By Scott DiSavino

(Reuters) -U.S. energy firms this week kept the number of oil and rigs unchanged for the second week in a row, energy services firm Baker Hughes (NASDAQ:) said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, remained at 589 in the week to Dec. 20.

Baker Hughes said that puts the total rig count down 31 rigs, or 5% below this time last year.

Baker Hughes said oil rigs were up one to 483 while natural gas rigs were down one to 102. The oil rig count was the highest since September.

The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising output.

U.S. oil futures did not move after the Baker Hughes data, leaving them down about 3% for the year to date after dropping by 11% in 2023. U.S. gas futures are up about 49% so far in 2024 after plunging by 44% in 2023.

The 25 independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said that on average the E&Ps planned to leave spending in 2024 roughly unchanged from 2023.

That compares with year-over-year spending increases of 27% in 2023, 40% in 2022 and 4% in 2021.

output was on track to rise from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024 and 13.5 million bpd in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.

On the gas side, several producers reduced drilling activities this year after monthly average spot prices at the U.S. Henry Hub benchmark in Louisiana plunged to a 32-year low in March, and remained relatively low for months after that.

That reduction in drilling activity should cause U.S. gas output to decline for the first time since the COVID-19 pandemic cut demand for the fuel in 2020.

EIA projected gas output would slide to 103.2 billion cubic feet per day (bcfd) in 2024, down from a record high of 103.8 bcfd in 2023.

By David Lawder

WASHINGTON (Reuters) -A trade-dispute panel ruled on Friday that Mexico’s restrictions on U.S. genetically modified corn exports violate the U.S.-Mexico-Canada Agreement, handing the Biden administration a major trade victory in its final weeks.

The U.S. Trade Representative’s office said the USMCA dispute settlement panel ruled in favor of all seven U.S. legal claims in the long-running case. It said the panel found Mexico’s restrictions are not based on science and violate the USMCA’s chapters on sanitary and phytosanitary measures and on market access and national treatment.

The three-member panel’s final report recommended that Mexico bring its corn-trade policies into compliance with the trade agreement. It has 45 days to do so under the 2020 trade deal’s rules and failure to comply could result in punitive duties on some exports to the U.S.

Mexico’s economy and agriculture ministries said in a joint statement they disagreed with the ruling but would respect it, providing no details on what steps they would take.

“The Government of Mexico does not agree with the Panel’s decision, as it considers that the measures in question are aligned with the principles of public health protection and the rights of Indigenous peoples,” the agencies said.

Nonetheless, they said that dispute resolution was a key component of the USMCA trade deal, noting that Mexico and Canada prevailed over the U.S. in an automotive rules of origin dispute case last year.

The corn dispute began six months after USMCA came into force in July 2020 when then-President Andres Manuel Lopez Obrador decreed that GM corn be banned by the end of 2024 — a move largely targeting U.S. corn exports. His successor, President Claudia Sheinbaum, has supported the policy.

After years of little movement in consultations, USTR requested arbitration to settle the dispute, challenging Mexico’s 2023 decree that immediately banned use of GM corn in tortillas and dough, and instructed government agencies to gradually eliminate its use in other foods and in animal feed.

The U.S. argued the Mexican government’s claims that GM corn is harmful to human health were not based on science.

“The panel’s ruling reaffirms the United States’ longstanding concerns about Mexico’s biotechnology policies and their detrimental impact on U.S. agricultural exports, U.S. Trade Representative Katherine Tai said in a statement.

U.S. Agriculture Secretary Tom Vilsack said the decision ensured that U.S. farmers and exporters “will continue to have full and fair access to the Mexican market.”

“It is also a victory for the countries around the world growing and using products of agricultural biotechnology to feed their growing populations and adapt to a changing planet,” Vilsack added.

In February, Mexico’s government softened its initial ban on GM corn, explicitly allowing its use for livestock feed and industrialized products for human consumption, but maintained the ban for use in tortillas.

