(MENAFN- Gulf Times) Oil
Benchmark crude oil futures continued to drop last week, losing almost 4% and 5% for Brent and WTI respectively. Most market drivers pulled crude prices down, including a global upward trend in output in some Opec & non-Opec countries, while US crude stocks rose in the week by 5.8mn barrels. US crude production reached 11.6mn bpd earlier in the week, which had the US overtake Russia as the world's largest crude producer. Eight importers; China, India, South Korea, Japan, Taiwan, Italy, Greece, and Turkey will continue buying Iranian oil for at least six months, as they were granted sanction waivers by the US administration. On top of that, worries about global oil demand slowdown has continued due to a slower rate of economic growth in the coming quarters and the ongoing US-China trade war.
Since the announcement of the US sanctions on Iran early May, five months elapsed before crude prices reached their peak for the year, and strengthened by around 15%. Following the peak, it took only five weeks for prices to reverse the trend and offset the five-month price gains, as the market balance loosened due to the market factors mentioned above. The next Opec Ministerial meeting in December might be crucial not only to discuss the market situation, but also the future of the organisation.
Gas
Asian spot LNG prices changed course last week and increased by 1%, after almost two months of decline for a cumulative loss of 16%. Prices were boosted by a pickup in demand from Japanese utilities like Kansai Electric and Tohoku Electric, amid forecasts of below-average temperatures in the coming two weeks in Tokyo and Beijing. Customers from South Asia — namely India and Pakistan — also returned to the spot market seeking cargoes. However, healthy supply and unsold cargoes were still seen as capping price gains. LNG shipping rates reached a new high since 2012 of around $200,000 per day, due to an increased appetite for LNG carriers, especially from new entrants and also due to the rise in flexible destination agreements.
In the US, Henry Hub natural gas futures surged last week by 13% on cold weather forecasts. The boost in heating demand could cause shortages according to analysts, just as the gas withdrawal season is kicking in and inventories are 16% below normal. Meanwhile, UK gas futures recorded a modest increase of 0.9% last week amid volatile market conditions. Market volatility is fuelled by fluctuations in seasonal temperatures, Norwegian and LNG supplies, and renewable electricity output.
This article was supplied by the Abdullah bin Hamad
Al-Attiyah International Foundation for Energy and Sustainable Development.
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