Doha, Qatar: Oil prices rose about 1 percent on Friday on signs of slowing US output, but both crude benchmarks also ended their longest weekly rally of 2023 on mounting concerns about global demand growth. WTI crude futures gained 86 cents to settle at $81.25 a barrel, and Brent crude futures rose 68 cents to settle at $84.80 a barrel. Both benchmarks pushed higher on Friday after industry data showed that the US oil and natural gas rig count, an early indicator of future output, fell for the sixth week in a row.
A slump in US production could exacerbate an anticipated supply tightness through the rest of this year. Those concerns, spurred on by output cuts from OPEC+, helped oil prices gain for seven straight weeks since June. Brent crude gained about 18 percent and WTI gained 20 percent over the past seven weeks.
Last week, however, oil prices dropped about 2 percent as a worsening property crisis in China added to concerns about the country’s sluggish economic recovery and reduced investors appetite for risk across markets. Concern is also mounting that the US Federal Reserve has not finished raising interest rates to tackle inflation.
Higher borrowing costs can impede economic growth and in turn reduce overall demand for oil.
Asian spot liquefied natural gas (LNG) prices rose last week to the highest level in five months, as the risk of possible industrial action at some Australian LNG facilities raised concerns over supply.
The average LNG price rose to $14.00 per million British thermal units (mmBtu) from $11.50 the previous week, its highest level since mid-March, industry sources estimated. Analysts said that there were no updates on wage disputes at some of Australia’s largest LNG facilities, as the unions involved in talks filed a safety complaint against the company.
Meanwhile, Chevron faces the prospect of work stoppages or even an all-out strike at Australia’s second largest LNG plant at Gorgon and at its Wheatstone operations after voting opened on Friday for a union ballot. If Australian strikes affecting 10 percent of global LNG output did go ahead, and last for several weeks or months, there would likely be a much bigger move in spot prices as Asian buyers will compete with Europe to replace supply.
However, most of Japan and South Korea remains in a heatwave that is set to continue throughout the rest of summer, but overall power demand is still weak due to greater nuclear and renewable generation.
