Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.
Oil remains on a steady course as US inventories rise
Oil edged higher in volatile trade on Friday, 24 February, with prices supported by the prospect of lower Russian exports but pressured by rising inventories in the United States and concerns over global economic activity. The benchmarks changed little during the week.
Brent crude futures settled at US$83.16 a barrel, up 95 cents, or 1.2%. West Texas Intermediate US crude futures (WTI) closed at US$76.32 a barrel, rising 93 cents, or 1.2%. Earlier, both fell by more than US$1 a barrel.
On the anniversary of Russia’s invasion of Ukraine, Brent crude was about 15% lower than a year earlier. It hit a 14-year high of nearly US$128 a barrel on 8 March 2022. Both benchmarks rose about 2% in the previous session on Russia’s plans to cut oil exports from its western ports by up to 25% in March, which exceeded its announced production cuts of 500,000 barrels per day.
However, the market appeared to be well supplied with US inventories at their highest since May 2021, according to data from the US Energy Information Administration.
US oil rigs, an indicator of future supply, fell seven to 600 this week, while the total count was still up 103 rigs over this time last year, according to energy services firm Baker Hughes Co.
Asian prices slip, northeast Asian buyers stay away
The Asian spot liquefied natural gas (LNG) price eased last week, extending declines to its lowest since July 2021, as demand from key buyers in northeast Asia remains weak.
The average LNG price was at US$15 per million British thermal units (mmBtu), following estimates by industry sources, down US$1 or 6.3% from the previous week. Asia’s spot LNG prices have been trending downward since mid-December, losing 46% since the start of the year.
Prices were also pressured by high stock levels and ample spot supply availability.
Amidst the lack of spot market demand from northeast Asia, China Gas Holdings announced on Friday that it signed two 20-year LNG supply contracts with US exporter Venture Global, for a total supply of two million tonnes per year.
Several south Asian buyers, including Indian Petronet LNG and GAIL, are coming into the market incentivised by the much lower spot prices compared with most of 2022 and earlier this year.
Meanwhile, the major European gas hubs remained above LNG prices this week in a pattern that has been sustained since mid-January. Dutch TTF prices also edged higher on expectations of increased demand for heating, as temperatures turn cooler.
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