Oil hits 7-year highs as rally extends to a 7th week

Oil prices surged to seven-year highs on Friday, extending their rally into a seventh week on ongoing worries about supply disruptions fuelled by frigid U.S. weather and ongoing political turmoil among major world producers. Brent crude rose $2.16, or 2.4%, to settle at $93.27 a barrel. U.S. West Texas Intermediate crude ended $2.04, or 2.3%, higher at $92.31 a barrel. Brent ended the week 3.6% higher, while WTI posted a 6.3% rise in their longest rally since October. The market’s surge accelerated in the last two days as buyers piled into crude contracts due to expectations that world suppliers will continue to struggle to meet demand. Meanwhile, winter storms bringing icy conditions in the United States, particularly in Texas, also fuelled supply fears as extreme cold could cause production to shut temporarily, similar to what happened in the state a year ago. Oil markets have also gained support from geopolitical risks as major oil producer Russia has amassed thousands of troops on Ukraine’s border and is accusing the United States and its allies of fanning tensions. Last week, OPEC+ agreed to stick to moderate output increases despite pressure from top consumers to raise production more quickly.
Asian prices fall as Lunar New Year reduces trading
Asian spot LNG fell last week, tracking gas prices in Europe, amid muted demand from China as the Lunar New Year holiday reduced trading activity in northeast Asia. The average LNG price for March delivery into northeast Asia fell to $25 per metric million British thermal units, down $2.00 or 7.4% from the previous week, industry sources said. However, several Asian buyers have re-emerged to purchase cargoes to replace inventories, and more spot procurement activity in the coming weeks, analysts said. Meanwhile, Europe continues to be reliant on LNG amid low Russian gas supply. The arbitrage between Asia and Europe – or cargo diversion from one market to another – has been shifting back and forth, and there is a risk that European LNG imports could slow in case of any increase in Asian demand and prices. However, the absence of de-escalation signs in the Russia-Ukraine conflict continues to support the market. In the U.S., natural gas futures dropped almost 7% on Friday during a period of record volatility on forecasts for less cold and lower heating demand over the next two weeks than previously expected. Front-month gas futures fell 31 cents to settle at $4.57 per mmBtu.
— By the Al-Attiyah Foundation

Pages

Open chat