Biden departs, Trump returns

Oil prices opened on Monday morning with a swagger, ready to knock any bear that popped its head up straight back into the woods.?By Friday evening, prices were unchanged, Monday’s confidence had turned into Friday’s “let’s wait and see what happens next” market close!

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It’s fair to say the oil market has confused itself, the bulls charged into the market after Joe Biden’s farewell gasp turned the screw on Russian oil supply, shipping , insurance, and banking lines on the evening of Friday the 10th of January. Oil prices reacted wildly but in somewhat of a blanket fashion without enough detail to justify the almost $4 a barrel move to the upside. However, as this week moved along the desire to push oil prices higher hit some bumps in the road, the euphoria died down….until Wednesday.?

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Wednesday was a pivotal day, yet again, the EIA reported crude oil inventories in America had dropped week on week, this time by 2 million barrels, the buyers piled in again, almost ignoring the build at Cushing storage?(the home of WTI crude) with inventories of 800,000 barrels, which in theory is a key change, but not in such a market as this, crude oil markets pushed higher again.

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At the risk of sounding patronising crude oil has little use except to be distilled via an oil refinery into useful petroleum products, LPG, gasoline, naphtha, gas oil, kerosene, jet fuel and fuel oils as well as bitumen for covering roads. Therefore, it’s puzzling when we see during the last 3 weeks American crude inventories have fallen a total of just 4.2 million barrels, whilst gasoline and distillate inventories combined have risen 35 million barrels due to lack of demand. It seems odd that such a huge increase in petroleum products inventories remains metaphorically invisible to those who play crude oil markets….. adding the caveat, we would concede that not all geographical areas of the world are set up in an identical way to the USA, that said, those statistics often lead market price direction.?

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American refinery turnaround and maintenance in late January through February will see some of that product inventory build being drawn down, but it won’t be by 35 million barrels!?It remains a mystery why the rising American road fuel inventories remain out of the picture for those who relentlessly chase higher oil prices, i.e. ice Brent above $80 a barrel, but the fact remains crude oil is driving the numbers, and one good reason remains.

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Joe’s new sanctions mean some of that sanctioned Russian crude will be replaced by Middle East barrels, both Dubai and Murban crude premiums have soared recently as India and China ( China received 2.17 million barrels a day of Russian crude between January and November last year) shop the market for crudes that don't break the new rules, ?although it’s only a matter of time before those important buyers of Russian and Iranian crude find their way around the sanctions handicap as they’ve done before, but this time it will be harder economically; given the cost of shipping has soared during the first 17 days of 2025 meaning cheap supply is a thing of the past.

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Meanwhile, a few other things away from oil have distracted the market but have contributed to commodities moving higher.?Much of that is hidden in an Israeli and Hamas agreeing a fragile ceasefire in their war, but even on Sunday the truce wobbled momentarily as Israel demanded the names of Israeli hostages to be released. Hamas so far has supplied 3, but it is impossible to know how many are still in Hamas hands. Interesting to note that Al Jazeera reports?Houthi rebels have backed the Gaza?ceasefire agreement?reached between Israel and Hamas, with the Yemeni group’s spokesperson saying they will halt their military operations against Israel as well as commercial ships in the Red Sea if the truce comes into force on Sunday.”If Israel stops the aggression in Gaza, and if the US, UK and Israel stop the aggression against Yemen, the Houthis will stop their operations, including attacks against navies and commercial ships,” Mohammed al-Bukhaiti told Al Jazeera on Saturday. This is a very important move and if true could certainly restore some of the old shipping routes to the markets.?

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In some ways Monday becomes the most important day of all, as the World says goodbye to Joe Biden and awaits the return of Donald Trump as President of the United States.

It’s worth mentioning he will be crowned indoors , the first president since Ronald Reagan in 1985 to do so. It seems the man who spends much time fist pumping and surviving the assassin’s gun in the fresh air is worried he, his guests, and supporters could spend the day out in the cold….. !) let’s also speculate, with a remote possibility?Florida could become the new capital of the United States of America…. Just joking… maybe!!

In the early days of office the Russia/ Ukraine war will be an agenda priority, the Western management of Russian and Iranian oil will lay in his hands from tomorrow onwards, as does American oil production (currently 13.84 million barrels a day), import tariffs and probably most importantly his relationship with other World leaders ( Opec and particularly those leaders who will be asking for forgiveness having jumped the gun during the election campaign and supported the other team!!).

When we know some of his plans, then we shall have a better guide to 2025’s oil price future.

Meanwhile, speculative trading in the first days of a new year with the kind of real changes to the world we’ve not seen in 4 years is starting to look a dangerous business.?

The new world (not as we know it ) begins this week!

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This week’s closing guide prices:

Ice Brent 80.79 (-0.12)

WTI 77.88 (+0.10)

Ice gas oil 753.50 (-7.00)

Euro Mogas swaps 725.00 (+0.50)

Euro naphtha swaps 656.00 (+5.00)

Nymex gasoline 2.1122 (+1.16 cents per gallon)

Lpg swaps 586.50 (+1.50)