Doha: Oil futures rose on Friday, reversing early losses, and are set for a fourth week of gains after Opec sources said the producer group expected limited US oil output growth this year, despite rising prices. Brent crude futures rose 0.6 percent to settle at $73.51 a barrel, while US West Texas Intermediate (WTI) crude rose 0.8 percent to $71.64 a barrel.
Both benchmarks were headed for a weekly gain of about 1.1 percent. On Wednesday, Brent settled at its highest price since April 2019 and WTI closed at its highest since October 2018. Gains were capped, however, by lingering concerns about the pandemic and a stronger US dollar, which makes oil more expensive in other currencies.
Officials from Opec’s Economic Commission Board (ECB) and external presenters attended a meeting on Tuesday focused on US output, while Opec heard from more forecasters on the outlook for 2021 and 2022 at a separate meeting on Thursday. Although there was general agreement on limited US supply growth this year, an industry source said 2022’s forecasts ranged from growth of 500,000 b/d to 1.3 million b/d. US shale oil output usually responds rapidly to price signals, but US producers are still focusing on capital discipline and investor returns, rather than expanding supply, the ECB heard.
Meanwhile, indirect talks between Tehran and Washington on reviving the 2015 Iran nuclear deal have come closer than ever to an agreement, but essential issues remain to be negotiated.
Traders are concerned that the return of Iranian oil to the market could boost global crude supplies and depress prices.
Spot liquefied natural gas (LNG) prices in Asia slipped last week, but remained at double digits as demand was firm globally from the power generation sector. The average LNG price for August delivery into Northeast Asia was estimated at about $11.70 per metric million British thermal units (mmBtu), down 10 cents from the previous week, they said. The price for cargoes delivered in July was estimated to be about $11.90 per mmBtu, down 20 cents from the previous week, they added. Still, LNG prices have more than doubled since late February.
Demand from China continued to be firm with Guangzhou Gas seeking a cargo for delivery in July and Shenzhen Energy buying a cargo for delivery in July at about $11.70 to $11.80 per mmBtu. India’s gas consumption is also recovering after states started to ease restrictions in the wake of a drop in coronavirus infections. The country’s top gas importer Petronet LNG sought a cargo for June delivery while Indian Oil is seeking a cargo for August delivery. Kuwait Petroleum bought a commissioning cargo for its new Al Zour terminal from Qatar Petroleum at about $12.10 to $12.30 per mmBtu.
US natural gas futures slipped to a one-week low on Friday on forecasts for slightly less demand than previously expected next week following heatwaves in California and Texas that boosted local power and gas use and prices. Front-month gas futures fell 3.8 cents, or 1.2 percent, to settle at $3.22 per mmBtu. With European and Asian gas prices both over $10 per mmBtu, analysts said they expect buyers around the world to keep purchasing all the LNG the United States can produce.
