Oil Prices Predicted to Plummet Below $60 Under Trump
A new survey from law firm Haynes Boone LLC has revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term, Bloomberg reported on Monday. The survey of 26 bankers showed that they expect WTI prices to drop to $58.62 a barrel by 2027, more than $10 lower than the intraday price of $69.87 at 11.00 am ET on Wednesday. Trump says he’ll push shale producers to ramp up output, even if it means operators “drill themselves out of business.” However, it’s not clear he intends to accomplish this feat since U.S. oil is produced by independent companies and not a national oil company (NOC). Exxon Mobil’s (NYSE:XOM) Upstream President Liam Mallon recently dismissed the notion that U.S. producers will dramatically increase output under a second Trump term. “I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing,” Mallon said last week at a conference in London. Meanwhile, StanChart notes that following Scott Bessent’s recent nomination as Treasury Secretary, his Manhattan Institute June session where he spoke at a conference entitled ‘Towards a New Supply-Side: The Future of Free Enterprise in the United States’ is being scrutinised as a potential guide to policy. The commodity analysts point out that U.S. oil and gas output is currently ~40.7 mboe/d; U.S. oil and gas output has grown by an average of about 123 kboe/d per month since 2015, meaning adding 3 mboe/d would take less than 25 months. The commodity experts have noted that 41% of the post-2015 increase has come from natural gas, 28% from natural gas liquids (NGLs) and just 28% from crude oil. StanChart has predicted that the crude oil element of the next 3 mboe/d increase is likely to be significantly less than 20%, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult. Recently, Morgan Stanley predicted that the U.S. natural gas market is poised to enter a new cycle of demand growth thanks to surging LNG exports and rising electricity demand.
Petrol and diesel sales rebound across India on festival demand
India’s petrol and diesel consumption soared in November 2024 as the festive season reversed a slump in demand for motor fuels that was witnessed in previous months, reveals the preliminary data released by the state-owned oil marketing firms. While petrol sales have shown a year-on-year (YoY) increase, diesel sales remained a laggard since monsoon this year. November was the first month this year that witnessed positive growth in diesel consumption. Petrol sales of the three state-owned firms, which control 90 per cent of the fuel market in India, surged 8.3 per cent to 3.1 million tonnes in November 2024 as compared to 2.86 million tonnes of petrol consumed in the same month last year. On the other hand, diesel demand was up 5.9 per cent to 7.2 million tonnes. Festivities give petrol, diesel’s tepid demand necessary push Petrol and diesel sales in India remained tepid during the monsoon months this year as rains and bad weather conditions resulted in reduced vehicular activities. Also, demand from the agriculture sector was low as well. However, petrol demand soared once rains eased but consumption of diesel lagged on a year-on-year basis. PTI has reported that month-on-month petrol sales in India were up 4.7 per cent in November when compared to 2.96 million tonnes of consumption in October this year. On the other hand, diesel demand was almost 11 per cent more than 6.5 million tonnes of registered consumption in October 2024.
Amit Garg Recommended as CMD of HPCL by MoPNG Panel
Amit Garg, currently serving as Director (Marketing) at Hindustan Petroleum Corporation Limited (HPCL), is set to become the next Chairman and Managing Director (CMD) of the Maharatna public sector enterprise. A selection panel formed by the Ministry of Petroleum and Natural Gas (MoPNG) has recommended his name for the top post following interviews conducted, according to sources. Garg, who took over as HPCL’s Director (Marketing) in December 2023, has extensive experience in the oil and gas industry, spanning over 35 years. Before assuming his current role, he was Executive Director (Aviation) at HPCL. His professional portfolio includes responsibilities across sourcing, storage, logistics, and sales in various capacities at Bharat Petroleum Corporation Limited (BPCL). Earlier this year, the Public Enterprises Selection Board (PESB) had conducted interviews for the CMD position but declared in June that no candidate met the suitability criteria for the role. The board subsequently advised the ministry to explore alternative options for appointing a candidate. Garg’s prior roles also include serving as a full-time director with Indraprastha Gas Limited, India’s largest city gas distribution company, and as a nominee director with Maharashtra Natural Gas Limited, a BPCL-GAIL joint venture. He holds a postgraduate degree in Electronics and Management. The final approval for Garg’s appointment as CMD will likely be announced after formal clearances. HPCL, one of India’s leading oil marketing companies, has been operating under interim leadership since the retirement of the previous CMD.
