Oil Prices Drop on Trump’s First Day in Office
Oil prices dropped ahead of Donald Trump’s first day back in office, with expectations of a stronger dollar and a delay to his tariff threats both boosted bearish sentiment.
On his first day in office, US President Donald Trump signed an executive order to withdraw from the Paris Climate Agreement and instructed the Energy Department to lift the government freeze on new LNG export permit applications.
– By revoking the 2021 Biden electric vehicle mandate, albeit not legally binding with its 50% target by 2030, Trump hinted at a potential end to EV tax credits in the country and stated he would seek the repeal of California’s EPA waiver.
– Just as US crude oil inventories excluding the Strategic Petroleum Reserve fell to their lowest since April 2022, a mere 412 million barrels, President Trump pledged to fill US stocks ‘back to the very top’.
– Whilst refraining from introducing 25% tariffs on Canada and Mexico on Day 1 of his tenure, Trump nevertheless signaled potential punitive measures as soon as February 1.
Market Movers
London-based mining giant Glencore (LON:GLEN) has publicly admitted that it is open to M&A transactions that would create value for its shareholders, failing to finalize its copper merger with Rio Tinto.
– UK oil major BP (NYSE:BP) is reportedly close to finalizing a deal with Iraq over the redevelopment of fields in the Kirkuk region, aiming to restart some 300,000 b/d of production, with most commercial terms agreed.
– The world’s second-largest miner Rio Tinto (NYSE:RIO) plans to create a standalone lithium division after it completes its $6.7 billion acquisition of Arcadium Lithium, expected to take place by July 2025.
Tuesday, January 21, 2025
All eyes were on Donald Trump as the 45th US President was sworn in again as the 47th, sending a flurry of confusing messages to oil markets. Bullish catalysts ranged from slapping sanctions on Canada, rescinding Chevron’s Venezuelan waiver, and filling up the SPR right to the top. On the other hand, the strengthening US dollar could offset some of those pressures. The immediate market reaction to Trump’s orders was nevertheless more bearish, with ICE Brent dipping to $78.50 per barrel.
Trump Declares National Energy Emergence. US President Donald Trump declared a ‘national energy emergency’ to expedite the permitting of oil, gas, and power projects, seeking to lower energy prices in line with his campaign promise of cutting prices by 50% in his 12 months in office.
Houthis Promise to Attack Less in Red Sea. As the Israel-Gaza ceasefire seems to be holding since Sunday, Yemen’s Houthi militias vowed to limit their attacks on commercial vessels to Israel-linked ships, no longer targeting US or British-owned tankers, potentially offsetting soaring freight costs.
Libya Auctions Blocks to Fill State Coffers. Libya’s acting oil minister Khalifa Abdulsadiq said that Libya would need between $3 billion and $4 billion to increase its oil production to 1.6 million b/d, the pre-2011 Civil War target level, pinning great hopes on Tripoli’s upcoming onshore licensing round.
Iraq Tries One Last Time to Restart Flows. The finance committee of Iraq’s federal parliament has approved a 2025 budget amendment that would allow Baghdad to pay $16 per barrel for crude produced in Kurdistan, paving the way for a potential settlement with the breakaway region.
Canada Mulls Expansion of TMX Capacity. The operator of the 890,000 b/d Trans Mountain Expansion pipeline is considering expanding its capacity in the next 4-5 years as the threat of US sanctions makes TMX the only non-southbound evacuation conduit, expected to be full by 2028.
US Gasoline Eases as Colonial Pipe Restart. One of the key product arteries of the United States, Colonial Pipeline’s Line I which transports gasoline from the Gulf Coast to Greensboro, NC, resumed operations this past weekend after being offline since January 14 due to a leak in Georgia.
Chinese Coal Production Hits All-Time High. China’s coal production has soared to another record high in 2024, reaching 4.76 billion tonnes and marking a 1.3% year-over-year increase, thanks to a surge in output since June 2024 as Beijing eased regulatory pressure on smaller mines.
Traders Divest LNG Cargoes Away from Asia. According to media reports, at least six cargoes of LNG cargoes that were en route to Asia this month were re-routed towards Europe, just as Asia’s benchmark JKM gas futures dipped below $14/mmBtu whilst European prices trade at $14.5/mmBtu.
Kuwait Discovers Giant Offshore Field. Kuwait’s national oil company KOC reported a discovery of a large commercial volume of hydrocarbons containing some 800 million barrels of medium-density oil at its offshore Al-Jlaiaa prospect, the Middle Eastern nation’s second major discovery in less than a year.
Hoping for a Better 2025, Suez Canal Readies Expansion. The expansion project of the Suez Canal, adding some 6 miles of additional navigational leeway to transiting ships near Egypt’s Little Bitter Lake, will be operational in Q1, boosting the waterway’s two-way section to a total of 51 miles.
Saudi Arabia Hopes for the Best. Amin Nasser, the chief executive of Saudi oil giant Saudi Aramco (TADAWUL:2222) said he expects oil demand this year to rise by 1.3 million b/d, but considering production caps agreed within OPEC+ they’re looking at expanding their LNG portfolio.
Cold Snap Caps Bakken Production. Oil production in North Dakota dropped by 125,000-150,000 b/d as extreme cold weather forced some operators to shut in production wells across the Bakken, equivalent to 12% of the region’s 1.1 million b/d output, with similar declines in gas production, too.
Argentina’s Shale Gale Lures Indian Buyers. Argentina’s state-owned oil company YPF (NYSE:YPF) signed a memorandum of understanding with three Indian energy firms – ONGC, GAIL, and Oil India – to potentially export up to 10 million metric tonnes of LNG from Vaca Muerta.