An aerial view of Halul Island, Qatar.
Doha, Qatar: Oil prices settled lower on Friday after Hamas released two US hostages from Gaza, leading to hopes the Israeli-Palestinian crisis could de-escalate without engulfing the rest of the Middle East region and disrupting oil supplies. Brent crude futures fell 22 cents, or 0.2%, to settle at $92.16 a barrel.
US West Texas Intermediate crude futures for November delivery, fell 62 cents, or 0.7%, to $88.75 a barrel. Hamas’ armed wing released two US hostages from Gaza - a mother and her daughter - “for humanitarian reasons” in response to Qatari mediation efforts in the war with Israel, its spokesman Abu Ubaida said on Friday.
Both contracts had gained more than a dollar per barrel during Friday session on signs of escalation of the conflict. For the week, both front-month contracts rose over 1%. The Middle East remains a big focus of the market because of fears of a region-wide conflict that would likely involve a disruption of oil supplies. Also supporting prices were forecasts of a tightening market in the fourth quarter after top producers Saudi Arabia and Russia extended supply cuts to year end. Large inventory draws, mostly in the US, support the thesis of an undersupplied market. Asian spot liquefied natural gas (LNG) prices rose more than $3 this week to a near nine-month high, supported by increased demand from northeast Asian buyers and amid tensions in the Middle East. The average LNG price rose 23%, to $17.90 per million British thermal units (mmBtu), industry sources estimated, its highest levels since early February.
This week, Japanese LNG stocks held by power utilities are ramping up, with the help of above-normal temperatures in the past few weeks. Chinese LNG imports jumped this week as the Golden Week holiday concluded and some additional restocking is expected to take place ahead of the heating season.
As the Middle East is a major producing region of natural gas as well, buyers are very concerned about the supply issues from the region, combined with worries over the fuel supply from Russia due to the war in Ukraine. In Europe, gas prices rose on Friday, with cold weather forecast over the weekend in Britain and across Europe expected to raise demand for heating. Fore the week, Dutch TTF benchmark plunged 8.4% to $15.63 per mmBtu. Latest European gas storages were 98.1% full, a historic high for the time of year.
