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Oil News:

Winter Storm Blair has hit the US Midwest, Plains, and Atlantic Coast with snowstorms and freezing temperatures, canceling nearly 2,000 flights across the country and sending oil and gas prices climbing.

- Wholesale electricity prices across the US Northeast skyrocketed into triple-digit territory as the cold snap ratcheted up demand for power with ISO New England Massachusetts hitting $120 per MWh in intra-day trading.

- There has been limited impact on refining so far, but the NYMEX ULSD futures contract rose to its highest since early October and settled at $2.35 per gallon on Monday thanks to rising demand for heating oil.

- The freezing cold has also reached Texas where the Permian’s Waha gas trading hub saw prices rise to a one-year high of $3.67 per mmBtu, having traded in negative territory as recently as November 2024. 

Market Movers

- In a long-awaited move, Italy’s oil major ENI (BIT:ENI) said it would resume drilling at Egypt’s giant Zohr gas field this month as the Saipem 10000 drillship is set to arrive in Egypt within several weeks.

- US refining giant Phillips66 (NYSESX) announced it would acquire various midstream assets from pipeline operator EPIC NGL in an all-cash deal worth $2.2 billion, boosting its portfolio in natural gas liquids.

- One of the best-performing oil companies of 2024, Portugal’s Galp Energia (ELI:GALP) launched a probe into an alleged conflict of interest regarding CEO Filipe Silva, potentially leading to his dismissal.

Tuesday, January 07, 2025

Sanctions have become the main news in 2025 so far, with this week seeing a tightening of US sanctions against China as the Pentagon targeted state-backed oil and shipping firms. Rumors are circulating that the outgoing Biden administration will slap further sanctions on Russia and Iran, inadvertently lifting oil prices before Donald Trump takes office on January 20. For the time being, ICE Brent futures are hovering around $77 per barrel, with a potential spike above $80 per barrel becoming an increasingly likely outcome.

US Sanctions China’s Top Offshore Producer. The US Defense Department has sanctioned China’s offshore oil producer CNOOC (SHA:600938) and largest shipping firm Cosco over alleged links to the People’s Liberation Army, less than a month after the former sold its assets in the US Gulf of Mexico.

Exxon Strikes Back at California. US oil major ExxonMobil (NYSE:XOM) filed a lawsuit against California Attorney General Rob Bonta and several environmental groups for alleged defamation, claiming Bonta has been acting in concert with a law firm that has ties to billionaire Andrew Forrest.

Sudan Lifts Force Majeure on Oil Exports. Sudan has withdrawn a force majeure on transportation and exports of crude from Port Sudan, ending an almost year-long blockade of its own production as well as South Sudan’s output, repairing damages caused by the insurgent militia RSF.

Italy Calls for EU Gas Price Cap. Italy’s Energy Minister Gilberto Fratin suggested the European Union extend its emergency cap on gas prices and set an upper limit of €60 per MWh to limit speculative trading in TTF futures as Ukraine’s transit halt and cold weather keep gas prices around €47-48/MWh.

Germany’s Gas Withdrawals Speed Up. The speed of natural gas withdrawals in Germany doubled in the first week of January as the ongoing cold snap increased heating demand, with net withdrawals averaging 1.23 TWh per day compared to 0.56 TWh per day the week before.

US, Nippon Steel Sue the US Government. US Steel (NYSE:X) and its Japanese peer Nippon Steel filed a lawsuit in a federal appeals court against the Biden administration, claiming their blocked $15 billion merger was scuttled by the White House through a sham national security review.

India Seeks Investors for SPR Expansion. India has issued a tender to build and operate a strategic petroleum reserves site with a capacity of 2.5 million tonnes at Padur in the southern Karnataka state, boosting the South Asian country’s SPR reserves that currently only wield 5.3 million tonnes.

Canada’s Midstream Giant Wants More Pipelines. Canada’s leading pipeline firm Enbridge (TSE:ENB) signed a letter of intent with the Alberta government to boost pipeline capacity amidst rising oil sands output, potentially expanding the US-bound 3.1 million b/d Mainline system.

Namibia Eyes Chinese Nuclear Investment. Namibia is seeking investment from Beijing to build on its vast reserves on uranium and develop nuclear power in the African country, with China’s Foreign Minister Wang Yi visiting Windhoek this week, building on last year’s $3 billion desalination deal.

UK Becomes Europe’s Largest EV Market. The United Kingdom has become Europe’s largest market for electric vehicles as new EV registrations rose to 381,970 last year, up 21% year-over-year and 1,300 units more than in Germany, greatly boosted by its stringent EV sales mandate.

Deindustrialization Helps German Emissions Fall. According to climate analysts, Germany’s greenhouse gas emissions fell by 3% year-over-year to 656 million metric tonnes of CO2eq., undershooting Berlin’s own cap by more than 5% as industrial activity keeps on contracting.

China Churns Out Record Amounts of Cobalt. China’s cobalt giant CMOC (SHA:603993) posted all-time high production figures of the transition metal in 2024, mining 114,165 metric tonnes and doubling the 2023 total of 55,526 tonnes, overperforming its own production guidance by a hefty 63%.

Weak China Prompts Iron Ore Slump. Iron ore futures continued their decline to an almost two-month low as the May futures contract on China’s Dalian Exchange dropped to ¥751 per metric tonne ($102/mt), driven by the ongoing slowdown in Chinese smelting ahead of the Lunar New Year.

NVDA:

• The bull market's poster child, Nvidia ($NVDA), closed at an all-time high for the first time in two months today, rising +3.4%. It's nearly the largest in the S&P 500 again, closing slightly below $AAPL's market cap.
  
• $NVDA has surged +11.3% over the past three sessions, marking its best three-day rally since September. Today's breakout invalidates a three-month Head & Shoulders Top. It's often bullish when bearish patterns fail.
  
• If $NVDA rallies, the major averages (Dow, S&P 500, Nasdaq) will likely follow to all-time highs. However, this could turn into a nasty Bull Trap if $NVDA violates its post-election highs ($148) on a closing basis this week.

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Lots of insider selling.

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Market still choppy, trendless

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Off to work.

jog on

duc