Oil markets are hesitant to trade with conviction as they await the start of Trump’s second term.

OPEC+ has delayed unwinding production cuts until the end of Q1 2025 due to pessimistic market sentiment.

Natural gas prices have dipped due to forecasts of milder weather.

With nearly a month since U.S. President-elect Donald Trump won a second term in the Oval Office, oil markets have been struggling to find direction despite event risk remaining high, particularly in the Middle East. According to commodity analysts at Standard Chartered, the market’s apparent hesitation to trade a view with any conviction has intensified the notion that oil markets seem content to wait for Trump to take office. Volatility has fallen sharply, with the 30-day front-month Brent realized annualized volatility sinking to a1 6-week low of 25.1% at settlement on 2 December. This volatility reading falls in the lower 30% tail of the distribution of volatility over the past 10 years.

The ongoing ceasefire in Lebanon appears fragile, while the rekindling of the Syrian civil war indicates that the balance of power in the region has been disturbed. On Monday, Hezbollah fired into a disputed border zone held by Israel, with Lebanon’s parliament speaker claiming that Israel has committed 54 breaches of the ceasefire.

StanChart has reiterated its earlier prediction that OPEC+ tapering mechanism is likely to play the biggest role in dictating the oil price trajectory. The analysts note that the OPEC+ Joint Ministerial Monitoring Committee (JMMC) and the broader OPEC+ Ministerial meeting originally scheduled for 1 December was moved to today, with the more administrative OPEC meeting set for 10 December.

According to StanChart, the key discussions were those between Saudi Arabia, Russia, Iraq, Kuwait, the UAE, Kazakhstan, Algeria, and Oman, the eight OPEC+ nations that announced additional voluntary output cuts in April and November 2023. StanChart correctly predicted that, given current negative market sentiment and an overly pessimistic market view of 2025 balances, tactically the best choice for ministers was to delay any unwinding of voluntary cuts to the end of Q1 and perhaps even further out. StanChart notes that much of the recent burst of oil diplomacy has centered on Iraq and its commitment to both reduce output to target and to pay back past overproduction.

Bloomberg estimates that Iraqi crude oil output fell to a three-year low of 4.06 million barrels per day (mb/d) in November; good for a 70 thousand barrels per day (kb/d) m/m decline;, 260 kb/d below August and 420 kb/d lower y/y, but still 60 kb/d above target (including voluntary cuts).

According to StanChart, much of the negative sentiment that has dominated oil markets over the past couple of 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. This realization is likely to have driven the latest oil price rally.

Gas Rally Hits Pause

U.S. natural gas futures dropped to $3.00/MMBtu on Tuesday, their lowest in over a week, after surging 20% in November. Gas prices have declined amid forecasts of milder weather in mid-December, following a brief cold spell that had driven earlier gains. Utilities have stopped drawing heavily from storage, despite colder-than-usual weather recently boosting consumption. Meanwhile, U.S. gas production clocked in at a robust 101.5 billion cubic feet per day in November, but below last year’s peak of 105.3 bcfd. 

Meanwhile, European natural gas futures slipped to €47.6 per megawatt-hour, retreating from a 13-month high of €49 earlier this week, as forecasts pointed to warmer weather while withdrawals slowed down. EU gas inventory draws have moderated over the past week: According to Gas Infrastructure Europe (GIE) data, inventories stood at 100.06 billion cubic metres (bcm) on 1 December; the w/w draw clocking in at 2.96 bcm, a significant deceleration from the previous week’s draw of 3.58 bcm. Last week’s withdrawal clip was also less than both last year’s draw of 3.65 bcm and the five-year average of 3.09 bcm.

Gas inventories are at 85.2% of capacity, 10.54 bcm lower y/y but just 0.36 bcm below the five-year average.

By Alex Kimani, Oilprice.com  – Dec 06, 2024

4 critical moments for North American oil and gas trading

To stay ahead of the energy commodities market in North America in 2024, you had to be on top of these events as they happened

In an uncertain world, global commodities markets are increasingly sensitive to a wide range of factors that can impact supply, demand and prices. As we come to the end of an eventful year for North American oil and gas, we highlight some of the ways Wood Mackenzie’s real-time data and analytics have helped our clients stay ahead of events that shaped the market in 2024. 

