Pump jacks and storage tanks in the Permian Basin in western Texas.
Doha, Qatar: Oil prices fell by more than 1% on Friday and cemented weekly losses as analysts projected a supply surplus next year on weak demand despite an OPEC+ decision to delay output hikes and extend deep production cuts to the end of 2026. Brent crude futures settled at $71.12 a barrel, shedding 97 cents, or 1.4%. US, noted Al-Attiyah Foundation in its Weekly Energy Market Review.
West Texas Intermediate (WTI) crude futures settled at $67.20 a barrel, falling $1.10, or 1.6%. For the week, Brent prices lost more than 2.5%, while WTI saw a drop of 1.2%. A rising number oil and gas rigs deployed in the United States last week, pointing to rising production from the world’s biggest crude producer, also pushed prices lower.
On Thursday, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026. Weak global oil demand and the prospect of OPEC+ ramping up production as soon as prices rise have weighed on trading, analysts said. OPEC+, which is responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand - especially from top crude importer China - and rising output elsewhere have forced it to postpone the plan several times. Also pressuring prices was the US rig count, which grew for the first time in eight weeks, Baker Hughes said.
Asian spot LNG prices edged down last week as high inventories depressed demand, but prices remained near their highest level this year, tracking European gas prices which have risen on supply concerns.
The average LNG price for January delivery into north-east Asia was at $15.00 per million British thermal units (mmBtu), slightly lower than $15.10 per mmBtu last week, industry sources estimated. Colder temperatures in north-east Asia will keep prices in check although not expected to lift spot demand as ample inventory levels and high LNG prices will sideline major buyers, analysts said.
In Europe, gas prices were firm amid colder weather last week and faster gas storage withdrawal. Europe’s gas storage facilities are below the levels of the previous two years, although they are still significantly higher than they were at the same time in 2021.
Competition between the Pacific and Atlantic basis have remained strong, with the arbitrage - moving cargoes from one place to another - for US loadings holding open for prompt cargoes but shut for most exports planned for Q1. In the US, natural gas futures were little changed on Friday as rising output and forecasts for warmer-than-expected weather over the next two weeks offset an increase in the amount of gas flowing to liquefied natural gas export plants to a 10-month high.
Front-month gas futures settle at $3.08 per mmBtu, down about 9 percent for the week after gaining about 49 percent over the prior six weeks.
