Al Attiyah Foundation Weekly Energy Market Review | 12 November 2022
Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.
Oil posts weekly loss as China eases COVID curbs
Oil prices settled higher last Friday, 11 November, but fell week-on-week after health authorities in China eased some of the country’s heavy COVID-19 curbs, raising hopes for improved economic activity and demand in the world’s top crude importer.
Brent crude futures settled up US$2.32 at US$95.99 a barrel, extending a 1.1% rise from the previous session but falling 2.6% on the week. WTI crude futures settled up US$2.49 at US$88.96 a barrel, climbing 0.8% in the previous session but down nearly 4% on the week.
The easing curbs in China include shortening quarantine times for close contacts of cases and inbound travellers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers.
A weaker US dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies. Prices also picked up on Friday, 12 November, after milder-than-expected US inflation reinforced hopes that the Federal Reserve would slow down rate increases, boosting chances of a soft landing for the world’s biggest economy.
Meanwhile, Saudi Arabia’s energy minister said OPEC+ will remain cautious on oil production, noting that members saw ‘uncertainties’ in the global economy ahead of the bloc’s next meeting in December.
Asian spot prices slip as mild weather curbs demand
Asian spot liquefied natural gas (LNG) prices slipped last week as mild temperatures and ample inventories in Asia and Europe muted buying activity.
The average LNG price for December delivery into northeast Asia was US$26 per million British thermal units (mmBtu) last week, down US$2 or 7.1%, from the previous week, as estimated by industry sources. Warm weather in Asia and Europe continues to weigh on prices as seasonal heating demand has yet to pick up.
Meanwhile, inventories are currently high in both Asia and Europe, and LNG cargoes are being floated off Europe in anticipation of higher demand and prices. But an easing of stringent COVID rules in China, which have impacted economic activity this year, could boost demand.
In Europe, dozens of LNG vessels that have been circling off Spain and the Mediterranean since October due to limited slots to unload their cargoes are likely to stay there in anticipation of rising European gas prices.
In the US, front-month natural gas prices dropped 36 cents, about 6%, to settle at US$5.88 per mmBtu last Friday in what has already been an extremely volatile week on forecasts for less cold and heating demand this week than previously expected.
For related reports and other publications, visit abhafoundation.org.
Check out Marhaba’s FREE e-Guides for everything you need to know about Qatar.