Oil prices fell on Friday and posted a weekly loss on a faster-than-expected recovery in Saudi output, while investors also worried about global crude demand amid slowing Chinese economic growth.
During a volatile session, Brent crude futures fell 1.3%, to settle at $61.91 a barrel, after dropping to a session low of $60.76 a barrel. US West Texas Intermediate (WTI) crude futures fell 0.9%, to settle at $55.9. Brent fell 3.7% for the week, its biggest weekly loss since early August. WTI lost 3.6%, its steepest loss since mid-July. Brent is just above its level before attacks on Saudi facilities on September 14, which initially halved the kingdom’s production.
Sources told Reuters last week that Saudi Arabia had already restored capacity to 11.3mn barrels per day, although Saudi Aramco has yet to confirm it is fully back online.
Crude futures fell along with other higher-risk assets after news that the US government is considering the possibility of delisting Chinese companies from US exchanges. The move would be a radical escalation of trade tensions between the US and China. Also weighing on prices, the International Energy Agency (IEA) said it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further, while in China, the world’s second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August. Emerging details related to the Trump impeachment inquiry also helped to dent demand sentiment adding uncertainty to the US economy. In an indication of future production, US energy firms reduced the number of oil rigs last week, and for a record 10th month in a row. Drillers cut six oil rigs in the week to September 27, bringing the total count down to 713.
Gas
Asian spot prices for LNG remained relatively stable this week, having firmed over the previous two weeks on turbulence in the gas and crude oil sectors. The average LNG price for November delivery into northeast Asia is estimated at $5.75 per mmBtu, down from $5.80 mmBtu the previous week. While there were no indications of rising demand, some traders may have looked to close financial exposure towards the end of the month, which provided some price support on Friday.
The market expects some volatility in the coming week as European front-month gas contracts roll from October to November, which could lead to the November price becoming more bearish as Europe is well supplied with LNG and has full gas stocks.
Any movement on European gas prices is expected to translate to Asian LNG prices. Activity on the LNG market this week also indicated that market participants may have different expectation for future price direction.
Some buyers, such as Indian Oil Corp and India’s Gujarat State Petroleum Corp (GSPC), cancelled their latest tenders, adding that offers they received might have been higher than expected. Some other buyers re-issued previously unawarded tenders, in likely expectation that prices could rise even higher. In the US, natural gas futures fell again last week following the falling oil market and continued demand concerns. Henry Hub spot prices dropped around 5.1% from the previous week to settle at $2.40 MMBtu.
* This article was supplied by the Abdullah bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.
During a volatile session, Brent crude futures fell 1.3%, to settle at $61.91 a barrel, after dropping to a session low of $60.76 a barrel. US West Texas Intermediate (WTI) crude futures fell 0.9%, to settle at $55.9. Brent fell 3.7% for the week, its biggest weekly loss since early August. WTI lost 3.6%, its steepest loss since mid-July. Brent is just above its level before attacks on Saudi facilities on September 14, which initially halved the kingdom’s production.
Sources told Reuters last week that Saudi Arabia had already restored capacity to 11.3mn barrels per day, although Saudi Aramco has yet to confirm it is fully back online.
Crude futures fell along with other higher-risk assets after news that the US government is considering the possibility of delisting Chinese companies from US exchanges. The move would be a radical escalation of trade tensions between the US and China. Also weighing on prices, the International Energy Agency (IEA) said it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further, while in China, the world’s second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August. Emerging details related to the Trump impeachment inquiry also helped to dent demand sentiment adding uncertainty to the US economy. In an indication of future production, US energy firms reduced the number of oil rigs last week, and for a record 10th month in a row. Drillers cut six oil rigs in the week to September 27, bringing the total count down to 713.
Gas
Asian spot prices for LNG remained relatively stable this week, having firmed over the previous two weeks on turbulence in the gas and crude oil sectors. The average LNG price for November delivery into northeast Asia is estimated at $5.75 per mmBtu, down from $5.80 mmBtu the previous week. While there were no indications of rising demand, some traders may have looked to close financial exposure towards the end of the month, which provided some price support on Friday.
The market expects some volatility in the coming week as European front-month gas contracts roll from October to November, which could lead to the November price becoming more bearish as Europe is well supplied with LNG and has full gas stocks.
Any movement on European gas prices is expected to translate to Asian LNG prices. Activity on the LNG market this week also indicated that market participants may have different expectation for future price direction.
Some buyers, such as Indian Oil Corp and India’s Gujarat State Petroleum Corp (GSPC), cancelled their latest tenders, adding that offers they received might have been higher than expected. Some other buyers re-issued previously unawarded tenders, in likely expectation that prices could rise even higher. In the US, natural gas futures fell again last week following the falling oil market and continued demand concerns. Henry Hub spot prices dropped around 5.1% from the previous week to settle at $2.40 MMBtu.
* This article was supplied by the Abdullah bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.
