Oil Daily | Rising U.S. Crude Inventories and Russian Oil Trade Hurdles Amid Sanctions and Protests

【Global Oil Supply and Demand】

The American Petroleum Institute reported a rise in U.S. crude oil inventories by 2.86 million barrels for the week ending January 17, slightly less than analysts' expectations. Strategic Petroleum Reserve inventories increased by 0.2 million barrels, remaining significantly lower than pre-withdrawal levels. Meanwhile, gasoline inventories rose, and distillate inventories decreased significantly.

Global LNG imports are predicted to surge to the highest volume since January 2024, driven by stronger European demand attracting cargoes away from Asia. European LNG imports are set to reach their highest level since April 2023 due to higher European prices compared to Asia, encouraging cargo diversions.

【Oil-Producing Countries Dynamics】

Protesters in Libya threatened to halt crude oil exports, but the National Oil Corporation confirmed normal export rates after discussions. The U.S. plans to impose a 25% tariff on goods from Canada and Mexico, raising concerns about fuel prices, with both countries threatening retaliation.

Nigeria plans to attract $15 billion in private investment to revitalize its power sector, aiming to double household grid connections and increase renewable energy share. The country seeks to address a $23 billion funding gap while easing electricity costs for vulnerable citizens.

Russia is bypassing U.S. Treasury sanctions on its oil industry by shipping oil to India on sanctioned tankers. Despite sanctions targeting crude exports, Russia maintains steady oil shipments, aided by logistical maneuvers like transferring oil between vessels.

【Latest Oil Policies】

The European Union considers a phased ban on Russian aluminum imports as part of its next sanctions package, aiming to affect more oil tankers and banks. Hungary and Slovakia criticize the sanctions, arguing they harm the EU more than Russia. Despite calls for a gas ban, Russian LNG imports remain high, with Germany importing significant amounts through intermediaries.

Legislators in Mexico proposed a bill for public-private partnerships in power generation, requiring a minimum 54% public share. The draft aims to cement the state-owned power utility's dominance, continuing a trend of favoring state control.

【Industry News】

Efficiency improvements and flat budgets in the U.S. oil and gas sector are impacting oilfield services companies, who face weaker demand and pricing pressure. Key players like Halliburton expect decreased activity in North America in 2025, highlighting the challenges of E&P consolidation and pricing negotiations.

U.S. grid operators and utilities plan significant investments in power transmission lines to meet rising electricity demand. As the energy landscape evolves, regions that lag in planning and investments risk becoming constrained, with projects totaling over $22 billion already underway.

【Company News】

A U.S. court is set to re-launch the auction of Venezuela's PDV Holding, Citgo's parent company, with new terms aimed at drawing higher bids. The previous sale attempt attracted insufficient offers, prompting revised bidding terms to meet creditors' expectations.

【Others】

China is believed to be building a major fusion research site, possibly aiding both nuclear fusion and weapons design. The facility, larger than the U.S. National Ignition Facility, highlights China's significant investment in nuclear fusion research, which could impact global energy and security dynamics.

Trade in Russian crude for Asia halted as tanker rates soar following new U.S. sanctions. The sanctions target vessels transporting Russian crude, leading to increased freight rates and complicating trade with top buyers like China and India, who are now cautious about sanctioned tankers.