After closing November 2024 at US$73 per barrel, Brent crude futures remained relatively stable in December 2024, climbing gradually to US$74.60 per barrel by month-end. According to Portland Pricing’s national average price, delivered-in diesel also increased from 107ppl to just below 109ppl throughout the latter month.
At the beginning of December 2024, oil prices had declined towards US$71 per barrel due to concerns of an oversupplied oil market. In response, OPEC+ opted to postpone production hikes, although that decision was insufficient in relieving oversupply concerns.
Geopolitical tensions prevented prices from declining further, as the Syrian civil war progressed and the conflict between Lebanon and Israel persisted, despite a ceasefire agreement being in place since 27 November 2024.
On the demand side, the Chinese government was expected to loosen monetary policy to boost economic growth, causing Brent crude to rebound to US$72.50 per barrel. Chinese crude imports grew by 14% in November 2024 from a year earlier after the government issued an extra 5.82 million metric tonnes of crude import quotas for private refiners.
However, the nation’s economy continued to falter, with retail sales increasing by just 3.3% during November 2024, below forecasts of 4.6%. In the United States, crude stocks continued to decline, indicating a stronger demand sentiment.
By mid-month, Brent crude had rebounded to above US$73 per barrel, following news that the United States may impose stricter sanctions on Iranian and Russian crude, potentially tightening global oil supplies. However, President-elect Donald Trump has already suggested that his administration will be ready “within seconds” to issue orders to boost domestic oil drilling, increasing supply.
Towards month-end, progress was made on Gaza truce negotiations, after the United States administration, joined by mediators from Egypt and Qatar, made intensive efforts to advance talks before President Joe Biden leaves office in January.
Finally, concerns of oversupply persisted following projections of strong production growth from non-OPEC+ countries in 2025. Despite this, strong demand outweighed concerns, and Brent crude closed December 2024 at US$74.60.
GBP weakened from US$1.262 to US$1.252 against USD during December 2024. The UK’s annual inflation rate rose for a second consecutive month to 2.6% in November 2024, the highest level for eight months.
However, the Bank of England left interest rates unchanged in December 2024, with Governor Andrew Bailey suggesting that rates will be reduced by one percentage point in 2025. Meanwhile, the United States Federal Reserve cut interest rates by 0.25% due to stubborn inflation.
The cost of blending biodiesel to the UK B7 specification hovered at just below 7ppl in December 2024, and therefore the cost of Renewable Transport Fuel Obligation compliance remained virtually unchanged.
Wholesale UK renewable diesel (HVO) prices experienced significant volatility over that month, starting at 115ppl and reaching highs of 128ppl mid-month before falling below 120ppl by close, according to Portland’s average price. Uncertainty remains over whether Trump will impose tariffs on Chinese used cooking oil imports, which may lead to increased feedstock and biofuels prices.
The price of Renewable Transport Fuel Certificates (RTFCs) remained around 23-24p per certificate throughout December 2024. The benefit to HVO consumers was thus the same as the previous month (assuming 100% of the RTFC benefit is passed onto the end-user).
As delivered-in diesel prices remained steady and HVO prices increased, the HVO premium has widened.
Portland Pricing is a specialist provider of transparent, independent fuel price information, covering both traditional and alternative fuels. For more information visit its website.
