Doha: Oil prices rose on Friday but fell for the third straight week after a sharp fall ahead of benchmark interest rate rises and on concern that the US banking crisis will slow the economy and sap fuel demand. Brent crude closed $2.80 higher at $75.30 a barrel. US WTI settled up $2.78 at $71.34 after four days of declines that sent the contract to lows last seen in late 2021.
The Brent benchmark finished the week with a decline of about 5.3 percent, while WTI plunged 7.1 percent.
Both benchmarks were down for three weeks in a row for the first time since November. For some analysts, fundamentals in the physical market are stronger than the futures market would indicate. Rather than underlying fundamentals, the selling frenzy over the past week has been driven by worries about demand linked to recession risks and the strain in the US banking sector.
A better-than-expected jobs report helped ease some fears of an imminent economic downturn, spurred in part by renewed banking fears. Investors also broadly expect the Fed to pause rate hikes at its June policy meeting. However, expectations of potential supply cuts at the next meeting of OPEC+ in June have provided some price support.
Asian spot liquefied natural gas (LNG) prices hit a 23-month low on Friday on mild weather and weak restocking demand in China, Japan, and Korea, while Europe enjoys 60 percent full inventories ahead of summer. The average LNG price for June delivery into northeast Asia was $11 per million British thermal units (mmBtu), the lowest since June 2021.
The price is 4.3 percent down from the previous week, industry sources estimated. Market analysts said spot prices are unlikely to receive much support in the near-term, with northeast Asian buyers not competing for flexible Atlantic basin LNG cargoes and Europe potentially having less flexibility to absorb spot shipments if underground storage sites reach full capacity.
In Europe, there are no signs of substantial early summer cooling demand emerging this month, and while temperatures have been high in Spain, this hasn’t fully translated over to power sector gas demand with renewable output curbing the call on the country’s thermal fleet. In the US, natural gas futures gained about 2 percent on Friday on forecasts for more demand this week and next than previously expected. Despite the daily increase, the contract was still down about 12 percent for the week.
