Doha, Qatar: Oil prices rose last Friday to their highest in over half a year and snapped a two-week losing streak, buoyed by expectations of tightening supplies. Saudi Arabia is widely expected to extend a voluntary 1 million barrel per day oil production cut into October, prolonging supply curbs engineered by the Organization of the Petroleum Exporting Countries (OPEC) and allies, known collectively as OPEC+, to support prices.
Russia, the world’s second-largest oil exporter, has already agreed with OPEC+ partners to cut oil exports next month, Deputy Prime Minister Alexander Novak said last Thursday. Brent crude settled up $1.66, or 1.9%, at $88.55 a barrel. WTI had risen $1.39, roughly 1.7%, to $85.55. For the week, Brent rose about 4.8%, while WTI advanced by 7.2%.
The appetite for oil in the US has been robust, with commercial crude inventories declining in five of the most recent six weeks, according to surveys conducted by the US Energy Information Administration. A keenly watched US report on Friday also showed a rise in the unemployment rate and moderation in wage growth, bolstering outlooks of a pause in interest rate hikes. Meanwhile, expectations for demand recovery elsewhere are growing.
Asian spot liquefied natural gas (LNG) prices held steady last week as more certainty over potential strike action at LNG facilities in Australia kept buyers on the sidelines from seeking replacement cargoes. The average LNG price for October delivery into north-east Asia remained at $13.00 per mmBtu, industry sources estimated.
Little interest has so far emerged for replacement cargoes, with terminal inventories in northeast Asia largely remaining high as power sector cooling demand begins to wane with the seasonal fall in temperatures across much of the region.
Two major LNG production facilities operated by Chevron could face daily work stoppages of up to 10 hours next week after unions on Tuesday threatened labour action in a dispute over pay and work conditions.
European traders have said the expectation of the strikes was already priced in and that high gas inventory levels in Europe and Asia have been the primary reason prices haven’t risen on the news. Europe’s gas stocks are currently around 92.8% full according to Gas Infrastructure Europe data. In the US, front-month gas futures was up 9% last week, to settle at $2.77 per mmBtu on continued hot weather forecast.
