Al Attiyah Foundation Weekly Energy Market Review | 10 April 2021
Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.
Oil Markets: Oil Falls, Ending Week About 2% Lower on Supply increase, and New Lockdowns
Oil prices settled lower on Friday 9 April and fell around 2% last week, as production increases and renewed COVID-19 lockdowns in some countries offset optimism about a recovery in fuel demand. Brent crude settled down 22 cents, or 0.4%, to USD62.95, while WTI ended 28 cents, or 0.5%, lower at USD59.32.
US drillers maintained the current number of drill rigs this week, energy services firm Baker Hughes said on Friday, with analysts forecasting more rigs will be needed to keep production steady in coming weeks.
Prices have been pressured by the decision of OPEC+ to increase supplies by 2 mn barrels per day (bpd) between May and July. Coupled with this, the US dollar fell to a two-week low against a basket of currencies, tracking Treasury yields lower, after data showed a surprising rise in US weekly unemployment claims. A weaker dollar makes oil cheaper for holders of other currencies, which can help boost crude prices.
Talks to bring Iran and the US fully back into the 2015 nuclear deal have progressed, delegates said on Friday. However, Iranian officials indicated a disagreement with Washington exists over which sanctions must be lifted. A successful deal would potentially bring an additional 2 mn bpd of supply into the market, according to data intelligence firm Kpler.
US gasoline inventories rose sharply by 4 mn barrels to a little more than 230 mn barrels last week. This is due to refiners ramping up output before the summer driving season, the US Department of Energy said on Wednesday.
Gas Markets: Asian LNG Spot Prices Rise on Chinese Appetite Ahead of Winter
Asian spot prices for LNG rose last week on the back of demand from China as at least two buyers sought cargoes for delivery ahead of winter, trade sources said. The average LNG price for May delivery into Northeast Asia was estimated at about USD7.30 per mn British thermal units (mmBtu), up 35 cents from the previous week.
Still, Asia supply was ample with several sellers offering cargoes, which capped price gains, said sources. China’s Sinopec Corp bought 30 to 50 LNG cargoes for delivery into China from June this year to February next year at a discount to North Asian prices. Thailand’s PTT bought a cargo for mid-May at about USD7.20 to USD7.35 per mmBtu, while India’s Gujarat State Petroleum Corp (GSPC) bought a cargo for delivery in May at about USD7.10 to USD7.20 per mmBtu.
China’s ENN Energy is seeking four to eight cargoes for delivery from July to February in a tender that closes early next week. Also, Cheniere Energy offered six cargoes for delivery into Northwest Europe from April to September, and Darwin LNG sold a cargo for loading in early May at about USD7.20 per mmBtu. Angola LNG has also offered a cargo for delivery to as far as North Asia from April to May, while Brunei LNG offered a cargo for May 12 loading, the sources said.
In the US
Front-month gas futures rose 0.4 cents, or 0.2%, to settle at USD2.526 per mmBtu, their highest since April 1. The last time the contract rose for three straight days was in mid-February. Even though the contract has been up for a few days in a row, big losses early in the week left the front-month down about 4%, after rising about 3% last week. However, Henry Hub prices were edged on Friday, on forecasts for cooler weather and higher heating demand in mid- to late-April. This is the first time in seven weeks prices rose for three straight days.
Traders noted that while temperatures may be lower, they are expected to remain at above above-normal levels with LNG exports expected to decline this month during routine plant and pipeline maintenance.
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