An oil rig on the Norwegian continental shelf.
Doha, Qatar: Oil prices climbed about 3% to a nine-week high on Friday as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil. Brent futures rose $1.95 to settle at $78.47 a barrel, while US West Texas Intermediate crude (WTI) spiked $2.06 to close at $73.86. For the week, both benchmarks gained nearly 5%.
Top oil exporters Saudi Arabia and Russia announced fresh output cuts last week bringing total reductions by OPEC and its allies to around 5 million barrels per day (bpd), or about 5% of global oil demand. Oil analytics firm Vortexa said there are currently 10.5 million barrels of Saudi crude in floating storage off the Egyptian Red Sea port of Ain Sukhna, down by almost half from mid-June. In Norway, Equinor paused production at its Oseberg East oil field in the North Sea due to staffing shortages.
Also supporting crude prices, the US dollar fell to a two-week low after data showed US job growth was lower than expected but still strong enough to likely lead the US Federal Reserve (Fed) to resume raising interest rates later this month as it has signaled. Higher borrowing costs could slow economic growth and reduce oil demand.
Asian spot liquefied natural gas (LNG) prices held steady for a second consecutive week, as some summer demand kept prices from sliding in an overall tepid market. The average LNG price for August delivery into north-east Asia was at $12 per million British thermal units (mmBtu), industry sources estimated. It earlier fell to $9 per mmBtu on slow demand and high inventories, before rising to a three-month high in mid-June, tracking gains in European gas prices. In Europe, gas storage levels on July 5 was at 78.63%, compared to 60.16% full at this time during the previous year.
Analysts expect storage to reach the 90% target by mid-August on the back of muted demand and stronger LNG supply. Meanwhile, a substantial widening of the spread between front-month northeast Asian and northwest European delivered prices could mean that the inter-basin arbitrage has reopened, at least for loading over the next couple of months, as the incentive to market Atlantic cargoes to Asian buyers over European LNG markets returns.
