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Benchmark crude futures continued their decline last week due mainly to the escalating trade dispute between the US and China that could damage global economic growth and impact negatively on oil demand. The trade dispute between the US and its global partners is also boosting the US Dollar and affecting currencies of other impacted countries. US crude stocks fell in the latest week, but much less than expected, while both gasoline and distillate stocks increased amid prospects of lower US gasoline demand. The US oil rig count increased by 10, making it the highest addition since May. Last Tuesday, the first batch of US sanctions hit the Iranian economy but not yet its oil sector. Some sources informed that Saudi crude production fell in July to 10.29 mbpd, raising questions on its, and others, capacity to sustainably increase output. US crude oil production also fell in the latest week to 10.8 mbpd, while the US EIA lowered its 2018 US crude production forecast to 10.68 mbpd from 10.79 mbpd.
Current crude oil market supplies are deemed, by many experts, as sufficient to balance the market, with Brent prices likely to stabilise in the middle of the price range $60-$80 by year-end. However, many factors may shake up the current supply-demand picture and add more volatility to the market, such as the upcoming US sanctions on Iran’s oil exports taking effect next November. While a 0.5 to 1.0 mbpd drop in Iranian exports seem to be gradually priced in by the market, a heavier drop could have dramatic impact on prices if not adequately compensated.
Asian spot LNG prices kept steady last week at $10 per mmbtu, on robust demand and still tight supplies. Malaysian LNG supplies are suffering from a 4-year low due to an issue in the pipeline transporting gas from Sabah terminal to Bintulu LNG complex. The pipeline was damaged in January and repaired since, but it is still waiting approval to restart. The 9 mtpa Australia Pacific LNG plant is planned to go through maintenance next month, adding thus more pressure on prices. October’s LNG cargoes were valued around $1 per mmBtu higher than the current price level. US LNG exports to China dropped to 0.13 MT in July from almost 0.40 MT in May, amid threats of tariffs on US LNG supplies that could push up prices. Meanwhile, PetroChina is in advanced discussion to strike an LNG purchase agreement with world’s largest LNG exporter, Qatar. However, other factors were dragging prices downward, as new and revamping projects are commissioned. For instance, the second LNG train at Novatek’s Yamal LNG was started last Thursday, six months ahead of schedule.
In the US, Henry Hub natural gas futures rose last week by more than 3%, continuing their rally streak for a fourth straight week. Overall volatility remains low according to experts as the US gas market could fall due to record production or rise as gas in storage is at its lowest level in 15 years. In the UK, gas futures rose by 3.1% for a third straight weekly gain. Prices increased mainly due to cooler temperatures which slipped on average from highs of 30°C to 16°C. Nonetheless, the return of multiple terminals from outage status weighed on prices at the end of the week.
The global oil demand growth forecast for 2019 remains at 1.14 million barrels per day (mb/d), with expectations for global oil demand to reach 99.87 mb/d, said Opec in its July monthly outlook for t
Opec on Monday forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production.
In a mon
Times of Oman
The hydrocarbon sector continued to remain the major driver of economic activities in the Sultanate, despite diversification making tangible progress in the last few years, according to the Central B
Oman Daily Observer
China retained its dominant position as the leading destination for Omani crude exports in July, the Ministry of Oil and Gas (MOG) stated in its monthly report. Of total exports of 24.080 million bar
Oman Daily Observer
World shares edged toward a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and a sharp rally in Europe’s oil and mining firms set Wall Street up for more gains.
The Gulf Today