Ethanol-petrol blending initiative helped farmers earn Rs 575 billion in 3 years: Centre
The Ethanol-Blended Petrol (EBP) programme has helped expeditious payment of about Rs 575.52 billion to the farmers and savings of more than Rs 750 billion of foreign exchange in the last three years, the Parliament was informed on Monday. Under the EBP programme, public sector oil marketing companies (OMCs) sell ethanol blended with petrol. Minister of State for Petroleum and Natural Gas, Suresh Gopi, informed the Rajya Sabha that in the last three years (as on September 30, 2024), the EBP programme also resulted in crude oil substitution of nearly 11 million metric tonnes and net CO2 reduction of about 33.2 million metric tonnes. Under the EBP programme, the blending of ethanol with petrol increased from 1886 million litres in ethanol supply year (ESY) 2018-19 to more than 7 billion litres in ESY 2023-24, with a corresponding increase in blending percentage from 5 per cent in ESY 2018-19 to approximately 14.6 per cent in ESY 2023-24. Since 2019, the number of retail outlets selling ethanol-blended petrol has increased steadily. In 2019, ethanol-blended petrol was sold from 43,168 retail outlets of Public Sector OMCs which increased to all retail outlets across the country in 2024, the minister said. In order to promote the blending of ethanol in petrol, the government has taken several measures which include the expansion of feedstock for the production of ethanol, an administered price mechanism for procurement of cane-based ethanol under the EBP Programme, Ethanol Interest Subvention Schemes (EISS) for ethanol production from molasses as well as grains, and Long-Term Offtake Agreements (LTOAs) by OMCs with Dedicated Ethanol Plants (DEPs), etc. From 1.53 per cent in 2014, ethanol blending has surged to almost 15 per cent in 2024, with the government advancing the target of 20 per cent blending to 2025 – five years ahead of schedule.
LNG imports surge 10.8% in October as domestic gas output falls by 1.6%
India’s natural gas landscape in October 2024 reflected a mixed bag of growth and challenges, with liquefied natural gas (LNG) imports rising sharply by 10.8% year-on-year to 2941 million standard cubic meters (MMSCM), while domestic production fell by 1.6% to 3111 MMSCM. The latest report from the Petroleum Planning & Analysis Cell (PPAC) highlights the country’s increasing reliance on imported LNG to meet burgeoning energy demands, as domestic output struggles to keep pace. Total natural gas available for sale in October stood at 5527 MMSCM, marking a 4.2% increase compared to the same month last year. However, consumption marginally dipped to 6019 MMSCM in October 2024 from September’s levels, underscoring uneven sectoral demand. Fertilizers accounted for the largest share at 29%, followed by city gas distribution (CGD) at 21%, and power generation at 11%. Refineries and petrochemicals collectively consumed 12% of the total gas available. (Source: Economic Times) UBS Upgrades Petronet To ‘Buy’ On India’s Rising LNG Demand UBS has upgraded Petronet LNG Ltd. to ‘buy’, raising the target price for the stock to Rs 400 from Rs 320, citing benefits for the company in meeting India’s growing LNG demand. The target price implies a significant upside as Petronet is strategically positioned to benefit from India’s rising LNG dependence, UBS said. Demand is set to grow at 5.6% CAGR over the next three years, outpacing domestic gas output growth at 1.8% CAGR, the brokerage said in a recent note. Petronet has secured five long-term LNG supply contracts starting from 2026, adding 4.2 MMTPA, a 20% jump from current levels as per the report. Around 80–85% of incremental gas demand over the next three years expected to be met through imports, stated UBS. Liquified natural gas imports into India are expected to increase by around 11 MMTPA over the fiscal 2024 to 2028. Petronet could cater for half of these incremental imports, the brokerage said. UBS has based its expectations on expansion of the company’s Dahej terminal from 17.5 MMTPA to 22.5 MMTPA by March 2025, and improved pipeline connectivity of its Kochi terminal by mid-2025. Delay in commissioning and ramp-up of competitive terminals in Dabhol and Chhara is also likely to aid the company, UBS noted. Expansion of the Dahej facility and use-or-pay agreements for new capacity showcase strong earnings visibility, said UBS. Terminal growth rates were increased by 1%, factoring in 3–4% free cash flow growth in later years. With price-to-earnings ratio for fiscal 2026 at 13.6 times, valuations remain attractive, trading at a 15% discount to the historical average, added the brokerage. Revenues are projected to reach Rs 788 billion by financial year 2029, supported by higher LNG import volumes. UBS expects Petronet’s EBIT margins to remain robust, even as aggressive capex is spread over the next four years. Dividend payout remains steady due to strong cash flow from operations.
