Oil
Benchmark crude oil futures remained strong last week with both Brent and WTI reaching 40-month and 175-week highs. Building on a tight market fundamentals structure, the possibility of new sanctions not only on Iran but also on Venezuela and Russia sustained the prices at firm levels. Oil demand in Asia is expected to hit a record this month, with China likely taking more than 9mn bpd (mbpd) of crude, which represents almost 10% of global consumption. The oil prices were still receiving a boost from equity markets.
However, a stronger US Dollar pressured oil markets and limited the gains. US crude inventories rose 2.2mn barrels in the week to April 20, whereas combined US exports of crude and products also hit a weekly record of 8.3 mbpd, of which more than 6 mbpd was from products. The latest US weekly data showed that US crude production reached 10.59 mbpd, while the US oil rig count gained five rigs to reach 820.
The oil prices sat comfortably for almost a year and a half until October last year in the price territory $45-$55, they clearly took off since then and are looking to settle in a new comfort zone which is still undefined but definitely on a higher orbit. The fundamental picture looks quite robust for this year with global oil demand and Opec+ cuts seem to be containing the US tight oil growth so far, amid draining OECD oil stocks. However, many risks and uncertainties, whether geopolitical or fundamental, could undermine this trajectory.


Gas 
Asian spot LNG prices surged by more than 7% due last week due to higher spot demand triggered by relatively higher oil-indexed contract price. Crude oil prices remained high last week which prompted buyers to be more active in the spot market to look for cheaper cargoes. Conditions were pointing towards continued rising demand with some cargoes for June and July delivery believed to be sold above $8/mmbtu.
China’s apparent natural gas demand in the first quarter of 2018 hit 71.2 bcm, up 10% from last year, driven by strong growth in demand from domestic users, which rose 23%, the National Energy Administration reported. Moreover, Sinopec aims to start the Erdos-Anping-Cangzhou pipeline project in northern China next year, connecting production from Ordos basin and LNG storages, including Sinopec’s new LNG terminal in Tianjin, near Beijing.
In the US, Henry Hub natural gas futures rose 1% over last week and reached an 11-week high on Thursday. An unexpected third weekly storage withdrawal this month of about 18bn cubic feet brought total inventories to around 29% below normal. However, heating demand is expected to decline over the next two weeks due to forecasts for relatively warmer weather. In the UK, NBP gas futures rallied for a third week in a row with another weekly gain of almost 3%. However, an oversupplied system due mainly to a boost in Norwegian flows into the UK offset the impact of a drop in temperatures. Gas consumption in the domestic sector is expected to remain strong this week due to an expected two degrees Celsius fall in average British temperatures. 

* The author is senior energy researcher at Abdullah Bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.