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

Al-Attiyah Foundation - Weekly Energy Market Review

Oil Slumps on Fears That Recession Would Cut Demand

Both benchmarks saw their biggest weekly percentage drops in about a month, largely on fears earlier in the week that a nearing recession would chop away at demand. Brent lost 5.5% in its third weekly drop, while WTI was down 6.9% in its second weekly decline. However, oil gained 2.5% on Friday, 15 July, after a US official told Reuters that an immediate Saudi oil output boost was not expected, and as investors question whether OPEC has the room to significantly ramp up crude production. Brent crude futures settled at USD101.16 a barrel, rising USD2.06, while West Texas Intermediate crude settled at USD97.59 a barrel, gaining USD1.81. Meanwhile, the US oil rig count, an early indicator of future output, inched up by two to 599 this week to their highest since March 2020, energy services firm Baker Hughes said. Also signalling more oil supply on the horizon was Libya’s oil chief, who said crude output will resume after meeting groups that have blockaded the country’s oil facilities for months. Bearish market sentiment has also followed renewed COVID-19 outbreaks in China, which have hampered a demand recovery. Meanwhile, analysts expect continued pressure on oil from concerns over the global economy.

Asia Spot Prices Stay High on Summer Demand

Asian spot liquefied natural gas prices remained at high levels last week on a summer demand pickup in Asia and uncertainty over the Nord Stream 1 pipeline’s return to operations after maintenance ends on July 21. The average LNG price for August delivery into north-east Asia was estimated at USD40.50 per million British thermal units (mmBtu), down USD0.50 or 1.2%, from the previous week, industry sources said. Although China has healthy storage levels, a current heatwave across is stressing the power system and might increase LNG buying. Japan and South Korea are also expected to buy more LNG cargoes for summer, according to analysts. In Europe, British and Dutch gas prices edged lower on Friday as Norwegian exports ramped up after an outage, though concerns remain over future supply from Russia. Flows from Russia via the Nord Stream 1 pipeline remained shut because of maintenance. The maintenance is due to end on 21 July but market participants and governments fear it could be prolonged by Moscow. In the US, natural gas futures jumped about 6% to a four-week high on Friday on a drop in output last week and forecasts for hotter weather and more demand over the next two weeks.

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