Oil commentary - 27 January 2025

Morning all, and welcome back. A week’s break after a very pleasant trip to Singapore, and what have we come back to then? Hmm, let’s dive in, shall we? Talking of taking a dive, shall we start with Tottenham’s league position? Don’t think I need to. Back to oil. Brent is trading this morning at $77.93, down 0.57, and WTI is trading down 0.55 at $74.11.

So, if you can barely believe it, we are approaching the end of the first month of the year, and I don’t know about you, but there’s only one thing all markets are focusing on now: what the first 100 days of a second Trump administration hold in store.

If we were to focus just on energy, then so far this year we’ve seen The Donald double down on promoting US energy independence by rolling back regulations, opening new areas for exploration, and fast-tracking LNG export terminals. He has exited the Paris Climate Agreement, reducing pressure on the US to cut fossil fuel consumption. He has proposed tariffs on imports from Canada and Mexico. And lastly, he has told Davos that he’s going to “tell OPEC to bring down the cost of oil”.

And you thought he was just a bloke with an orange face who could dance round the stage a bit, didn’t you? I mean, wow, talk about a Republican-sized spanner thrown in the works of all things oily! Jeez! Well, all things non-US oily, of course.

Look, this was something I think the vast majority expected. The mantra “Make America Great Again” didn’t also come with a caveat that said, “Make America Great Again, but only if it’s OK with everyone else and doesn’t disrupt things too much that everyone has spent a lot of time working on, no, no, no. Not me”. Not as catchy, I think you’ll agree. Plus, the acronym “MAGA” would have to be changed to MAGABOIIOWEEADDTTMTEHSALOTONNNNM. And I don’t think there’s a milliner in the world who could make that fit on a red baseball cap, do you?

Oil prices, though—what are they doing on the back of all this? Well, since the US enforced stricter sanctions on Russian oil, we’ve seen prices come off the highs of $81.68 when they were first announced, settling around $77.50. Perhaps the supply shock that so many were pricing in has largely calmed down, and whilst freight costs are bearing the brunt of tightened sanctions, maybe The Pendulum of Premium will shift back to what demand looks like.

Starting with how many people will be moving around for Chinese New Year. Let’s wait until that demand starts filtering in. In the meantime, keep your eyes on what Trump may do next.

Good day, and week, to all.