India Removes Windfall Profit Tax On Crude Oil And Fuel Exports To Boost Energy Sector
The Centre on Monday eliminated the windfall profit tax that had been in place for 30 months on domestically-produced crude oil and fuel exports. Minister of State for finance Pankaj Chaudhary tabled a notification in the Rajya Sabha about the decision of removing tax on crude oil produced by companies like ONGC and fuel exports by firms such as Reliance Industries Ltd The notification cancelled the June 30, 2022 order and removed the special additional excise duty (SAED) on crude oil production and fuel exports, including aviation turbine fuel (ATF), diesel and petrol. Additionally, the government withdrew the road and infrastructure cess (RIC) previously imposed on petrol and diesel exports. On July 1, 2022, India implemented windfall profit taxes, joining other nations in taxing extraordinary profits of energy companies. Initially, export duties were set at Rs 6 per litre for petrol and ATF, and Rs 13 per litre for diesel. A domestic crude production tax of Rs 23,250 per tonne was also established.
India Sees 9% Jump in Gasoline Consumption in November
Gasoline sales in India hit 3.42 million metric tons in November, which was a 9.2% increase on the year, the Economic Times has reported, noting diesel demand also grew, with November sales adding 8.4% on the year to 8.158 million tons. Aviation fuel demand also grew last month, further evidence of India’s growing demand for energy across fuel categories and the growth trajectory of its economy, highlighted by the increase in demand for diesel fuel. India is the world’s third-biggest importer of crude oil with over 80% of its demand covered by foreign crude. This has made the country highly price-sensitive and open to opportunities to diversify its supply, from both domestic and foreign sources. Domestic resources may hold significant promise, with up to 22 billion barrels in hitherto unexplored regions of the subcontinent’s sedimentary basin. To tap these, India would need help from Big Oil. Until such time as these reserves are confirmed, India remains reliant on imports—and OPEC production policies. Last month, the country’s petroleum minister called on the cartel and other producers to get together and discuss ways to stabilize the price of crude. India and other large consumers need predictability and stability in oil prices, Hardeep Singh Puri told Reuters last month on the sidelines of the ADIPEC energy conference in Abu Dhabi. “I’m hoping as a professional that all the players in this game will see a reason that… both producers and consumers can sit down together, have a discussion on what is a realistic price because it is not as if some production is taken off,” Puri said. Natural gas demand in India is on a growth trajectory as well. Projections are for twofold growth by 2040 and threefold by 2050, despite a parallel increase in wind and solar capacity for electricity generation as planned by the government.
Iran, India, Uzbekistan to ease transit thru Chabahar Port
Officials from Iran, India, Afghanistan, and Uzbekistan in the third joint working group exchanged their views regarding the facilitating the trade transactions and transiting and transporting goods through Chabahar Port. According to the Iran Ports and Maritime Organization, the third joint working group was held in Mumbai, India, in the presence of Deputy Director of Port and Economic Affairs of Chabahar Hossein Shahdadi. The participants discussed the capacity and infrastructure of transportation and the obstacles in this field. Presenting the necessary proposals to facilitate commercial transactions through Chabahar Port was also on the agenda of the meeting. Transportation and transit of goods from Chabahar Port were also discussed in the working group. The 3rd joint working group was held with the participation of officials from the Ministry of Ports, Shipping and Waterways of India, along with ambassadors of Uzbekistan, Afghanistan, and Iran in India, and Indian diplomats.
U.S. LNG Demand Nears Record Highs as Winter Looms
U.S. liquefied natural gas (LNG) plants are running near full throttle, with demand from export facilities hitting 14.6 billion cubic feet (bcf) on Friday. That’s just shy of the all-time record of 14.7 bcf set last December, according to data from LSEG. The surge comes as cooler weather settles in and outages at key facilities, like Freeport LNG, ease. The second-largest LNG exporter in the United States, Freeport LNG, was expected to draw just over 2 bcf on Friday after resolving several outages earlier this year. The plant is closely watched since its operations—or lack thereof—can send global gas prices swinging. Meanwhile, Cheniere Energy’s Sabine Pass facility in Louisiana, the largest U.S. LNG exporter, operated near its capacity, pulling almost 5.2 bcf. The U.S. continues to dominate as the world’s largest LNG exporter, with more production expected soon as two new plants gear up to go online. This comes as global LNG demand ramps up, especially in Europe, where natural gas prices have surged by 40% in the last two months due to cold weather forecasts and geopolitical tensions. Natural gas prices in the U.S. remain far lower than in Europe, where the benchmark Dutch TTF prices are nearly five times higher. This price gap is driving more U.S. LNG exports to European markets, helping meet their rising energy needs ahead of winter. As global markets tighten and colder temperatures arrive, U.S. LNG facilities are expected to play a crucial role in keeping the gas flowing to international buyers, all while pushing domestic production to new limits. With LNG demand near record levels, the U.S. solidifies its position as a global energy powerhouse.