 1. January 2024: New WoodMac model forecasts US natural gas freeze-offs 

Freeze-offs can be a serious problem at all stages of the gas supply chain, from the production wellhead through to the last point in the customer delivery system. Whether the gas is a byproduct from a crude oil well, or ‘dry gas’ from a gas-only well, the potential for water or hydrates to freeze and block the flow is a constant threat as temperatures fall. Our research shows that new natural gas production added over the past decade is more vulnerable to freeze-offs than legacy wells, making the forecasting of these events more important than ever. 

As the cold weather surge hit at the beginning of the year, we launched an all-new freeze-off forecasting model to accurately forecast the impact by region of low temperatures two weeks ahead. During the extreme weather, freeze-offs actualised close to our ‘most likely’ scenario, underlining the accuracy of the new forecasting approach.  

2. February 2024: WoodMac flyover shows Matterhorn Express Pipeline progress 

The 580-mile Matterhorn Express Pipeline (MXP) is designed to provide an added 2.5 billion cubic feet per day (bcfd) of takeaway capacity out of the Permian basin to Katy, near Houston, Texas. In mid-February, we chartered an aircraft to overfly the route of the pipeline, which was still under construction.  

With the benefit of over 3,000 photographs taken on the reconnaissance flight we were able to confirm significant progress both on the pipeline itself and on its associated compressor stations. Subscribers to our Natural Gas Infrastructure Intelligence product were able to access the photos and draw their own conclusions via our NatGas Portal.  

Initial flows along the MXP followed in September 2024. While the pipeline won’t initially unlock new production, it will provide much-needed additional capacity to address constraints on sending gas eastwards from the Permian and out of the region. That should strengthen cash prices for gas at the central Waha Hub in Pecos County, Texas – particularly during disruption due to events such as pipeline outages and maintenance that can drive Waha cash prices below zero. 

3. April 2024: WoodMac crude storage levels data shows TMX oil pipeline nearing completion

The Trans Mountain Expansion (TMX) project involves the construction of an additional pipeline roughly parallel to the existing one between Edmonton and Burnaby in Vancouver, Canada. In April we registered a sharp drop in crude inventories at the storage hub in Edmonton where the pipeline originates. This indicated that significant system line fill had started – the final pre-operation step before the pipeline was ready for commercial shipments.

TMX went on to deliver its first barrels of oil on 20 May. By subscribing to our North American Crude Markets Service, WoodMac clients were able to stay ahead of the market impact of TMX going into commercial operation. They also enjoyed access to our in-depth views on how the pipeline will reconfigure trade flows across the North American crude value chain.

4. August 2024: Wood Mac Production by Producer models capture Marcellus gas curtailment

On 2 August 2024, Coterra Energy announced it had decided to cut 325 million cubic feet per day (mmcfd) of gross production (275 mmcfd net) from its Marcellus shale gas play in Pennsylvania. The firm’s decision, made in response to low market prices, was one of a string of similar decisions made that quarter by companies including Chesapeake Energy, EQT Corporation and National Fuel Gas.

Clients of WoodMac’s Equity Production Insight Service, which uses proprietary data and analytics to monitor daily production levels for more than 30 oil and gas exploration firms, were informed of the curtailment almost as it happened. Our data showed estimated net production for Coterra down around 270 mmcfd from the first of the month, in line with the figure given in the company’s announcement the following day.

By :Jim Mitchell , Woodmac / 06 December 2024

The oil and gas industry is shifting towards a new investment cycle that prioritizes decarbonization and sustainability alongside financial performance.

Emission-reduction targets are now a critical part of project development and decision-making processes.

Oil and gas companies must navigate uncertainty while delivering on their commitments to decarbonization, resilience, and diversification.

The upstream oil and gas sector stands on the cusp of entering a new investment cycle — one that Rystad Energy has dubbed the ‘deliver in uncertainty’ cycle — where there is set to be an increased focus among players to deliver on sustainability targets while remaining financially robust.

The previous cycle, which started amid the Covid-19 pandemic in 2020 and is now ending, threw energy markets into turmoil. However, it accelerated the pace of energy transition as oil and gas companies were forced to re-invent themselves, figuring out their value proposition amid an increasing push from investors and governments to do more to lower emissions.

