Saying Goodbye to 2024—The Calm Before the Storm?
- Price volatility was down in 2024 for petroleum products
- Stage is set for a more volatile 2025
- Natural gas outlook turning bullish
- POWERHOUSE wishes you a Happy, Healthy and Prosperous 2025!
Sincerely,
Elaine Levin
President
Powerhouse
(202) 333-5380
The Matrix
Petroleum prices in 2024 took a rest from the volatile trading that has characterized most of this decade. The price swings witnessed during the first half of the 2020s were ones for the record books. WTI crude oil futures traded negative during the pandemic. ULSD traded a record high of $5.8595 in early 2022, soon after Russian troops invaded Ukraine. As we look forward to a new year, a new administration, and the start of the decade’s second half, could 2024 be the calm before the next volatility storm?
With one trading day to go, here are the stats:
ULSD futures averaged $2.4395 per gallon in 2024. The average daily range was $0.0643. On average, prices changed daily by $0.0326, or 1.3%, the lowest average percentage daily change of the decade so far. By comparison, 2022 was the most volatile year, both on an absolute and percentage basis. The average daily range was $0.1928. The average daily change was $0.1000, or 2.8%.
RBOB futures averaged $2.3026 per gallon in 2024. The average daily range was $0.0604. On average, prices changed daily by $0.0604, or 2.6%, which is also the lowest average percentage daily change of the decade so far. 2020 was the most volatile year on a percentage basis. The average daily change was $0.0317 per gallon, a 2.7% move in price. 2022 had the most volatile trading on an absolute basis. The average daily change of 0.0701 represented a 2.4% move in price.
Why the lower volatility? As discussed in last week’s Energy Market Situation, OPEC+ has been doing its best to balance the market and has increased spare capacity in the process. Spare capacity has been a cushion against any price spikes due to unrest in the Middle East. China’s demand growth engine has slowed. The world has adjusted to new trade flows in the global oil trade after sanctions on Russia.
What could change in 2025? The year starts with a forecast of an extended period of below-average temperatures for the country’s eastern half. China had announced additional plans to stimulate the economy. January will also be the start of the second Trump administration. Stiffer sanctions on Iran are a high probability. So are tariffs, which add uncertainty to everything from the price of imported Canadian crude to the global economy. Higher prices could usher in a new wave of inflation, impacting the Fed’s interest rate plans for the new year. Biofuel programs are in flux as market participants brace for changes to the Renewable Volume Obligations and a more generous granting of small refinery exemptions.
The good news is that volatility is an opportunity for those who know how to hedge.
Supply/Demand Balances
Supply/demand data in the United States for the week ended December 20, 2024, were released by the Energy Information Administration.
Total commercial stocks of petroleum decreased (⬇) 12.7 million barrels to 1.2205 billion barrels during the week ended December 20th, 2024.
Commercial crude oil supplies in the United States were lower (⬇) by 4.2 million barrels from the previous report week to 416.8 million barrels.
Crude oil inventory changes by PAD District:
PADD 1: Up (⬆) 0.6 million barrels to 8.1 million barrels
PADD 2: Down (⬇) 1.2 million barrels to 103.9 million barrels
PADD 3: Down (⬇) 1.9 million barrels to 231.5 million barrels
PADD 4: Unchanged (=) at 24.3 million barrels
PADD 5: Down (⬇) 1.7 million barrels to 49.0 million barrels
Cushing, Oklahoma, inventories were down (⬇) 0.3 million barrels to 22.7 million barrels.
Domestic crude oil production decreased (⬇) 19,000 barrels per day from the previous report at 13.585 million barrels per day.
Crude oil imports averaged 6.471 million barrels per day, a daily decrease (⬇) of 178,000 barrels. Exports decreased (⬇) 1,173,000 barrels daily to 3.722 million barrels per day.
Refineries used 92.5% of capacity; an increase (⬆) of 0.7% from the previous report week.
Crude oil inputs to refineries increased (⬆) 205,000 barrels daily; there were 16.816 million barrels per day of crude oil run to facilities. Gross inputs, which include blended stocks, increased (⬆) 126,000 barrels daily to 16.954 million barrels daily.
Total petroleum product inventories decreased (⬇) by 8.4 million barrels from the previous report week, up to 803.7 million barrels.
Total product demand increased (⬆) 1,011,000 barrels daily to 21.831 million barrels per day.
Gasoline stocks decreased (⬇) 3.0 million barrels from the previous report week; total stocks are 217.0 million barrels.
Demand for gasoline increased (⬆) 80,000 barrels per day to 9.008 million barrels per day.
Distillate fuel oil stocks decreased (⬇) 1.7 million barrels from the previous report week; distillate stocks are at 116.5 million barrels. EIA reported national distillate demand at 4.253 million barrels per day during the report week, a decrease (⬇) of 245,000 barrels daily.
Propane stocks fell (⬇) 4.5 million barrels from the previous report to 85.6 million barrels. The report estimated current demand at 1,734,000 barrels per day, an increase (⬆) of 453,000 barrels daily from the previous report week.
Natural Gas
Natural Gas Futures are closing 2024 on a strong note. With two trading sessions left for the year, prices traded above $4.00 for the first time this year on the prospect of a colder January. Looking ahead to 2025, a more bullish picture is emerging.
Natural gas producers cut production in 2024 for the first time since 2020 in response to lower prices, but demand is expected to grow. A stated goal of the incoming administration is to boost exports of U.S. oil and natural gas. There was even a threat of tariffs to the E.U. if they did not increase the amount of energy they import from the U.S. And there is new demand growth to power the grid for data centers and AI.
The technical outlook has turned bullish as well. Elliott Wave analysis shows prices moving higher as part of a third wave. The current technical targets are $4.83, then $6.18 for the top of the third wave.
According to the EIA:
- Net withdrawals from storage totaled 125 Bcf for the week ended December 13, compared with the five-year (2019–2023) average net withdrawals of 92 Bcf and last year’s net withdrawals of 78 Bcf during the same week. Working natural gas stocks totaled 3,622 Bcf, which is 132 Bcf (4%) more than the five-year average and 20 Bcf (1%) more than last year at this time.
- According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net withdrawals of 117 Bcf to 147 Bcf, with a median estimate of 130 Bcf.
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