Oil Steady As Markets Weigh Fed Rate Cut Expectations, Chinese Demand
Date
12/22/2024 4:00:18 AM
(MENAFN- The Peninsula)
The Peninsula
Doha, Qatar: Oil prices settled little changed on Friday as markets weighed Chinese demand and interest rate-cut expectations after data showed cooling US inflation. brent crude futures closed up 6 cents, or 0.08%, at $72.94 a barrel. US 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%, noted Al-Attiyah Foundation in its Weekly energy market Review.
The US dollar retreated from a two-year high but was heading for a third consecutive week of gains, after data showed cooling US 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. According to analysts, fears of the Fed abandoning market support with interest rate schemes have vanished. Meanwhile, Chinese state-owned refiner Sinopec said in its annual energy outlook 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. 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.
Asian spot liquefied natural gas (LNG) prices fell last week to its lowest level in 10 weeks amid mild weather and strong storage inventories. The average LNG price for February delivery into north-east Asia was at $13.30 per million British thermal units (mmBtu), its lowest level since mid October and down from slightly lower than $14.50 per mmBtu last week, industry sources estimated. The market is reasonably comfortable in immediate supply/demand terms. China seems well-stocked and Japan is bringing some new nuclear plants back in coming weeks. Given normal weather and an absence of supply shocks, the conditions could be in place for prices to begin a slow slide over the first quarter of 2025, similar to last year, analysts said. In Europe, gas prices rose this week as uncertainty remains over Russian gas flows to Europe with the end of the Ukraine gas transit deal looming. The benchmark front-month contract at the Dutch TTF hub was up 5.7% at 13.39 per mmBtu.
Energy analysts said that Russian flows through Ukraine are unlikely to resume in the first quarter of 2025, leaving Europe more exposed to higher LNG import demand in the new year. However, the amount of gas that will have to be replaced is small, and actual concern about supply availability is limited. Demand in Asia and the pace of Europe's gas storage withdrawals will be key in determining which market will become the premium market in the first quarter of 2025.
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