With Russia’s invasion of Ukraine in February 2022, high energy prices, OPEC+ production cuts and a realization that transition may take longer, the pendulum swung towards resilient supply, with the stock prices of major oil players rising, market capitalization surging, and companies paying dividends and undertaking share buybacks like never before.

Oil price cycles typically affect investment levels and force some exploration and production (E&P) players to adopt new strategies and reset priorities to remain competitive and investable in a new market reality. The market is nearing the end of the current investment cycle where, to protect their balance sheets and stabilize returns, E&P players have revised and reshaped their portfolios, prioritizing decarbonization and portfolio resilience. As a result, a wide range of new key-performance indicators and targets were adopted as part of the decision-making process. Emission-reduction targets, emission intensity and carbon prices are no longer a novelty in decision-making and portfolio valuation; they are essential parts of a company’s strategy.

Digitalization has been under the spotlight of the industry and companies for several years, but eventually it became a part of ‘business as usual’. Now, digital initiatives are an essential component of project development as they are beneficial in terms of optimizing cost and time. Decarbonization can be considered in the same way: steadily, it is becoming a part of business strategy, and abatement plans must be included in each project development as, even if a company has an objective of increasing supply, its emission-reduction targets make it accountable for keeping emissions under control.

Decarbonization as a new digitalization strategy is now an essential part of business, with companies, the financial sector and governments sharing accountability for reducing emissions to meet global emissions targets.

For the upcoming ‘deliver in uncertainty’ investment cycle, oil and gas companies must deliver on commitments, targets and goals acquired in the previous cycle associated with decarbonization, resilience and diversification while performing their fiduciary responsibilities. Even under the most conservative energy transition scenario, where hydrocarbon demand aligns with a 2.2 degrees Celsius temperature increase – referring to average global temperature rises above pre-industrial levels – upstream investments are expected to plateau at around $620 billion per year.

By Olga Savenkova,  Rystad Energy / Dec 06, 2024.

Is OPEC Plus getting its acts together? Brent Oil Futures prices are rising on reports that suggest that OPEC-plus will extend of its production cuts until the end of the first quarter of next year. If agreed it would allow the trend of dwindling supply. And unless it falls apart, it will establish what we have seen and that is to the lower the end of the trading rage for the rest of this year and into the new one.

This comes as China reacts to the Biden administration putting export controls on computer chip-making equipment, software and high-bandwidth memory chips to China. China struck back by banning some exports of gallium and germanium, that can be used for military purposes.

Gallium and Germanium are rare metals that are essential in producing semiconductors and other high-tech products like semiconductor wafers for solar cells, LEDs, fiber optics, dentistry, Integrated circuits, airport security scanners, infrared optics, Infrared sensors. China is the world’s largest producer of gallium and germanium, and it would be hard to replace those supplies.

Reuters reported that on Saturday Iraq halted all operations at the Shuaiba refinery in Basra following the overloading of fuel oil storage tanks, according to three refinery officials. The disruption occurred after no ships arrived at the Khor al-Zubair port to load exported fuel oil since mid-last week. The officials, who spoke on condition of anonymity, said the backlog of fuel oil at the refinery led to the suspension of operations.

Natural Gas Futures has pulled back hopes for a December warm up but in Europe an energy crisis is developing. Javier Blass from Bloomberg pointed out that, “European natural gas storage withdrawals in November were the 2nd largest since at least 2011 (and about double the long-term average). The reason? Strong gas-fired electricity generation to offset low wind, plus a cold start of the winter season.

In the US cold was the natural gas story last week but hopes for a warmup is pressuring us. Fox Weather reported that, “Winter weather is making its presence known across the U.S. as millions of people deal with the onslaught of a long-duration, lake-effect snowstorm that has paralyzed communities downwind of the Great Lakes. And to make matters worse, rounds of arctic air will continue to invade the country and send temperatures tumbling below freezing in cities as far as the Southeast.

The FOX Forecast Center said the arctic blast from Canada has been sweeping across the central and eastern U.S.. Temperatures in cities in the northern Plains plummeted below zero over the weekend, and wind chills made it feel even colder.

