Page 5 - Policy Economic Report_Jan 25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

On the external front, India's foreign exchange reserves fell to $623.98 billion, down by $ 1.8 billion as of
week ending January 17, 2025 according to data from the Reserve Bank of India (RBI). The primary
contributor of this decline were the foreign currency assets that declined by $2.87 billion to settle at
$533.13 billion. Gold reserves saw an increase of $1.06 billion, rising to $68.94 billion during the same
week, the Reserve Bank of India (RBI) reported. While the Special Drawing Rights (SDRs) increased by $1
million to $17.78 billion, the India reserve position with IMF was down by $74 million to $4.12 billion.

Also, India’s total exports (Merchandise and Services combined) for December 2024 is estimated at USD
70.67 Billion, registering a growth of 0.92 percent vis-à-vis December 2023. Total imports (Merchandise
and Services combined) for December 2024 are estimated at USD 77.44 Billion, registering a growth of
6.40 percent vis-à-vis December 2023.

As far as oil and gas industry is concerned, benchmark crude oil prices rallied in early January as US
sanctions on Iran and Russia intensified and freezing temperatures swept across large parts of the
Northern Hemisphere. Brent crude futures hit a four-month high of $81/bbl by mid-January, up $8/bbl
from a month-ago. Following a relatively mild start to the winter heating season, the weather turned
decidedly colder in December in Canada, the northern and central regions of the United States, much of
Europe, Russia, China and Japan. Average heating degree days were significantly higher than a year ago
and slightly above the five-year average, boosting oil demand. OECD oil demand for 4Q24 has been raised
by 250 kb/d, underpinning a 90 kb/d upward adjustment to our global growth estimate for 2024. Oil
demand trends in non-OECD economies were mixed. While China posted modest y-o-y growth in
November, the latest data for Saudi Arabia, Brazil and India were all below expectations. Estimated growth
of 940 kb/d in 2024 and 1.05 mb/d in 2025 will push world oil demand to 104 mb/d.

Hedge funds and other money managers closed a large volume of short futures and option positions in
the NYMEX WTI futures market and raised long positions in both ICE Brent and NYMEX WTI futures and
option contracts. Between the weeks of 26 November and 31 December, hedge funds and other money
managers bought an equivalent of 144 mb of oil in Brent and WTI futures and options.

Sweet-sour crude differentials narrowed in the US Gulf Coast (USGC) and Europe in December, primarily
driven by the elevated availability of light sweet crude in the Atlantic Basin, including from the US. In Asia,
however, sweet-sour crude differentials widened in December, as the sweet crude market outperformed
medium sour crudes.

Natural gas spot prices at the US Henry Hub benchmark averaged $3.01 per million British thermal units
(MMBtu) in December 2024. Henry Hub's natural gas prices rebounded in December after two
consecutive months of declines. Prices experienced a sharp increase in the second half of the month, rising
by 43.6%, m-o-m, on the back of expectations of colder weather across the US. Reports of a decline in
underground storage levels in December underscored the increase in demand. According to data from
the US Energy Information Administration (EIA), weekly average underground storage decreased in
December by 9.5%, m-o-m. Henry Hub prices were up by 19.4%, y-o-y.

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