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

Oil settles 5% higher as more interest rate hikes loom

Oil prices settled higher by more than 5% last Friday, 4 November, amidst uncertainty around future interest rate hikes by the US Federal Reserve, while a looming EU ban on Russian oil and the possibility of China easing some COVID restrictions supported markets.

Though fears of global recession capped gains, Brent crude futures settled up US$3.99 to US$98.57 per barrel, a weekly gain of 2.9%. US West Texas Intermediate crude futures were up by US$2.96 at US$92.61 per barrel, a 4.7% weekly gain. China is sticking to its strict COVID-19 curbs after cases rose on Thursday, 3 November to their highest since August, but a former Chinese disease control official said substantial changes to the country’s COVID-19 policy are to take place soon.

Meanwhile, signals about the size of US interest rate hikes caused oil to pare some gains. The US Labor Department’s report showed a rise in the unemployment rate to 3.7% last month from 3.5% in September, suggesting some loosening in labour market conditions that could give the Fed cover to shift towards smaller rate increases.

While demand concerns weighed on the market, supply is expected to remain tight because of Europe’s planned embargoes on Russian oil and a slide in US crude stockpiles.

Asian spot prices for LNG continue easing amidst ample supplies

Asian spot liquefied natural gas (LNG) prices edged lower again last week as ample supply across Asia and Europe weighed on prices. The average LNG price for December delivery into northeast Asia was US$28 per mmBtu this week, down US$2, or 6.7%, from the previous week, industry sources estimated.

In Europe, total LNG imports saw a monthly increase in October, reaching about 14 billion cubic metres despite mild temperatures and high storage levels. This is also nearly 50% above levels in October 2021. European price has continued to soften on the back of excess cargo availability, while weaker Asian spot prices are dragging the region down with it.

However, the weather dynamics and the potential restart of the US Freeport LNG export plant soon are the main factors that could more strongly impact prices.

In the US, natural gas futures jumped about 7% to a three-week high on Friday, 4 November, at the end of an extremely volatile week of trade on forecasts for much colder weather and higher heating demand in mid-November than previously expected.

Front-month gas futures rose 42 cents to settle at US$6.40 per mmBtu, the highest close since 14 October. For the week, the contract was up 13% after gaining 15% last week.

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