Cheap corn, more Ethanol. DTN reports that US Ethanol production is hot and at an all-time high! DTN Energy says that overall ethanol production in the United States averaged 1.119 million barrels per day (bpd) in the week ended Nov. 22, a fresh record high, up 9,000 bpd week-on-week, the Energy Information Administration reports. Domestic ethanol production for the week was 108,000 bpd, or 9.7%, higher than in the same week last year while four-week average output at 1.112 million bpd was 81,000 bpd above the same four weeks last year. Midwest ethanol production averaged 1.048 million bpd, up 10,000 bpd week-on-week and 98,000 bpd, or 9.4%, higher than in the same week last year.

The fundamental outlook for oil is looking pretty solid here as we get into winter demand. We should start hitting on all cylinders now we’re going to really test the thesis that the market is oversupplied. We’re probably going to find out very shortly whether that’s the case.

By Phil Flynn, Investing / 12. 03. 2024.

Linde has been awarded $10 million (€9 million) by the US Department of Energy (DOE) to lead the demonstration of cost-effective, standardised, and replicable advanced hydrogen fuelling infrastructure for heavy-duty trucks in La Porte, Texas.

The hydrogen refuelling station (HRS) will offer high fuelling throughput with convenient and accessible fuelling options to businesses and transportation fleets in the region, as well as tube trailer filling to enable supply chain development in the Gulf Coast region.

The HRS will be located in the heart of Linde’s robust hydrogen pipeline complex that supplies over 1 billion cubic feet (28 million m3) per day of hydrogen to the area, enabling access to reliable and low-cost feedstock.

The funding is part of DOE’s efforts to advance the National Clean Hydrogen Strategy to accelerate the research, development, demonstration, and deployment of next-generation clean hydrogen technologies.

By: Anamika Talwaria , Tankstorage / December 3, 2024.

ExxonMobil reported a dip in third-quarter profits Friday on lower earnings from its refining business, but the results were strong enough to enable nearly $10 billion in shareholder distributions.

The big US oil company, which saw upstream oil production rise following its acquisition of Pioneer Natural Resources, pointed to the benefits of $11.3 billion in “structural cost savings” as a driver of the results. 

The oil giant returned $9.8 billion to investors in the three-month period, up from $9.5 billion in the second quarter. ExxonMobil lifted the dividend by four percent, in addition to making share repurchases.

Net profits in the third quarter were $8.6 billion, down 5.1 percent from the year-ago period.

While earnings were higher in upstream and chemical products, ExxonMobil saw a big drop in energy products results due to weakened refinery margins.

The company pointed to record oil and natural gas output in Guyana and strong results in the Permian Basin, a shale region in Texas and New Mexico.

Crude oil prices have fallen about 15 percent since the end of the second quarter, a dynamic that Chief Executive Darren Woods said reflected a market imbalance.

“We’re seeing record levels of demand for oil, record levels for demand for products coming out of refinery, petroleum products,” Woods told CNBC.

“But we also see a lot of supply in the world right now, and a lot of that supply is coming out of the US, and the unconventional developments that we have here in the US, and so it’s basically a supply-driven price environment right now.”

At Chevron, profits came in at $4.5 billion, down 31 percent from the year-ago level.

Chevron’s earnings were also dented by lower refining margins, although it also enjoyed record oil and natural gas production from the Permian Basin.

Chevron returned $7.7 billion to shareholders during the quarter, which the company said was a record.

By: Easternprogress / December 03, 2024 

Brazil’s fuel retailer Ultra UGPA3.SA has asked the country’s antitrust body for approval to build and operate a liquefied petroleum gas (LPG) terminal in the Port of Pecem, in the state of Ceara, together with Supergasbras, it said on Friday.

The facility, with storage capacity of some 62,000 tons, would cost a total of 1.2 billion reais ($200.90 million) to be split between Ultra’s subsidiary Ultragaz and Supergasbras, Ultra said in the filing, adding that building works are expected to be completed in 2028.

($1 = 5.9730 reais)

By: Isabel Teles, Reuters / Dic 3, 2024.

Aramco’s journey reflects not just the shift in Saudi energy policy but a broader reimagining of what national oil companies can achieve on the global stage.

Saudi Aramco is not only the largest oil producer globally but also the most profitable business, surpassing tech giants like Apple and Microsoft. Aramco is evolving far beyond its traditional role, now positioning itself at the forefront of economic diversification, technological innovation, and sustainability, aligning with the broader vision set forth by Crown Prince Mohammed bin Salman to transform the Saudi economy and reduce its dependence on oil. This shift has turned Aramco into a key player in reshaping the kingdom’s energy landscape and broader strategic interests.

