Commodities
US lays out plan at COP 28 to slash climate ‘super pollutant’ methane from oil and gas
© Reuters. FILE PHOTO: An oil pump jack is seen in the Loco Hills region, New Mexico, U.S., April 6, 2023. REUTERS/Liz Hampton/File Photo
By Nichola Groom and Valerie Volcovici
DUBAI (Reuters) -The Biden administration on Saturday unveiled final rules aimed at cracking down on U.S. oil and gas industry releases of methane, part of a global plan to rein in emissions that contribute to climate change.
The rules, two years in the making, were announced by U.S. officials at the United Nations COP28 climate change conference in Dubai. The United States and other nations attending the summit are expected to detail how they will achieve a 150-country pledge made two years ago to slash methane emissions by 30% from 2020 levels by 2030.
Methane tends to leak into the atmosphere undetected from drill sites, gas pipelines and other oil and gas equipment. It has more warming potential than carbon dioxide and breaks down in the atmosphere faster, so reining in methane emissions can have a more immediate impact on limiting climate change.
“These new standards will help us meet our international commitments to aggressively tackle climate change, while improving air quality for communities all across the country,” U.S. Environmental Protection Agency Administrator Michael Regan told a news conference in Dubai.
EPA’s new policies would ban routine flaring of produced by newly drilled oil wells, require oil companies to monitor for leaks from well sites and compressor stations and establishes a program to use third party remote sensing to detect large methane releases from so-called “super emitters,” the agency said in a statement.
The rules would prevent an estimated 58 million tons of methane from reaching the atmosphere between 2024 and 2038 – nearly the equivalent of all the carbon dioxide emissions from the power sector in the year 2021, EPA added.
New Mexico Governor Michelle Lujan Grisham, whose state already put in place methane regulations that served as a model for the EPA, said that the new methane rules enables the United States to lead by example and encourage other countries to take similar measures.
“Now we’ve got credibility to make sure that we can demonstrate to the whole world that we can hold polluters accountable and move the needle,” she told the press conference.
Some environmental groups praised the rules.
“Strong methane standards are essential to curb climate pollution and better protect the health and safety of workers and communities living near fossil fuel extraction,” Earthjustice’s vice president of litigation for climate and energy, Jill Tauber, said in a statement.
The rule will produce climate and health benefits of up to $7.6 billion a year through 2038, EPA said. It will also increase recovery of up to $13 billion of natural gas over the time period.
The rule differs somewhat from draft proposals EPA released in 2021 and 2022, in part by giving the industry more time to comply.
The agency also tweaked the Super Emitter Program so that third parties send information on methane leaks to EPA directly for verification. Previously they would have been able to send the information directly to companies, a provision the oil and gas industry said would put too much power in the hands of environmental groups that search for methane leaks.
The American Petroleum Institute, an oil and gas industry trade group, said it was reviewing the rule.
“To be truly effective, this rule must balance emissions reductions with the need to continue meeting rising energy demand,” Dustin Meyer, API senior vice president of policy, economics and regulatory affairs, said in a statement.
Exxon (NYSE:) CEO Darren Woods told Reuters at COP28 that it still needs to review the rule but: “Conceptually, we’re supportive of it as long as it’s a reasonable and sound policy.”
BP (NYSE:) said it “actively collaborated” with EPA as it worked on the final rule and “welcomes the finalization.”
By Nicole Jao
NEW YORK (Reuters) -Oil prices edged lower on Monday in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened dollar.
futures settled down 31 cents, or 0.43%, at $72.63 a barrel. U.S. West Texas Intermediate crude futures fell 22 cents, or 0.32%, to $69.24 a barrel.
Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of $70.50 a barrel, down from this year’s average of $79.64, they said in a December report.
Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.
The U.S. dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.
“With the U.S. dollar changing from weaker to stronger, oil prices have given up earlier gains,” UBS analyst Giovanni Staunovo said.
A stronger dollar makes oil more expensive for holders of other currencies.
On Friday, U.S. data that showed cooling inflation helped alleviate concerns after the Federal Reserve interest rate cut last week.
“With the Fed sending mixed signals and some of these economic data points not being all that robust, the market is listless,” said John Kilduff, partner at Again Capital in New York.
