Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.

Oil prices settle as Iraq backs more output cuts from OPEC+

Oil prices gained about 2% on Friday, 9 November, as Iraq voiced support for oil cuts from the Organization of the Petroleum Exporting Countries and allies (OPEC+) including Russia, ahead of a meeting in two weeks. Still, prices settled with weekly losses of 4%, their third straight weekly decline. Iraq’s oil ministry said Baghdad is committed to the OPEC+ agreement on determining production levels.

Chances of Saudi Arabia extending its output cut into the first quarter of 2024 are certainly increasing given renewed market concerns about Chinese demand and the broader macro outlook, analysts said.

Weak Chinese economic data this week increased worries of faltering demand. Refiners in China, the largest buyer of crude from Saudi Arabia, the world’s largest exporter, asked for less supply for December.

In the US, energy firms cut the number of oil rigs operating for a second week in a row to the lowest since January 2022, according to energy services firm Baker Hughes. The rig count points to future output.

Meanwhile, US consumer sentiment fell for a fourth straight month this November and households’ expectations for inflation rose again.

Britain’s economy avoided recession but failed to grow in the third quarter.

Benchmark Oil Prices 11 Nov 2023

Asian spot prices for LNG lower amidst full Inventories, mild weather

Asian spot prices for LNG fell last week as full inventories and warm weather helped mitigate concerns over new US sanctions on Russia’s Arctic LNG 2.  Analysts said this is a testament to how bearish the short-term fundamental picture is because of the recent mild weather in Asia and high gas stocks in both basins.

The forecast next week in northeast Asia looks much colder, but LNG stocks currently offer a decent buffer.

The average LNG price for December delivery into northeast Asia fell 3% to US$16.50 per mmBtu.

An electrical incident at Chevron Australia’s Gorgon gas facility has left one LNG production train producing at 80% capacity. The market will follow this situation – as it may affect supply – and the short-term weather forecast given recent warmer temperatures for the heating season.

In Europe, 99.6% full storage and mild weather forecast to last through year-end leave little incentive for withdrawals until early 2024.

In the US, natural gas futures held near a two-week low on Friday as forecasts for colder weather and record amounts of gas flowing to LNG export plants offset forecasts for mild weather over the next 10 days and record output.

Benchmark Gas Prices 11 Nov 2023

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