Driving Vision 2030

Aramco, Saudi Arabia’s economic crown jewel, is central to the ambitions of Vision 2030, which aims to diversify the economy and prepare for a post-oil future. As the primary source of funding for the Public Investment Fund, Aramco’s recent financial activities, including its record-breaking initial public offering in 2019 and a secondary share offering in 2023, are crucial in channeling resources into non-oil sectors. Funds raised through these offerings are being reinvested to support an array of domestic and international projects that are expected to reduce the kingdom’s reliance on oil and build a more resilient, diversified economy.

In a strategic move in March, Saudi Arabia transferred 8% of Aramco’s shares to the PIF – valued at around $163.6 billion, reflecting Aramco’s market worth – aiming to bolster the fund as the kingdom prepares for a possible IPO of the company. This transaction could provide additional financing for Vision 2030. The transaction raised the combined stake of the PIF and its affiliates in Saudi Aramco to 16%, equating to $327 billion in value.

New Discoveries and a Renewed Gas Focus

Aramco recently announced the discovery of two unconventional oil fields, an Arabian light crude reservoir, two natural gas fields, and two gas reservoirs in the Eastern Province and Empty Quarter. Aramco is set to invest between $48 billion and $58 billion in 2024, prioritizing exploration efforts even as it holds off on further expanding its oil production capacity.

Complementing these exploration efforts, the company is advancing its natural gas ambitions through strategic investments and contracts. Aramco has secured contracts exceeding $25 billion for the expansion of the Jafurah gas field and the third phase of its main gas network upgrade. In 2023, Aramco made its initial venture into the global liquefied natural gas market by acquiring a minority share in MidOcean Energy, recently expanding its stake to 49%. Aramco signed a nonbinding deal in June 2024 to purchase LNG from Sempra’s Port Arthur project in Texas, with the potential to acquire a 25% stake in Phase 2. Additionally, Aramco is negotiating with Tellurian to acquire a stake in its Driftwood LNG plant in Louisiana and reached a preliminary agreement with NextDecade Corporation for a 20-year LNG offtake from the Rio Grande export facility in Texas. Aramco’s potential LNG trading expansion comes at a time of growing demand, with Europe moving away from Russian gas and Asia transitioning from coal.

Decarbonizing Energy Production

Aramco has committed to reduce its operational emissions to net zero by 2050. At the sixth Future Investment Initiative in 2022, Aramco introduced what it said was “one of the world’s largest sustainability-focused venture capital funds” to drive lower-emission energy solutions. Aramco Ventures, the corporate venture arm of Aramco, is leading this effort.

Aramco Ventures’ investments focus on supporting the company’s decarbonization efforts, developing lower-carbon fuel businesses, and driving digital transformation. Through the Sustainability Fund, Aramco Ventures targets companies, such as Xpansiv, that are aligned with Aramco’s 2050 net-zero goal for Scope 1 and Scope 2 emissions (emissions related to a company’s operations) across its fully owned and operated assets. In January, Aramco announced it would inject an additional $4 billion into Aramco Ventures, bringing its total capital to $7 billion over the next four years.

Over the past two years, Aramco has signed several memorandums of understanding to explore potential lower-carbon energy solutions. In July 2023, Aramco entered into an agreement with Aker Carbon Capture, headquartered in Oslo, Norway, to explore collaboration on carbon capture, utilization, and storage as well as industrial modularization in Saudi Arabia. In May 2024, Aramco Ventures signed an agreement with U.S. climate tech company Spiritus to explore opportunities in direct air capture and revealed that Aramco Ventures had made an equity investment in November 2023. Aramco is one of several investors, including Amazon’s Climate Pledge Fund and Siemens Financial Services, to have together recently injected a total $80 million into the Los Angeles-based CarbonCapture, Inc. Aramco also entered into an agreement with Rondo Energy, which specializes in lower-carbon industrial heat and power.

Aramco has shown a commitment to continued growth in these areas. In January, the company revealed plans to inject $4 billion into its venture capital division, aiming to diversify Saudi Arabia’s economy away from oil. This funding will raise Aramco Ventures’ total capital to more than $7 billion, with venture capital fund Wa’ed Ventures receiving another $500 million to invest in local startups.