The Next Four Years Will Be All About Natural Gas
Earlier in the year, energy analytics firm Wood Mackenzie predicted that a second Trump presidency could place a huge part of renewable energy investments at risk, increase carbon emissions by 1 billion tonnes more by 2050 and delay peak fossil fuel demand by 10 years beyond current forecasts. Not surprisingly, WoodMac expects the fossil fuel sector to benefit from Trump: the analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030. And now commodity analysts at Standard Chartered have concurred with that opinion. StanChart notes that following Scott Bessent’s recent nomination as Treasury Secretary, his Manhattan Institute June session where he spoke at a conference entitled ‘Towards a New Supply-Side: The Future of Free Enterprise in the United States’ is being scrutinised as a potential guide to policy. During that talk, Bessent was asked which version of the late Shinzo Abe’s three arrows economic plan he would recommend to an incoming President Trump. A keen admirer of Abe, Bessent put forward the three targets of 3% economic growth, cutting the budget deficit by 3% of GDP by the end of the administration and “Three million more oil barrels equivalent a day from U.S. energy production”. StanChart points out that many commentators are [incorrectly] interpreting Bessent’s comments to mean he would urge the Trump administration to raise U.S. crude oil production by 3 million barrels per day (mb/d), good for a huge 30% to about 16.5mb/d by 2028. The analysts say that Bessent meant the addition of 3 million per barrels of oil equivalent (mboe/d) to U.S. energy production by 2028, an objective well within the means of U.S. producers. StanChart points out that U.S. oil and gas output is currently ~40.7mboe/d. U.S. oil and gas output has grown by an average of about 123 kboe/d per month since 2015, meaning adding 3 mboe/d would take less than 25 months. The commodity experts have noted that 41% of the post-2015 increase has come from natural gas, 28% from natural gas liquids (NGLs) and just 28% from crude oil. StanChart has predicted that the crude oil element of the next 3 mboe/d increase is likely to be significantly less than 20%, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult. WoodMac and StanChart are not the only natural gas bulls. Last week, Morgan Stanley predicted that the U.S. natural gas market is poised to enter a new cycle of demand growth thanks to surging LNG exports and rising electricity demand. Over the past few years, dozens of pundits and industry experts have predicted that the ongoing Fourth Industrial Revolution will drive unprecedented electricity demand growth in the United States and globally. Last year, the power sector consulting firm Grid Strategies published a report titled “The Era of Flat Power Demand is Over,” which pointed out that United States grid planners—utilities and regional transmission operators (RTOs)—had nearly doubled growth projections in their five-year demand forecasts. For the first time in decades, demand for electricity in the U.S. is projected to grow by as much as 15% over the next decade driven by the Artificial Intelligence (AI), clean energy manufacturing and cryptocurrencies boom. Meanwhile, StanChart says oil market fundamentals would support an unwind of some OPEC+ cuts, but market sentiment justifies a pause. Earlier, StanChart predicted that actions by OPEC+ are likely to determine the near-and mid-term oil price trajectory. According to StanChart, much of the negative sentiment that has dominated oil markets over the past three months can be chalked up to misapprehensions about the tapering mechanism for the voluntary cuts made by eight OPEC+ countries. Many traders are worried that the balance of oil demand growth and non-OPEC+ supply growth might not offset the scale of restored OPEC+output, leaving oil markets oversupplied. However, the experts have pointed out that this assumption flies in the face of continued reassurances from OPEC+ members that the tapering would be fully dependent on market conditions rather than being automatic. Trader focus has been on the question of how many barrels could be returned before a surplus emerged; however, positioning and price dynamics imply that the answer to that question is zero. In a November 3 press release, OPEC announced that output increases would be postponed by a month until the start of 2025. StanChart says the delayed return of more barrels to the market does not necessarily mean that OPEC felt the physical market could not absorb the oil, but rather reflects its awareness that extremely pessimistic 2025 oil balance predictions have viewed the tapering through that lens. StanChart says the latest announcement by OPEC strengthens the case that the pace of tapering will be market-dependent and not automatic as traders fear.