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

Oil Rises USD3 Per Barrel After Russia Signals Output Cut

Oil prices settled about USD3 per barrel higher on Friday, 23 December, for a second straight week of gains after Moscow said it could cut crude output in response to the G7 price cap on Russian exports. Brent crude closed at USD83.92, up by USD2.94 while WTI crude settled at USD79.56 a barrel, up USD2.07. Both benchmarks recorded their biggest weekly gains since October. Russia may cut oil output by 5% to 7% in early 2023 as it responds to price caps, Deputy Prime Minister Alexander Novak said on Friday. Russia’s Baltic oil exports could fall by 20% in December from the previous month after the European Union and G7 nations imposed sanctions and a price cap on Russian crude from 5 December, according to traders and Reuters calculations. Both crude oil demand and output could slump over the next few days due to shut-ins from a massive winter storm that cascaded across a broad swath of the United States. Several of the largest US refineries shut down due to the extreme cold while output shut in Texas and North Dakota. Some 1.5 million barrels of daily refining capacity along the US Gulf Coast was shut due to the bitterly cold temperatures. The production losses are not expected to last, but they have lifted fuel prices.

Asia Spot LNG Prices Slip Tracking Declines in Europe

Asian spot LNG prices last week slipped for the first time in over a month, tracking declines in European gas prices as milder winter temperatures reduced heating demand. The average LNG price was USD31 per mmBtu, down USD7, or 18.4%, from the previous week, industry sources estimated. Asian prices fell along with much larger declines in the Dutch TTF, Europe’s main natural gas futures market, as milder temperatures reduced regional heating demand expectations, analysts said. Europe’s gas markets have survived the first half of the winter in reasonable shape supply-wise. The region has continued to receive steady inflows of LNG, and storage looks set to enter 2023 at a reasonably high level. Europe has been sourcing alternatives to Russian piped gas, including importing more LNG. Strong prices are expected throughout 2023 as global LNG supply growth remains small. However, regional spreads may narrow as Germany opens import capacity and if Asian demand recovers as China emerges from COVID lockdowns. Germany launched two LNG terminals in November, while six floating storage and regasification spread over four sites are currently expected to come online by the end of 2023.

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