As Aramco ramps up gas production and carbon capture and storage initiatives, it also intends to focus on producing blue hydrogen and ammonia. In September 2020, Aramco, in collaboration with Japan’s Institute of Energy Economics and the Saudi Basic Industries Corporation, for the first time successfully produced a shipment of blue ammonia in Saudi Arabia and delivered it to Japan, with support from the Japanese Ministry of Economy, Trade and Industry. Aramco signed final agreements in July to acquire a 50% interest in Jubail-based Blue Hydrogen Industrial Gases Company, a division of Air Products Qudra, with provisions for purchasing hydrogen and nitrogen.

Strengthening Global Ties: Aramco’s Downstream Expansion

Aramco’s international reach has continued to expand, especially in downstream refining and petrochemical projects with the acquisition in 2020 of majority ownership of the Saudi Basic Industries Corporation and successful pursuit of new downstream opportunities.

The Aramco-SABIC merger has delivered key strategic benefits. By acquiring a 70% stake in SABIC, Aramco expanded its global petrochemical footprint to over 50 countries and strengthened its integration across the hydrocarbon value chain. This has strengthened Aramco’s position in the chemicals sector, diversifying its operations beyond crude oil and boosting resilience to market fluctuations. The merger has also leveraged SABIC’s expertise in innovation and materials, enhancing synergies in research and development.

Aramco is working to secure downstream deals in Asia, particularly bolstering its presence in China, as it aims to lock in long-term crude demand and tap into the growing petrochemicals market. After a September visit to Saudi Arabia by Chinese Premier Li Qiang, Aramco announced new agreements with key Chinese partners. The Development Framework Agreement with Rongsheng Petrochemical explores joint expansion of Saudi Aramco Jubail Refinery Company facilities and potential equity stakes in each other’s downstream projects, while the Strategic Cooperation Agreement with Hengli Group advances discussions on Aramco’s potential 10% stake in Hengli Petrochemical. In another downstream project in China, in May 2023, Aramco and its partners began construction of a refinery and petrochemical complex in Panjin, Liaoning province, where Aramco holds a 30% stake and the right to supply crude feedstock.

Investing in Innovation and Growth

Aramco is expanding beyond energy, embracing advanced technologies to optimize its operations and drive Saudi Arabia’s digital transformation, through its subsidiary, Aramco Ventures. Over the past couple of years, Aramco Ventures has shifted its focus; while earlier investments were centered around core oil and gas technologies, recent efforts have focused on fourth industrial revolution, digital, sustainability, and artificial intelligence technologies. The firm sees generative AI as a key tool in helping Aramco achieve its 2050 net-zero goal.

Saudi Arabia is rapidly emerging as the fastest-growing data center market in the Middle East, with its economy and public utilities quickly adopting new technologies to drive a sweeping digital transformation. According to Mordor Intelligence, the country’s “big data” and AI market is poised for significant growth.

The “KSA Cloud First Policy,” introduced in 2020, mandates that civilian government entities prioritize cloud solutions for any new information technology investments, propelling further expansion of cloud technology across the kingdom. This strategic shift marks a key milestone in Saudi Arabia’s journey toward becoming a global leader in AI and cloud computing.

Aramco Digital, the company’s tech subsidiary, plays a pivotal role in these initiatives, forming strategic partnerships to advance AI-driven innovation across Saudi Arabia. Aramco has signed multiple agreements to enhance the company’s supercomputing and AI capabilities. Aramco aims to use an AI supercomputer powered by advanced NVIDIA chips to optimize drilling and geological analysis. The company’s partnership with South Korean chipmaker Rebellions, Inc. is focused on exploring the use of AI neural processing unit chips in its data centers. Additionally, Aramco signed a memorandum of understanding with SambaNova Systems, an industry-leading South Korean firm that designs AI semiconductors, to drive digital innovation across the kingdom.

Aramco plans to deploy Cerebras CS-3 systems to enhance its cloud computing capabilities. Aramco Digital also launched the world’s first 5G processors in partnership with Qualcomm. According to Qualcomm, these chips are engineered to “transform 5G connectivity and coverage within a single processor.” Alongside the chip launch, the two companies are collaborating with Saudi Arabia’s Research, Development, and Innovation Authority to introduce the startup incubator program Design in Saudi Arabia. This initiative aims to support AI, wireless technology, and Internet of Things startups by offering technical assistance, business mentoring, and intellectual property training.

