Oil Daily | U.S. Crude Hits Record as Europe Faces Energy Crisis Amid Reduced Russian Gas Supplies
Wednesday, Nov 27, 2024 7:00 am ET
2min read 【Global Oil Supply and Demand】
Europe's natural gas market is bracing for changes as the Russia-Ukraine gas transit deal ends, affecting the supply to Europe and Turkey. With a decrease in Russian exports expected, European countries are exploring alternative sources, such as gas from Azerbaijan, to mitigate potential shortages. The demand for LNG in Asia and the conclusion of the transit deal will shape the market in the coming months.
The Asian LNG market could see prices surge above $20 per million British thermal units this winter due to tight supplies in Europe. This is influenced by Europe's reduced Russian gas supplies, colder-than-average temperatures, and increased demand. LNG traders are diverting cargoes from Asia to Europe, which pays a premium, indicating a price rise is imminent.
U.S. crude oil production reached a record high in August 2024, averaging 13.4 million barrels per day, solidifying its position as the world's top producer. This rise is driven by advancements in shale extraction technology, making production more efficient and cost-effective. Major oil companies are seeing increased production, with a renewed focus on core oil and gas operations.
Crude oil inventories in the United States fell by nearly 6 million barrels for the week ending November 15, surpassing expectations. Gasoline and distillate inventories also rose, indicating fluctuating supply and demand dynamics. Cushing inventories, crucial for U.S. futures contracts, saw a decrease, reflecting ongoing changes in the market.
Europe faces high energy costs, impacting its competitiveness and job market. Rising electricity prices and energy-intensive industries like chemical and steel production are under pressure. Companies are cutting costs to maintain a competitive edge, but the energy crisis poses a long-term challenge to Europe's economic stability.
【Oil-Producing Countries Dynamics】
Russia is planning for a scenario where no natural gas flows to Europe via Ukraine post-2024 when the current transit deal expires. While Ukraine is not interested in renewing the deal, Russia expresses willingness for dialogue. European countries are preparing for reduced Russian gas supplies by exploring alternative sources amid a precarious market balance.
Turkey seeks a U.S. waiver to continue using a sanctioned Russian bank for energy payments, following U.S. sanctions on Gazprombank. Turkey heavily relies on Russian gas, and officials are in discussions with Russia and the U.S. to secure energy trade amidst the sanctions' implications.
Russia's seaborne crude oil exports fell in the four weeks leading to November 24, with significant declines in shipments to India. The reduction comes ahead of an OPEC meeting on market supply. Russia may lift its gasoline export ban, impacting crude oil exports and refinery rates.
【Latest Oil Policies】
OPEC's top producers, Saudi Arabia, Russia, and Iraq, met to discuss the global oil market ahead of the group's December 1 meeting. They emphasized stability and balance in pricing, considering production cuts and market conditions. OPEC may delay easing production cuts due to weak market fundamentals.
【Industry News】
ABB's CEO warns that Europe's high energy costs are harming its competitiveness and job market. Energy-intensive industries face challenges, and bureaucracy adds to the burden. Major European companies are taking measures to remain competitive as rising energy costs threaten economic stability.
【Company News】
U.S. businessman Stephen P. Lynch intends to bid for Nord Stream 2, aiming to secure American control over the pipeline. Kremlin spokesperson Dmitry Peskov doubts Gazprom would sell the infrastructure to a U.S. investor, highlighting geopolitical complexities and potential competing bidders if the pipeline goes up for auction.
【Others】
Proposed U.S. tariffs on Canadian and Mexican oil imports could increase consumer prices and strain trilateral trade relations. The tariffs might lead to higher costs for refiners and reduced supply options, potentially resulting in a trade war. However, they could also prompt trade negotiations to address deeper trade dynamics.
Europe's natural gas market is bracing for changes as the Russia-Ukraine gas transit deal ends, affecting the supply to Europe and Turkey. With a decrease in Russian exports expected, European countries are exploring alternative sources, such as gas from Azerbaijan, to mitigate potential shortages. The demand for LNG in Asia and the conclusion of the transit deal will shape the market in the coming months.
The Asian LNG market could see prices surge above $20 per million British thermal units this winter due to tight supplies in Europe. This is influenced by Europe's reduced Russian gas supplies, colder-than-average temperatures, and increased demand. LNG traders are diverting cargoes from Asia to Europe, which pays a premium, indicating a price rise is imminent.
U.S. crude oil production reached a record high in August 2024, averaging 13.4 million barrels per day, solidifying its position as the world's top producer. This rise is driven by advancements in shale extraction technology, making production more efficient and cost-effective. Major oil companies are seeing increased production, with a renewed focus on core oil and gas operations.
Crude oil inventories in the United States fell by nearly 6 million barrels for the week ending November 15, surpassing expectations. Gasoline and distillate inventories also rose, indicating fluctuating supply and demand dynamics. Cushing inventories, crucial for U.S. futures contracts, saw a decrease, reflecting ongoing changes in the market.
Europe faces high energy costs, impacting its competitiveness and job market. Rising electricity prices and energy-intensive industries like chemical and steel production are under pressure. Companies are cutting costs to maintain a competitive edge, but the energy crisis poses a long-term challenge to Europe's economic stability.
【Oil-Producing Countries Dynamics】
Russia is planning for a scenario where no natural gas flows to Europe via Ukraine post-2024 when the current transit deal expires. While Ukraine is not interested in renewing the deal, Russia expresses willingness for dialogue. European countries are preparing for reduced Russian gas supplies by exploring alternative sources amid a precarious market balance.
Turkey seeks a U.S. waiver to continue using a sanctioned Russian bank for energy payments, following U.S. sanctions on Gazprombank. Turkey heavily relies on Russian gas, and officials are in discussions with Russia and the U.S. to secure energy trade amidst the sanctions' implications.
Russia's seaborne crude oil exports fell in the four weeks leading to November 24, with significant declines in shipments to India. The reduction comes ahead of an OPEC meeting on market supply. Russia may lift its gasoline export ban, impacting crude oil exports and refinery rates.
【Latest Oil Policies】
OPEC's top producers, Saudi Arabia, Russia, and Iraq, met to discuss the global oil market ahead of the group's December 1 meeting. They emphasized stability and balance in pricing, considering production cuts and market conditions. OPEC may delay easing production cuts due to weak market fundamentals.
【Industry News】
ABB's CEO warns that Europe's high energy costs are harming its competitiveness and job market. Energy-intensive industries face challenges, and bureaucracy adds to the burden. Major European companies are taking measures to remain competitive as rising energy costs threaten economic stability.
【Company News】
U.S. businessman Stephen P. Lynch intends to bid for Nord Stream 2, aiming to secure American control over the pipeline. Kremlin spokesperson Dmitry Peskov doubts Gazprom would sell the infrastructure to a U.S. investor, highlighting geopolitical complexities and potential competing bidders if the pipeline goes up for auction.
【Others】
Proposed U.S. tariffs on Canadian and Mexican oil imports could increase consumer prices and strain trilateral trade relations. The tariffs might lead to higher costs for refiners and reduced supply options, potentially resulting in a trade war. However, they could also prompt trade negotiations to address deeper trade dynamics.
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