(MENAFN- The Peninsula) The Peninsula
Doha: Oil fell below $43 a barrel on Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, although crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.
The US reported more than 55,000 new coronavirus cases on Thursday, a new daily global record for the pandemic. The rise in cases suggested US jobs growth, which jumped in June, could suffer a setback. Both benchmarks rose more than 2 percent on Thursday, buoyed by strong US June jobs figures and a drop in US crude inventories. US trade was thinned by the Independence Day holiday.
Brent also saw a weekly gain of 4 percent. Signs of economic recovery, and a drop in supply after a record supply cut by Opec and allies have helped Brent more than double from a 21-year low below $16 reached in April.
Opec oil production fell to its lowest in decades in June and Russian production has dropped to near its Opec+ target. Russian oil and gas condensate production fell to 9.32 million barrels per day (bpd) from 9.39 million bpd in May, nearing its agreed target. Moscow has pledged to reduce its output by around 2.5 million bpd to 8.5 million bpd to support oil prices.
The deal does not include output of gas condensate, a light oil. Boosting recovery hopes, a private survey showed on Friday that China's services sector expanded at the fastest pace in over a decade in June.
The survey showed that the easing of coronavirus-related lockdown measures has revived consumer demand in China, although companies continued to shed jobs. The bankruptcy filing of US shale pioneer Chesapeake Energy also supported prices by raising expectations production will decline. Asian spot LNG prices were stable last week, with demand still sluggish in an oversupplied market.
The average LNG price for August delivery into northeast Asia was estimated at around $2.20 per million British thermal units (mmBtu), the same level as the previous week.
Some Chinese buyers were on the market and there could be gas demand for air conditioning in Japan due to hot weather, but overall, buying was subdued. Indian buyers were quiet as there is not much capacity in Indian ports to take more cargoes, in particular during the monsoon season. Brunei's LNG and Nigeria LNG all offered cargos for loading in August. In terms of buy tenders, Pakistan LNG Ltd issued a new tender seeking a cargo for delivery in September, after issuing a tender for August delivery the previous week.
In Europe, June LNG deliveries dropped by 32 percent from volumes in May and by 5.6 percent from June 2019, Refinitiv data showed, as gas stocks in Europe move close to full capacity.
Gas storage sites in Europe are on average just over 80 percent full, according to Gas Infrastructure Europe data. In the US, natural gas futures rose last week, after a federal report showed a smaller-than-expected storage build amid greater demand for cooling as the weather turned hotter. The August gas futures contract was up over 17% on the week, settling at $1.75 per mmBtu.
Prolonged lockdowns to curb the spread of the coronavirus have kept many businesses shut, cutting US LNG exports by half since the start of the year, with stockpiles filling fast and expected to reach a record levels.
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