Mexican officials have defended restrictions on GM corn in tortillas and argued it is up to Washington to demonstrate its exports do not harm human health.

U.S. President-elect Donald Trump has threatened to impose a 25% blanket tariff on all imports from Canada and Mexico when he takes office on Jan. 20 unless they stem the flow of illegal migrants and fentanyl to the U.S.

If implemented, those duties would appear to violate the USMCA’s rules, possibly spawning another dispute case.

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Mexico, birthplace of modern corn, prohibits planting of GM corn due to fears it would contaminate native strains of the grain. Yet the country is the top foreign buyer of U.S.-grown yellow corn, nearly all of which is genetically modified.

Mexico’s government expects local buyers will import a record 22.3 million metric tons during the 2023/24 agricultural season.

In 2024 through October, the U.S. exported $4.8 billion worth of corn to Mexico, according to U.S. Census Bureau data.

Mexico boasts over 60 native varieties of corn, known as landraces, many coming in a kaleidoscope of colors and featuring distinct flavor profiles.

This month, Deputy Economy Minister Luis Rosendo Gutierrez stressed that the government was doing everything it could to protect the free trade pact amid Trump’s tariff threats. He added Mexico would comply with the panel’s ruling.

U.S. and international agriculture and biotechnology groups applauded the ruling.

“This is the clearest of signals that upholding free-trade agreements delivers the stability needed for innovation to flourish and to anchor our food security,” said Emily Rees, president of CropLife International, which represents the plant science industry.

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices settled little changed on Friday as markets weighed Chinese demand and interest rate-cut expectations after data showed cooling U.S. inflation.

futures closed up 6 cents, or 0.08%, at $72.94 a barrel. U.S. West Texas Intermediate crude futures rose 8 cents, or 0.12%, at $69.46 per barrel.

Both benchmarks ended the week down about 2.5%.

The U.S. dollar retreated from a two-year high, but was heading for a third consecutive week of gains, after data showed cooling U.S. inflation two days after the Federal Reserve cut interest rates but trimmed its outlook for rate cuts next year.

A weaker dollar makes oil cheaper for holders of other currencies, while rate cuts could boost oil demand.

Inflation slowed in November, pushing Wall Street’s main indexes higher in volatile trading.

“The fears over the Fed abandoning support for the market with its interest rate schemes have gone out the window,” said John Kilduff, partner at Again Capital in New York.

“There were concerns around the market about the demand outlook, especially as it relates to China, and then if we were going to lose the monetary support from the Fed, it was sort of a one-two punch,” Kilduff added.

Chinese state-owned refiner Sinopec (OTC:) said in its annual energy outlook on Thursday that China’s crude imports could peak as soon as 2025 and the country’s oil consumption would peak by 2027, as demand for diesel and gasoline weakens. 

OPEC+ needed supply discipline to perk up prices and soothe jittery market nerves over continuous revisions of its demand outlook, said Emril Jamil, senior research specialist at LSEG. 

OPEC+, the Organization of the Petroleum Exporting Countries and allied producers, recently cut its growth forecast for 2024 global oil demand for a fifth straight month.

JPMorgan sees the oil market moving from balance in 2024 to a surplus of 1.2 million barrels per day in 2025, as the bank forecasts non-OPEC+ supply increasing by 1.8 million barrels per day in 2025 and OPEC output remaining at current levels.

U.S. President-elect Donald Trump said the European Union may face tariffs if the bloc does not cut its growing deficit with the U.S. by making large oil and gas trades with the world’s largest economy.

In a move that could pare supply, G7 countries are considering ways to tighten the price cap on Russian oil, such as with an outright ban or by lowering the price threshold, Bloomberg reported on Thursday. 

Russia has circumvented the $60 per barrel cap imposed in 2022 following the invasion of Ukraine through the use of its “shadow fleet” of ships, which the EU and Britain have targeted with further sanctions in recent days.

Money managers raised their net long futures and options positions in the week to Dec. 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.