Aramco has established a partnership with Groq Inc., an AI startup specializing in inference technology, to construct a massive data center in Saudi Arabia. The center is projected to become a key hub for companies utilizing AI systems across the Middle East, Africa, and India. AI inference, which involves processing live data to make predictions or solve tasks, will be central to the data center’s operations. Aramco Digital has also teamed up with Accenture to propel generative AI advancements and strengthen the digital skillset of Saudi Arabia’s workforce.

These initiatives build upon the launch of the Saudi Accelerated Innovation Laboratory, a national hub designed to turn innovative ideas into market-ready products, alongside its Global AI Corridor ecosystem. The hub is expanding with two new centers in Riyadh to provide support for domestic technology innovation, in collaboration with the Saudi Authority for Research and Innovation Development and King Abdulaziz City for Science and Technology, among others.

Through these ventures, Aramco is not only modernizing its core business but also positioning itself as a leader in the global digital economy.

Challenges and Opportunities

While Aramco’s aggressive diversification strategy opens new doors, it also brings challenges. The company’s expansion into the LNG market exposes it to fluctuations in global gas prices and the complexities of managing international partnerships. Moreover, aligning the interests of various stakeholders in joint ventures is essential for ensuring the long-term success of these projects.

Saudi Aramco and other companies face challenges in scaling carbon capture, utilization, and storage. Additionally, the high costs associated with blue hydrogen production could make it difficult for Aramco to attract potential customers.

However, by harnessing its vast financial resources, expertise in energy production, and advanced technology, Aramco appears well positioned to navigate these challenges. Its evolving role as a national energy leader – encompassing oil, gas, petrochemicals, and digital technology – underscores its transformation from an oil producer into a diversified energy and investment powerhouse, central to Saudi Arabia’s future.

Aramco’s journey reflects not just the shift in Saudi energy policy but a broader reimagining of what national oil companies can achieve on the global stage. By broadening its portfolio and embracing innovation, Aramco is laying the groundwork for a sustainable and diversified future.

By: John Calabrese / Dec 3, 2024.

Enbridge Inc. raised its quarterly dividend for next year as it released its financial guidance for 2025.

The pipeline company says it will pay a quarterly dividend of 94.25 cents per share, up from 91.5 cents per share, effective March 1.

The increased payment to shareholders amounts to an annualized dividend of $3.77 per share to give it an annual yield of about 6.2 per cent based on the company’s share price Monday.

In its outlook, Enbridge says it expects adjusted earnings before interest, income taxes and depreciation between $19.4 billion and $20.0 billion for 2025, a nine per cent increase from the midpoint of its 2024 guidance.

Distributable cash flow per share is expected to be $5.50 to $5.90 next year.

The company says the guidance is based on expected strong utilization across its businesses and contributions from acquisitions and growth projects that entered service in 2024 as well as partial-year earnings from projects that are expected to begin service in 2025.

This report by The Canadian Press was first published Dec. 3, 2024.

By: CALGARY , Canadian Press / December 3, 2024.

The release of the October broad measure of consumer prices in the United States, the PCE deflator, showed inflation that was unsurprising and broadly stable. The numbers are distorted by fantasy housing price measures, but measuring prices that actually exist in the real economy are rising less than 2% y/y.

The price data is not especially alarming. However, a note of caution is struck in the detail. Currently, supply issues are more important than demand issues in driving inflation.

The San Francisco Federal Reserve breaks down price data into supply and demand driven price changes. Essentially, if prices and consumption both rise in an unexpected manner, demand is likely to be driving inflation. If prices rise, but consumption falls in an unexpected manner, supply constraints are likely to be driving inflation. Since June last year, supply constraints have been more important than strong demand in pushing up prices.

That today’s inflation is driven more by supply than demand is relevant as the US enters 2025. Several possible US policy measures have supply chain implications—notably the threatened tax on consumers of imports (including companies using imports in their supply chains), and large-scale deportations of workers. The extent of future supply chain disruption will assume greater importance for future inflation.

by: Paul Donovan / December 3 , 2024.