The U.S. Hybrid Vehicle Market Is Booming

1. OPEC+ Delays Return of Production Cuts By Three Months

- In a largely anticipated move, OPEC+ announced it would postpone the easing of its production cuts for another quarter and only start bringing back some of its 2.2 million b/d of voluntary cuts from April 2025.

- In what seems to be a diplomatic win for Saudi Arabia, even the United Arab Emirates agreed to delay a 300,000 b/d hike to their production baseline, phasing in the subsequent increase over the remaining months of 2025.

- OPEC+ has signaled it would be managing oil supply in the long term by also extending its shared 3.6 million b/d cuts to the end of 2026, seeing limited space to bring back slashed output into the oversupplied markets of 2025. 

- OPEC+ countries have been avoiding in-person meetings as the initial ministerial meeting that was scheduled for December 1 at OPEC’s headquarters in Vienna was changed to an online meeting on December 5.  

2. Chevron Slams the Brakes on Permian Expansion

- Defying repeated calls from Donald Trump to ‘drill baby drill’, US oil major Chevron plans to slow its production growth across the Permian basin, reducing capital expenditures by some 10% year-over-year.

- Globally, Chevron will cut some $2 billion in exploration expenses to a total of $17 billion, capping its expenditures in the Permian to between $4.5 and $5 billion, preferring to maximize free cash flow.

- The United States is set to add a mere 250,000 b/d of incremental supply next year according to a Bloomberg survey of analysts, the slowest pace of growth since the COVID-induced decline in 2020. 

- Chevron has also signaled that it would take up to $1.5 billion in Q4 charges for restructuring and asset impairments, mostly stemming from the company’s job cuts and upcoming relocation to Houston, Texas. 

3. The US Hybrid Bonanza Shows No Signs of Stopping

- The share of hybrid and electric vehicle sales in the United States rose again in Q3 2024, reaching an all-time high of 19.6%, up 0.5 percentage points compared to the previous quarter, largely thanks to hybrid cars.

- Sales of battery electric vehicles have actually dropped, seeing pure EVs’ share decline to just 7% of the light-duty vehicle market, but this was more than offset by hybrids claiming even more territory, climbing to 10.8% last quarter.

- Tesla remains the most popular battery electric vehicle in the US market, but its market share has remained below 50% for the second consecutive quarter, seeing increasing competition from Chevrolet that boosted sales thanks to its newly introduced Equinox model. 

- Almost 79% of all EVs sold in the United States this past quarter have been produced in North America, as carmakers shifted their manufacturing bases to be able to benefit from IRA-provided credits.  

4. US Starts to Produce Solar Cells Again, Posting Record Year

- The US is set to post another record-breaking year in terms of adding new manufacturing capacity of solar modules, with 9.3 GW of new capacity coming to the market in Q3 2024 alone.

- According to Wood Mackenzie, were installed capacity to run full steam, the United States would be now able to produce enough solar modules to meet almost all its demand for solar generation.

- Solar cell manufacturing has resumed this past quarter, for the first time since 2019, marking an important turning point for an industry that remains dominated by China controlling almost 85% of all output. 

- Globally, solar is expected to record an all-time high of 593 GW capacity added this year, a jump of approximately 29% year-over-year that is coming on top of a doubling of installations in 2023.  

5. Vaca Muerta Is the Shale Gift That Keeps on Giving

- Argentina’s top shale basin, the Vaca Muerta, reached a new record high after production soared past 400,000 b/d in the third quarter of 2024 and remains on track to hit 1 million b/d by 2030.

- Drilling activities are intensifying in the shale patch, with Q3 horizontal well completions rising to an average of 40 per month, benefitting from higher pipeline evacuation capacity towards Bolivia and Brazil.

- Whilst initial exploration and appraisal works in the Neuquén region were done by Western majors, domestic champion YPF now accounts for 55% of total production, with independent producer Vista Energy coming in second. 

- Argentina’s state-controlled oil firm YPF remains one of the top performers in the energy sector globally, increasing by 133% this year to date, posting a Q3 net profit of $1.47 billion in a surprise boost in profitability.  

6. Politics Might Derail France’s Energy Policy Successes 

- The ouster of Michel Barnier as France’s prime minister after a vote of no-confidence could have far-reaching consequences for Europe’s power markets, potentially jeopardizing the outlook for its nuclear generation.

- Ever since the previous Macron government nationalized the power utility EDF, which single-handedly runs France’s vast nuclear fleet, the company’s debts totaling more than 10 billion have been a burden on the country’s budget.

- Outgoing PM Barnier has resisted calls on higher taxation of France’s power sector which has been enjoying a surge in exports, particularly to Germany, supplying almost 84 TWh of power to neighboring nations in January-November, an 85% year-over-year increase.

- The high debt burden of EDF could prompt Paris to limit investments into its aging nuclear fleet and power grids, which could erode France’s capacity surplus as well as its lower generation costs.

7. Market Interest Turns Towards Volatile Zinc Outlook

- Zinc prices have been seesawing lately as the market tries to gauge the impact of growing tightness in the metal’s supply chain, with the metal posting 16% year-to-date gains, the highest amongst all base metals.

- The LME zinc prices traded around $3,100 per metric tonne after huge volumes were withdrawn from warehouses approved by the London Exchange, just as the base metal’s supply was hampered by mining disruptions. 

- Orders to take zinc have seen a withdrawal of 106,775 metric tonnes in just two days in late November, with one single entity taking more than half of that stock, with inventories drawing at the highest rate since October 2017.

- Trading giant Trafigura is believed to be behind the huge take-out orders, just as Chinese zinc smelters have been vying for raw material, bearing similarity to the copper markets where treatment fees turned negative.