Why are major oil companies in confrontation with EV cars in the US?
Global oil companies are cooperating now with biofuel producers in a united front against EV cars, according to an interesting Bloomberg article published this week, which notes the rapid increase in EV cars, in turn threatening two industries that were usually at odds with each other.
What’s happening now is that both industries are uniting against Federal policies that aim to promote EV cars as the only alternative for the future, no matter the cost.
According to Bloomberg, the American Petroleum Institute joined the National Corn Growers Association and several other industrial groups to support a Republican proposal in the Congress that imposes the sale of gasoline mixed with higher parts of ethanol throughout the year.
Only during the cold months that E15 fuel is usually sold, while E10, with fewer ethanol parts, is sold usually in the summer, amid concerns about smoky fog resulting from E15 if sold in summer.
Usually, oil companies oppose the selling of higher ethanol-fuel as it means less gasoline in the tank and less sales, however they now took a radically different position under pressure from EV sales.
Traditional oil and fuel companies are now actively collaborating with biofuel companies, especially those depending on corn, in a united front against mass electrification of the automotive industry.
Last year, EV automotive sales hit a record 7% of total sales in the US in 2023, however sales are expected to slow down this year.
The demand for gasoline isn’t expected to collapse anytime soon as the appeal for traditional means of transportation remains strong, pushing major oil companies to agreement with major corn-based biofuel companies.
Amazingly, even in Norway, the current with the highest rate of EV car ownership in the world, fuel demand remains stable.
Why are Oil Companies Concerned?
They’re mainly concerned about the growing pressure from Washington and the hand of the government moving against their industry.
EV car ownership has so far only displaced 1.5 million bpd of daily global oil sales, which remains a tiny percentage, as EV cars are still a more expensive choice with less appealing infrastructure.
Traditional industries alongside biofuel industries have sown doubt about President Joe Biden’s announced goal for turning half of all car sales in the US to EV by 2030, with several officials saying such a thing won’t happen unless people were actively forced to purchase EVs under threat of violence.
Dow Jones dips but still on track for weekly profit
US stock indices were mixed on Friday with Wall Street heading for weekly gains as the corporate earnings season nears its end.
So far, 319 companies listed in the S&P 500 index have reported their results, with 80.6% of them beating analysts’ expectations.
On another front, Fed Chair Jerome Powell said in a Sunday interview that he expects only three Fed rate cuts this year, and he doesn’t expect a cut in March.
Minneapolis Fed Chair Neil Kashkari warned today from cutting rates too quickly, as current tight conditions haven’t yet impacted all aspects of the US economy sufficiently.
Investors expected six Fed rate cuts this year, and such optimistic forecasts sent US stocks sharply higher in recent weeks.
On trading, Dow Jones slipped 0.4% as of 17:06 GMT, or 144 points to 38,581, while S&P 500 rose 0.2%, or 11 points to 5009, as NASDAQ added 0.8%, or 138 points to 15,931.
Palladium slides by over 3% to below $900
Palladium prices fell on Friday as the dollar edged down against most major rivals, while investors assess the likely path ahead for US policies.
A series of stimulus measures launched by China last year to boost the real estate market failed to buoy the market sufficiently.
A major reason is Chinese Banks’ doubts and refusal to lend new credit to the struggling sector.
On the other hand, consumer prices in China continued their slowdown in January for the fourth straight month, hinting at deflation.
Official data showed consumer prices fell 0.8% in January y/y after a 0.3% drop in December.
However, consumer prices did rise 0.3% m/m after a 0.1% increase in the previous month.
Producer prices fell 2.5% y/y in January, after a 2.7% tumble in December.
China’s economy grew by 5.2% in 2023, passing the official target of 5%, however the recovery seems shaky in the eyes of many investors. .
On another front, Fed Chair Jerome Powell said in a Sunday interview that he expects only three Fed rate cuts this year, and he doesn’t expect a cut in March.
Minneapolis Fed Chair Neil Kashkari warned today from cutting rates too quickly, as current tight conditions haven’t yet impacted all aspects of the US economy sufficiently.
Investors expected six Fed rate cuts this year, and such optimistic forecasts sent US stocks sharply higher.
Otherwise, the dollar index stabilized at 104.1 as of 16:48 GMT, with a session-high at 104.2, and a low at 103.9.
Palladium March futures fell 3.1% as of 16:50 GMT to $864.5 an ounce.
Oil prices on track for weekly profits on Middle East tensions
Global oil prices rose on Friday for the fifth straight session, hitting a week high and on track for a weekly profit amid growing concerns about Middle East tensions.
Prices are also boosted by expectations of slower growth in US crude production this year, overshadowing data that showed a large US crude inventory buildup last week.
Crude Prices
US crude rose 0.45% to $76.72 a barrel, a week high, while Brent added 0.4% to $81.95 a barrel, also a week high.
US crude rallied 3.25% on Thursday, while Brent added 3.1%, the fourth profit in a row.
Weekly Trades
Global oil prices are up 5.5% so far this week on track for the third weekly profit in the last month.
Middle East Tensions
Israel Prime Minister Benjamin Netanyahu refused a potential ceasefire in the war with Gaza, leading to more tensions in the Middle East.
Otherwise, the US forces killed an important leader for an Iran-backed militia by a drone in Baghdad in response to recent attacks on US forces.
The US continues to target sites in Iraq and Syria used by Iranian forces and their allies.
US Production
The Energy Information Administration now officially expects that US production won’t surpass the record high of 13.3 million bpd touched in December 2023 until February 2025.
The EIA cut its forecasts for local oil production growth in 2024 to just 170 thousand bpd, compared to 1.02 million bpd in 2023.
US Stocks
The Energy Information Administration reported a buildup of 5.5 million barrels in US crude stocks last week to a total of 427.4 million barrels, while analysts only expected a buildup of 1.7 million barrels.
Gasoline stocks fell 3.1 million barrels to 251 million barrels, while distillate stocks tumbled by 3.2 million barrels to 127.6 million barrels.