ANS ends 2024 lower

Alaska benchmark crude price drops 5.5% in 2024 despite end of year gains

Steve Sutherlin

Petroleum News

Alaska North Slope crude ended 2024 with a Dec. 31 closing price of $73.43 per barrel, up 70 cents on the day, but down $4.33 -- some 5.5% -- for the year from its close of $77.76 Dec. 29, 2023.

West Texas Intermediate rose 73 cents Dec. 31 to close at $71.43 -- off 8 cents on the year, and Brent closed at $74.64 -- up 25 cents but down $2.40 for the year.

Crude rose Dec. 31 on geopolitical risks in Ukraine and the Middle East, while the Brent market was geared up for a cutoff in supply that never materialized, and the U.S. economy performed better than most parts of the world, according to Phil Flynn of the Price Futures Group.

"We've seen demand for oil in the U.S. hold up pretty well, total product demand has been very strong, and is above what it was a year ago," Flynn was quoted in Dow Jones Newswires, adding that the U.S. government added crude to the strategic petroleum reserve in 2024, but much less than releases in previous years.

"I think a smaller reserve means a higher WTI price because there's more risk of supply," Flynn said. "I think WTI may even have been a little bit higher if it weren't for the strong dollar."

As 2023 ended, ANS was at a 72-cent premium over Brent, but the dynamic shifted and by Dec. 31, 2024, Brent was poised at a $1.21 premium over ANS, while ANS was at a $1.71 premium over WTI.

Part of the reason for the relative ANS price weakness was that China's economic woes in latter 2024 reduced demand for Pacific seaborne crude cargoes on the West Coast where ANS is sold. China crude demand has also been impacted by a shift to electric cars and LNG-fueled trucks.

But traders are beginning to hold out some hope for renewed crude demand in China. The ANS loss for the year would have been more pronounced had it not been for stimulus measures announced recently by the Chinese government, designed to juice its economy out of COVID pandemic related malaise.

ANS closed at $71.10 Dec. 23, and it gained $2.33 in subsequent days to reach its $73.43 price on Dec. 31.

On Dec. 27, prices were sweetened as the U.S. Energy Information Administration data revealed a robust drawdown of U.S. crude supplies. ANS gained 75 cents to close at $72.16, WTI gained 98 cents to close at $70.60, and Brent gained 91 cents to close at $74.17.

U.S. commercial crude oil inventories for the week ending Dec. 20 -- not including Strategic Petroleum Reserve supplies -- plunged by 4.2 million barrels from the previous week to 416.8 million barrels -- 5% below the five-year average for the time of year, the EIA said. Total motor gasoline inventories jumped 1.6 million barrels for the period, but distillate fuel inventories decreased by 1.7 million barrels.

As Petroleum News goes to press, crude traders await the latest inventory data from the EIA Weekly Petroleum Status Report for the week ending Dec. 27, which was delayed until Jan. 2 due to the New Year holiday. Analysts answering a Reuters poll released Dec. 31 expected U.S. crude oil inventories to decline for the week, while motor gasoline inventories increase, and distillate levels fall.

ANS slid 44 cents Dec. 26 to close at $71.41, while WTI slid 48 cents to close at $69.62, and Brent edged 32 cents lower to close at $73.26.

War premium heats up

A "fear bid" from traders advanced futures prices, Tom Essaye, president of Sevens Report Research said.

Investors saw a particular risk of potential disruptions to oil shipments through the Red Sea, according to Bart Melek, head of commodity strategy at TD Bank.

"This is a geopolitics-driven market," Melek said in an interview with MarketWatch.

"We're a little worried about events around the Red Sea and potentially getting shipments interrupted in the broader region," he added.

On Christmas Eve, ANS gained 75 cents to close at $71.85, WTI lifted 86 cents to close at $70.10, and Brent jumped 95 cents to close at $73.58.

Crude was trading slightly higher Jan. 2 in Asian markets as Petroleum News went to press. It is the first trading of 2025 following the News Years Day holiday.

U.S. oil production hit a record high in 2024 according to the EIA, averaging 13.249 million barrels per day year-to-date through Dec. 13 -- besting the previous record of 12.9 million bpd set in 2023.

The EIA said enhanced recovery techniques such as precision fracking and improved drilling technologies have boosted productivity.

European and Asian demand for U.S. crude has incentivized greater production, the EIA said. Reliable U.S. consumer demand for refined products combined with healthy refining capacity has been a recipe for domestic market stability.

The Permian Basin continues as the jewel of U.S. production, responsible for a significant share of the growth.