Geopolitical Tensions and Market Shifts Drive Energy Trends

Key Highlights

• Price Trends: December 2024 NYMEX WTI at $69.40/b, with a slight increase in MCX crude oil prices, which opened at ₹5821 (up 2.68%).
• Demand-Supply Factors:No immediate disruptions in energy flows, but escalating hostilities and geopolitical risks pose concerns, particularly for natural gas supplies in Europe.
• Petroleum News: The Nigerian Navy's efforts under Operation Delta Sanity have led to significant reductions in crude oil theft, boosting Nigeria’s production to 1.8 million barrels/day.
• Expert Insights: Large inventory builds could weigh on crude prices, whereas a reduction might signal stronger demand or constrained supply.

Petroleum Price: Stability Amid Modest Fluctuations

• Front-month Jan25 ICE Brent futures were trading at $73.24/b (0440 GMT), compared to Tuesday's settle of $73.31/b. At the same time Dec24 NYMEX WTI was trading at $69.40/b, versus Tuesday's settle of $69.39/b, while the more-liquid Jan25 contract was trading $69.19/b. MCX Crude oil prices opened at 5821 with a gain of 2.68%.

Petroleum Demand and Supply: Inventory Build and Geopolitical Risks

• The escalation in hostilities lifted headline prices to more than one-week highs during the early part of the week, but so far there has been no immediate disruption to energy flows.
• However, analysts have said that natural gas supplies to Europe look most at risk should hostilities further escalate, while Moscow has hinted it may seek payback via various proxies such as Yemen's Houthis.
• Elsewhere on the geopolitical front, the latest UN report showed that Iran continues to build stockpiles of enriched uranium, although is looking for a deal that will limit further expansion in return for relaxing sanctions.
• Investors largely continued to overlook inventory data as economic and geopolitical events dominated. The latest report from the American Petroleum Institute revealed a sharp increase of a 4.75 million in crude stockpiles, beating expectations for a build of around 1 million barrels.

Petroleum News and Global Market Trends

• The Nigerian Navy has attributed its successes in the fight against crude oil theft to Operation Delta Sanity, which has contributed to a significant increase in Nigeria’s crude oil production.
• On October 8, three illegal refinery sites and 15 ovens were destroyed around Bakana River, Rivers State.
• This was followed by the arrest of a suspect with a locally made pistol and 3 cases of ammunition, along with the discovery of three illegal refinery sites and 5 reservoirs in Bayelsa State on October 9.
• The Nigerian National Petroleum Corporation Limited (NNPCL) Group CEO, Meleye Kyari, recently announced that oil production has risen to 1.8 million barrels per day in October 2024.

Expert Opinion: How Tensions and Inventory Data Shape the Market

• It is anticipated that WTI crude drew support from Russia-Ukraine tensions, as the prospect of a nuclear strike raised concerns about production from the OPEC+ nation. However, actual attacks could still bring risk-off flows strong enough to weigh on risk assets in general.
• The commodity could also take cues from inventory data by the Department of Energy, as a large build in stockpiles would point to weaker demand conditions or elevated supply levels, possibly leading to losses for crude oil.