Oil prices extended gains on Friday, as oil rigs operated by US energy firms declined sharply last week and strong job growth in the US in January lifted investors’ expectations on the demand side. US jobs data and signs that US sanctions on Venezuelan exports have helped tighten supply and to extend gains. Brent crude oil futures rose $1.91 a barrel, or 3.14%, to settle at $62.75 a barrel. The international benchmark notched a weekly gain of about 1.9%. US West Texas Intermediate (WTI) futures and ended the session at $55.26, up $1.47 a barrel or 2.73% and gained about 3% on the week.The number of oil rigs in the US decreased by 15 to 847 in the week to February 1, marking the lowest level since May 2018, energy services company Baker Hughes reported on Friday. As a key index to gauge future output, the US rig count fall offered a relief for the market clouded by fears of oversupply since late 2018. Oil prices received a boost from Wall Street after a surprisingly strong US job growth data fed demand for equities.
Financial markets also gained support from comments on Twitter by US President Donald Trump on Thursday, saying he would meet Chinese President Xi Jinping soon to try to resolve a trade standoff. However, Trump later warned he could postpone talks if a deal remains elusive. China’s trade delegation said the latest round of talks with the US made “important progress”, state news agency Xinhua reported. Supply has been tightened since Washington imposed sanctions on Venezuela’s Petróleos de Venezuela last week, keeping tankers stuck at ports. Analysts also believe the oil market will be more balanced in 2019 after supply cuts from Opec. Iraq’s oil exports averaged 3.649mn barrels per day in January, down slightly from the previous month, in line with the agreement between Opec and other exporters such as Russia to curtail global supply in order to support prices.
Asian spot prices for liquefied natural gas (LNG) fell to a nine-month low this week as the region remains oversupplied amid a warmer-than-usual winter. Spot prices for March delivery to Asia this week fell to $7per million British thermal units (mmBtu), down $1 from the previous week, the lowest since April 6. Asian prices for March cargoes have fallen below the UK front-month gas price, reversing a multi-year trend in which Asian prices had a premium over Europe and prompting some traders to redirect cargoes to Europe from Asia. Vitol on Wednesday changed the destination of two LNG cargoes sourced in the US to northwest Europe from Asia due to the discount on Asian prices compared to those in Britain.
The Papua New Guinea LNG plant may have sold its cargo for March delivery at about $6.50 per mmBtu on a free-on-board basis while Sakhalin LNG may have sold its March loading cargoes at below $7 per mmBtu, a second source said. The deals could not immediately be confirmed. Trade has also been quiet ahead of week-long Chinese New Year holiday, when most dealers from the world’s second largest LNG importer will be away, amid a production shut down at factories. Offering some support for prices, Chevron Corp’s Gorgon LNG project’s train 3 remains shut after production was halted in mid-January due to a mechanical issue.
This article was supplied by the Abdullah bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.
Sources and photo-credits: Gulf Times