Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.
Oil registers weekly decline on recession worries
Oil prices registered little change on Friday, 6 January, as the market balanced a weaker US dollar and mixed US jobs reports, but both crude benchmarks ended lower on the first week of the year due to global recession concerns.
Brent futures fell 12 cents to settle at US$78.57 a barrel, while US West Texas Intermediate (WTI) crude rose 10 cents to close at US$73.77. For the week, both Brent and WTI were down over 8%, their biggest weekly dives to start the year since 2016. Both benchmarks had gained about 13% during the prior three weeks.
US services industry activity in November contracted for the first time in more than 2-1/2 years, according to a report from the Institute for Supply Management (ISM). However, another report showed the US economy added jobs at a solid clip in December, pushing the unemployment rate back to a pre-pandemic low of 3.5% as the labour market remains tight.
That US jobs report caused the US dollar to fall and global stocks to rally as investors bet that inflation is easing and the US Federal Reserve (Fed) need not be as aggressive as some feared. A weaker dollar can boost demand for oil, as dollar-denominated commodities become cheaper for holders of other currencies.
Asian prices ease in New Year as demand remains slow
Asian spot LNG prices eased for a third straight week at the start of the year, on the back of slower demand amid ample inventory levels and milder winter weather.
The average LNG price for February delivery into northeast Asia was US$25 per mmBtu, down US$3, or 10.7%, from the previous week.
China, the world’s second-largest LNG importer in 2022, abruptly ended its stringent zero-COVID policy last month after maintaining strict measures to curb the virus spread. While this has led to a surge in infections across the country, the upcoming Lunar New Year is expected to see passenger trips double to reach 2.1 billion this year. Mainland China is also set to open borders with its special administrative region of Hong Kong, for the first time in three years.
In Europe, gas prices fell earlier in the week on mild weather and high stock levels, before edging up on colder temperatures. Northeast Asian delivered LNG prices however had fallen less sharply, resulting in tighter discounts to or even turning to a premium over the Dutch TTF hub in some cases. But interest from Asian buyers remains tepid, with many still facing ample LNG terminal inventories, limiting the number of firms willing to compete for Atlantic LNG supply.
For related reports and other publications, visit abhafoundation.org.
Check out Marhaba’s FREE e-Guides for everything you need to know about Qatar.