Brent futures fell by around 2.1% last week, while WTI futures lost 2.6%, on concerns about global economic growth and oil demand after the U.S. central bank signalled caution over further easing of monetary policy.
Research from Asia’s top refiner Sinopec (OTC:) pointing to China’s oil consumption peaking in 2027 also weighed on prices.
U.S. President-elect Donald Trump on Friday urged the European Union to increase U.S. oil and gas imports or face tariffs on the bloc’s exports.
Trump also threatened to reassert U.S. control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.
Investing.com– Gold prices edged higher on Tuesday, extending their tepid performance as investors still remained cautious with the rising dollar following the U.S. Federal Reserve’s hawkish tilt.
Traders also refrained from placing large bets ahead of a shortened trading week due to the Christmas holiday.
inched up 0.2% to $2,616.95 per ounce, while expiring in February ticked up 0.2% to $2,633.89 an ounce.
The yellow metal had inched up 0.3% on Monday, after losing more than 1% in the previous week, reflecting uncertainty about the metal’s outlook.
Bullion under pressure on Fed rate outlook
Gold prices had hit a one-month low on Wednesday, as the Fed meeting indicated that rates will remain higher for a longer period after Wednesday’s cut.
Prices have failed to fully recover from it and have seen subdued moves as investors still assessed the implications of the Fed’s rate outlook.
Higher interest rates put downward pressure on gold as, as the opportunity cost of holding gold increases, making it more attractive compared to interest-bearing assets like bonds.
Traders are now expecting only two quarter-point reductions in 2025 amid continued economic resilience and still-elevated inflation. This compares to expectations of four rate cuts before the Fed meeting.
Strong dollar creates downward pressure on gold, other metals
The Fed’s hawkish shift provided renewed strength to the U.S. dollar, as higher interest rates make the greenback more attractive due to increased returns on dollar-denominated assets.
The rose 0.1% in Asia hours on Tuesday and hovered near a two-year high it reached last week.
A stronger dollar often weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.
Other precious metals were largely muted. inched up 1.2% to $960.15 an ounce, while gained 0.3% to $30.265 an ounce.
Copper subdued on strong dollar, seasonal factors
Among industrial metals, copper prices were subdued and moved within tight ranges on Tuesday as a strong greenback weighed on the red metal.
Analysts attributed the weakness in copper to seasonal sluggishness as industrial production and construction projects often slow down as businesses and projects prepare for year-end closures and holidays.
Benchmark on the London Metal Exchange were largely unchanged at $8,954.50 a ton, while one-month were 0.5% higher at $4.1045 a pound.
Investing.com– Oil prices rose Tuesday, but stuck to a tight trading range as traders remained uncertain over a potential supply glut and softening demand in the coming year.
At 11:58 ET (17:58 GMT), rose 1.1% to $73.44 a barrel, and rose 1.2% to $70.03 a barrel.
Trading volumes were thin ahead of the Christmas holiday, while strength in the dollar also weighed on oil prices after the Federal Reserve signaled a slower pace of rate cuts in 2025.
Oil nurses losses in 2024 as demand jitters weigh
and WTI prices were down about 5% so far in 2024, with persistent concerns over slowing demand in China being a key point of pressure.
Chinese oil imports steadily dropped this year as the world’s largest oil importer struggled with slowing economic growth. While the country did outline plans to ramp up fiscal spending and stimulus measures in the coming year, markets were still holding out for more clarity on the planned measures.
Increased electric vehicle adoption in China also undermined fuel demand in the country.
Both the OPEC and the IEA have forecast slower demand growth in 2025 due to slowing demand in China. The country is also expected to face increased economic headwinds from a renewed trade war with the U.S. under Donald Trump.
Supply uncertainty spurs caution; US inventory data awaited
Oil markets were on edge over a potential supply glut in 2025. While the OPEC recently agreed to extend its ongoing supply cuts until at least mid-2025, production elsewhere could potentially increase.
US oil production remained close to record highs, and could potentially increase in the coming year, especially as Trump vowed to ramp up domestic energy production.
US inventory data, from the , is due later Tuesday and is set to offer more cues on oil production and supply.
(Peter Nurse contributed to this article.)
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