Oil Posts Weekly Gain as Supply Cuts Balance Demand Concerns

(MENAFN- The Al-Attiyah Foundation) Oil rose on Friday and posted a weekly gain, as higher Chinese demand and OPEC+ supply cuts lifted prices, despite expected weakness in the global economy and the prospect for further interest rate hikes. Brent crude gained 94 cents to settle at $76.61 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.16 to $71.78. Brent posted a weekly gain of 2.4% and WTI rose 2.3%. Oil prices jumped last week on hopes of growing Chinese demand. China's refinery throughput rose in May to its second-highest total on record. Also supporting crude are the voluntary output cuts implemented in May by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plus an additional cut by Saudi Arabia in July. In Iran, crude exports and oil output have hit new highs in 2023 despite U.S. sanctions, according to consultants, shipping data and a source familiar with the matter, adding to global supply when other producers are limiting output. U.S. oil rigs fell by four to 552 last week, their lowest since April 2022, while gas rigs fell by five to 130, their lowest since March 2022, energy services firm Baker Hughes Co said. Capping oil price gains was the prospect of rising interest rates, which could slow economic growth.

Asian Spot LNG Prices Rise to a 3-Month High

Asian spot liquefied natural gas (LNG) prices reversed their multi-week downward trend and rose to a three-month high last week, tracking European gas gains and as high temperatures in north-east Asia increased cooling demand. The average LNG price for August delivery into north-east Asia jumped by 50% from the previous week to $13.50 per million British thermal units (mmBtu), its highest level since mid-March, industry sources estimated. Analysts said that despite the increase, Asian prices are at a discount to European gas prices, which has seen prompt loading cargoes from the United States point back towards Europe. In Europe, gas prices at the Dutch TTF hub turned bullish last week, after hitting a two-year low at the start of June, on reiterated plans to close production at the Dutch Groningen gas field in October, and ongoing maintenance at the Norwegian Troll and Oseberg gas fields, which followed an extension to an outage at the Nyhamna gas processing plant. U.S. natural gas futures gained about 4% on Friday on a recent drop in output and forecasts for demand to soar as the weather turns hot in late June, especially in Texas. For the week, the front-month gas contract rose about 17%.

By: The Al-Attiyah Foundation

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