Oil prices remain lower on weaker demand outlook
September 15 2019 11:03 PM
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Oil
Oil prices edged lower towards the end of last week and posted weekly losses, as concerns about slower global economic growth outweighed hints of progress in the US-China trade dispute.
Brent crude futures settled at $60.22 a barrel on Friday, with US West Texas Intermediate (WTI) falling to $54.85 a barrel. Brent fell 2.1% for the week, its first decrease in five weeks while WTI lost about 3%, its first decrease in three weeks. Conciliatory gestures from the world’s two largest economies have continued to affect the markets as they prepare for new talks. President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact. China’s official Xinhua News Agency also reported that China will exempt some US agricultural products from additional tariffs.
A weaker demand outlook continued pressure on oil prices. Both Opec and the IEA last week said oil markets could end up in surplus next year, despite a pact by Opec and its allies to limit supplies that is largely being offset by growing US production. Some Opec delegates say the idea of a larger cut for next year is gaining support, though Saudi Arabia’s new energy minister said talks on that issue would be left until the next Opec+ meeting in December.
However, Yemen’s Iran-aligned Houthi group said it attacked two plants at the heart of Saudi Arabia’s oil industry on Saturday, knocking out half the Kingdoms crude processing capacity, in a move expected to send prices soaring this week and increase tensions in the region.

Gas
Asian spot prices for liquefied natural gas tracked a spike in the European gas market last week, rising for the first time in three weeks. Spot prices for October delivery to northeast Asia are estimated at $4.90-$5.20 mmBtu, against around $4.40 a week ago.
Traders quoted various levels for Asian prices as they moved sharply in reaction to developments on European gas market.
The European prices jumped on a requirement for Russian producer Gazprom to cut gas flows via the Opal pipeline into Germany; an announcement of problems with at least five French nuclear reactors and news of the Dutch Groningen gas field halting production eight years earlier than initially planned. The October contract on the Dutch market, a benchmark for LNG in Europe, has risen by more than $1 since the end of the previous week and traded over $5/mmBtu on Friday.
Asian and European gas markets have become more linked this year due to rising spot volumes and an increase in LNG paper trading.
In the US, natural gas futures rose to a 15-week high on Friday after midday weather forecasts called for a little more heat over the next two weeks and expectations that LNG exports would rise to record highs later in September. Henry Hub spot prices rose by over 4.7% from the previous week to settle at $2.61 MMBtu on Friday. Also last week, Cameron LNG declared force majeure due to technical problems at the export terminal. However, it is expected that the impact would be limited as demand in Asia remains largely subdued.
* This article was supplied by the Abdullah bin Hamad
Al-Attiyah International Foundation for Energy and Sustainable Development.



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