Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.
Oil jumps 4% as US gasoline prices hit record high
Oil prices rose on Friday, 13 May, as US gasoline prices jumped to a record high. China looked ready to ease pandemic restrictions and investors worried that supplies will tighten if the European Union bans Russian oil. An EU embargo, if fully enacted, could take about 3 million bpd of Russian oil offline, which will completely disrupt, and ultimately shift global trade flows, triggering market panic and extreme price volatility.
Brent futures rose US$4.10, to settle at US$111.55 a barrel. US West Texas Intermediate crude rose US$4.36, to settle at US$110.49. For the week, WTI gained 0.7%, while Brent fell 0.7%.
In the US, gasoline futures soared to an all-time high after stockpiles fell last week for a sixth straight week. That boosted the gasoline crack spread – a measure of refining profit margins – to its highest since it hit a record in April 2020 when WTI finished in negative territory.
In China, authorities pledged to support the economy and city officials said Shanghai would start to ease coronavirus traffic restrictions and open shops this month. Pressuring oil prices, coupled with inflation and rate rises, drove the US dollar to a near 20-year high last week, against a basket of currencies, making oil more expensive when purchased in other currencies.
Asian LNG prices ease despite restocking demand
Asian spot liquefied natural gas (LNG) prices inched down last week despite some spot procurement activities by utilities and traders from Japan, Korea and India to replenish stocks. Meanwhile, muted Chinese activity during COVID-19 lockdowns continued to suppress overall Asian demand. The average LNG price for June delivery into northeast Asia was estimated at US$23.35 per metric million British thermal units (mmBtu), around US$0.55 lower than the previous week, industry sources said.
In Europe, LNG prices continued to trade at a record discount to Benchmark Dutch TTF gas, as Russian pipeline gas supply issues dominated sentiment, given the region’s dependence on Russia. European LNG prices were assessed at US$22.15 per mmBtu for June deliveries to Northwest Europe, equivalent to a US$10 per mmBtu discount to the June TTF contract, analysts said.
Pressure on Europe to secure alternative gas supplies increased on Thursday, 12 May, as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route. In the US, natural gas futures eased about 1% on Friday, 13 May, on forecasts for milder weather and lower demand in two weeks.
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