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

Oil posts weekly loss as geopolitical risk premium recedes

Oil prices settled more than 2% lower on Friday, 3 Nov, as supply concerns driven by Middle East tensions eased, while jobs data raised expectations the US Federal Reserve could be done hiking interest rates in the biggest oil-consuming economy.

Brent crude futures were down US$1.92 to US$84.89 a barrel. US West Texas Intermediate crude futures fell US$1.95 to US$80.51 a barrel. Both benchmarks closed more than 6% down on the week.

Hezbollah leader Hassan Nasrallah, speaking for the first time since the Israel-Hamas war erupted, warned that a wider conflict in the Middle East was possible but did not commit to opening another front on Israel’s border with Lebanon. The market is taking this conflict in its stride, as it looks to be neither a significant demand nor supply disruption event.

US job growth slowed more than expected in October, official data showed, while wage inflation cooled, pointing to an easing in labour market conditions. The data bolstered the view that the Federal Reserve need not raise interest rates further.

The Fed held interest rates steady this week, while the Bank of England kept rates at a 15-year peak, supporting oil prices as some risk appetite returned to markets.

Benchmark Oil Prices 4 Nov 2023

Asian spot prices of LNG fall amidst full inventories, mild weather

Asian spot prices of liquefied natural gas (LNG) fell this week but remained at a near nine-month high as geopolitical risks raised market concerns despite full inventories and a mild start to winter.

The average LNG price for December delivery into northeast Asia fell 4.2% to US$17 per million British thermal units (mmBtu), its highest level since mid-February, industry sources estimated. As fears of war in the Middle East causing supply disruption slowly begin to wane, attention once again is drawn to the approaching tank top storage levels.

North Asia is experiencing a very warm winter onset. This trajectory might be maintained until heating demand is sufficient enough to bring the utilities in, which likely won’t be until the first quarter of 2024.

In Europe, market fundamentals remain comfortable, with storage nearly full and cargoes building up offshore, but prices are holding onto a risk premium due to the conflict in the Middle East and as a long, cold winter could still strain global supplies.

US natural gas futures edged up about 1% on Friday with seasonally colder weather coming in mid-November and as the amount of gas flowing to the US liquefied natural gas export plants rose to US$3.52 per mmBtu, near-record highs.

Benchmark Gas Prices 4 Nov 2023

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