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

Oil jumps to a five-week high after OPEC+ output cut

Oil prices jumped about 4% to a five-week high on Friday, 7 October, lifted again by an OPEC+ decision last week to make its largest supply cut since 2020 despite concerns about a possible recession and rising interest rates. Oil rallied for the fifth day in a row even as the dollar moved higher, after data showing the US economy was creating jobs at a strong pace gave the Federal Reserve a reason to continue hefty interest rate hikes.

Brent futures rose US$3.50, or 3.7%, to settle at US$97.92 a barrel, while US West Texas Intermediate (WTI) crude rose US$4.19, or 4.7%, to end at US$92.64. The Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, known as OPEC+, agreed this week to lower their output target by two million barrels per day. The OPEC+ cut comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market.

OPEC Secretary General Haitham al-Ghais said the output target cuts will leave OPEC+ with more supply to tap in the event of any crises. On Thursday, 6 October, US President Joe Biden expressed disappointment over the OPEC+ plans. Washington was looking at all possible alternatives to keep prices from rising.

Asian LNG prices slip on healthy stocks, mild weather

Asian spot liquefied natural gas (LNG) prices fell further last week on healthy inventory levels but a force majeure in Malaysia renewed concerns that buyers might need to seek replacement cargoes amid competition with Europe. The average LNG price for November delivery into northeast Asia was US$34.00 per mmBtu, down US$4.50, or 11.7%, from the previous week, industry sources estimated.

Prices in Asia have continued to trend lower with the help of milder weather and easing demand before winter, analysts said. Meanwhile, Malaysia LNG, majority owned by Petronas, has declared force majeure on LNG supplies to its customers, including Japanese utilities, due to a leak on the Sabah-Sarawak Gas Pipeline on 21 Sep, at a time when Japan and many other countries in Europe are scrambling to ensure gas supply for the peak winter demand season.

In Europe, gas prices have eased ahead of a meeting of European Union leaders to discuss whether and how to put a cap on gas prices before winter sets in. In the US, natural gas futures fell about 3% on Friday on record output and continued milder-than-normal weather that will allow utilities to keep injecting more gas into storage than usual in the coming weeks.

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