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 on China Demand Hopes, Posts Weekly Gain

Oil prices recovered from a brief sell-off to gain more than USD1 per barrel on Friday, 3 March, and ended the week higher, driven by renewed optimism around demand from top oil importer China. Brent crude futures rose USD1.08 to settle at USD85.83 a barrel. US WTI crude futures settled at USD79.68 a barrel, up by USD1.52. Brent and WTI notched their third biggest weekly percentage gains this year as strong Chinese economic data fed hopes for oil demand growth. China is getting more ambitious with its 2023 growth target, aiming as high as 6%, sources told Reuters. Activity in China’s services sector expanded at the fastest pace in six months during February as the removal of tough COVID-19 restrictions revived customer demand. China’s seaborne imports of Russian oil are set to hit a record high this month. Still, the oil market broadly shrugged off a 10th consecutive week of US crude stock builds. Meanwhile, analysts expect the dollar to be under pressure over the next 12 months, which would make dollar-denominated oil cheaper for holders of other currencies. The European Central Bank was still sending hawkish signals, saying that its key interest rate could climb as high as 4% if inflation remains high.

Asia Prices Hit 19-month Low on Tepid Demand

Asian spot liquefied natural gas prices continued their downtrend this week, hitting the lowest level since July 2021, due to tepid demand which is expected to last until the end of March. The average LNG price for April delivery into northeast Asia was USD14.50 per million British thermal units (mmBtu), industry sources estimated, down USD0.50, or 2.3%, from the previous week. Prices have fallen more than 48% year-to-date and around 79% from the August 2022 peak at USD70.50 per mmBtu. In Europe, gas prices have touched levels not seen since August 2021 and LNG cargoes continue to head to the continent with economics still favouring Atlantic deliveries over the Far East. The April JKM/TTF basin spread, which measures the economics for delivering LNG to Asia versus Europe, has strengthened from $-1.00/mmBtu at end of February to USD-0.35/mmBtu in early March, a welcome reversal but still not beneficial numbers for any cargo flows back to Asia. In the US, natural gas futures jumped about 9% on Friday to a five-week high, as the amount of gas flowing to US LNG export plants soared to a record high and on new forecasts for colder weather and higher heating demand.

For related reports and other publications, visit abhafoundation.org.

Check out Marhaba’s FREE e-Guides for everything you need to know about Qatar.