense fighting in Gaza since the October 7 Hamas attack on Israel, with the Israelis targeting two hospitals and advancing into a coastal district in southern Gaza, Reuters reports. The intensification of the conflict prompted the European Union’s foreign policy chief, Josep Borrell, to say on Monday that Israel’s goal of destroying Hamas in Gaza was failing and the only way out of this conflict is a peace deal involving a two-state solution. Also putting upward pressure on oil prices is new momentum in the Russia-Ukraine conflict, where a drone attack on a Russia fuel export terminal run by Russian Novatek on the Baltic Sea caused a fire that led to shutdown of operations. Fundamentals, however, continue to keep a lid on rising prices, with higher oil production and a mixed bag in terms of growth outlook subduing the impact of geopolitical developments. IG analyst Tony Sycamore told CNBC that “production is higher and the growth outlook in China and Europe is mixed at best, while GDP data this week is expected to show the velocity of the U.S. economy has slowed considerably”. NN: Did anyone not know this would unleash the bloodthirsty drug crazed monsters of Islam?

Former President and front-runner in the Republican leadership race, Donald Trump, has promised to ban the creation of a central bank digital currency (CBDC) during a campaign stop in New Hampshire. “As your president, I will never allow the creation of a central bank digital currency,” Trump said on stage, joined by crypto-friendly former candidate Vivek Ramaswamy, who recently suspended his campaign. ”  he continued. “Such a currency would give a federal government, absolute control over your money. They could take your money, and you wouldn’t even know it was gone.” CBDCs are digital versions or tokenized versions of cash that are issued and regulated by central banks that may or may not use blockchain as an underlying technology.

Crude oil inventories in the United States rose this week by 483,000 barrels for the week ending January 12, according to The American Petroleum Institute (API), after analysts predicted a draw of 2.4 million barrels. The API reported a 5.215-million-barrel draw in crude inventories in the week prior. On Tuesday, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 0.6 million barrels again this week. Inventories are now at 355.6 million barrels.Oil prices were mixed ahead of the API data release. At 4:20 pm ET, Brent crude was trading down 0.26% at $78.09—but up $0.67 per barrel compared to where it was this same time last week. The U.S. benchmark WTI was trading up on the day by 0.59% at $72.83, up $0.76 per barrel compared to this time last week. Gasoline inventories saw another large build this week, rising by 4.86 million barrels after rising by 4.896 million barrels in the week prior. As of last week, gasoline inventories are now about 1% above the five-year average for this time of year, according to EIA data. Distillate inventories also rose this week, by 5.21 million barrels, after rising by 6.873 million barrels in the week prior. Distillates are roughly 4% below the five-year average.

Brent Crude oil prices are expected to average $74 per barrel this year, Citi said in a note, revising down its previous forecast by $1 a barrel, due to expectations of excess supply.  The researchers at the bank also slashed their Brent forecast for 2025 by $10 per barrel, and now see the international benchmark averaging $60 a barrel next year. “We believe softer market fundamentals, absent major supply disruptions, will result in OPEC+ rolling over its Q1 2024 production cuts throughout the whole 2024 and start tapering them only in H2 2025,” Citi’s analysts wrote in a note carried by Reuters. Due to the OPEC supply management, Brent prices are likely to hold above $70 a barrel this year, as the cartel and its partners in the OPEC+ alliance are expected to keep the market “finely balanced,” according to Citi.   The analysts, however, warned that the rising tensions in the Red Sea and the Gulf of Oman could lead to a spike in the risk premium in oil prices in the short term.    Barring a major geopolitical escalation resulting in a large supply outage—which cannot be discounted—, oil prices are unlikely to reach $100 a barrel in 2024 as American oil production and exports are rising faster and higher than expected, and market sentiment about demand is downbeat, especially for the first half of 2024.  Expected weak global economic growth would slow oil demand growth in 2024, keeping the average U.S. benchmark WTI Crude oil price below $80 per barrel, according to the monthly Reuters poll at end-December, in which analysts revised down their forecasts for 2024 from the previous month’s projections.    Brent Crude prices are now expected to average $82.56 per barrel this year, down from the $84.43 consensus forecast in the November poll. In the December Reuters survey, only one of 34 contributors said they expected the average Brent Crude prices to be above $90 per barrel in 2024