Al Attiyah Foundation Weekly Energy Market Review | 2 September 2023
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 at highest level following supply worries
Oil prices rose last Friday, 1 September, to their highest in over half a year and snapped a two-week losing streak, buoyed by expectations of tightening supplies.
Saudi Arabia is widely expected to extend a voluntary 1 million barrel per day oil production cut into October, prolonging supply curbs engineered by the Organization of the Petroleum Exporting Countries (OPEC) and allies, known collectively as OPEC+, to support prices. Russia, the world’s second-largest oil exporter, has already agreed with OPEC+ partners to cut oil exports next month, Deputy Prime Minister Alexander Novak said on Thursday.
For the week, Brent rose about 4.8%, while WTI advanced by 7.2%. The appetite for oil in the US has been robust, with commercial crude inventories declining in five of the most recent six weeks, according to surveys conducted by the US Energy Information Administration.
A keenly watched US report on Friday also showed a rise in the unemployment rate and moderation in wage growth, bolstering outlooks of a pause in interest rate hikes.
Meanwhile, expectations for demand recovery elsewhere are growing.
Asian spot prices of LNG remain steady over likely strike action in Australia
Asian spot prices for liquefied natural gas (LNG) held steady last week as more certainty over potential strike action at LNG facilities in Australia kept buyers on the sidelines from seeking replacement cargoes.
The average LNG price for October delivery into northeast Asia remained at US$13.00 per mmBtu, industry sources estimated. Little interest has so far emerged for replacement cargoes, with terminal inventories in northeast Asia largely remaining high as power sector cooling demand begins to wane with the seasonal fall in temperatures across much of the region.
Two major LNG production facilities operated by Chevron could face daily work stoppages of up to 10 hours next week after unions threatened labour action in a dispute over pay and work conditions.
European traders said the expectation of the strikes was already priced in and that high gas inventory levels in Europe and Asia have been the primary reason prices haven’t risen on the news. Europe’s gas stocks are currently around 92.8% full according to Gas Infrastructure Europe data.
In the US, front-month gas futures were up 9% last week, to settle at US$2.77 per mmBtu on the continued hot weather forecast.
For related reports and other publications, visit abhafoundation.org.
Check out Marhaba’s FREE e-Guides for everything you need to know about Qatar.