Oil prices edged lower on Friday on worries that demand would recover more slowly than expected from Covid-19 pandemic lockdowns, while rising supply also overshadowed optimism over falling crude and fuel inventories. Brent crude settled at $44.80 a barrel, falling 16 cents, while US West Texas Intermediate CLc1 settled at $42.01 a barrel, down 23 cents. Still, both benchmarks showed weekly gains with Brent up 0.9 percent, while WTI gained 1.9 percent.
Prices were bolstered earlier in the week by US government data showing crude oil, gasoline and distillate inventories falling, as refiners ramped up production and demand for oil products rose. However, two prominent forecasters, the International Energy Agency and the Organization of the Petroleum Exporting Countries, trimmed their 2020 oil demand forecasts.
Oil has recovered from the lows it touched in April, when WTI briefly turned negative. Still, a rise in the number of Covid-19 infections has limited gains and forced producers to limit supply. The number of US oil and gas rigs, an indicator of future supply, fell last week for a 15th straight week to record lows, according to energy services firm Baker Hughes.
Opec+ have cut output since May by around 10 percent of pre-pandemic global demand to support the market. The deal calls for an increase in output this month as demand recovers. An Opec+ panel meets on Wednesday to review the market. Last month the panel recommended that the cut be eased from 1 August to about 7.7 million barrels per day (bpd) from a reduction of 9.7 million bpd previously, in line with an earlier Opec+ agreement. That change was implemented this month.
Asian spot LNG prices rose to more than a six-month high this week on concerns over production from Australia’s Gorgon plant and demand from some buyers in the region. The average LNG price for September delivery into northeast Asia was estimated at $3.70 per million British thermal units (mmBtu), $0.60 per mmBtu above last week’s level. This is the first time since January when prices neared $4.00 per mmBtu.
Gorgon Train 2 has been shut for maintenance since May, with its restart date delayed to September from July. Two other trains were also ordered to be inspected after safety concerns were raised. Off-takers from the plant have likely bought several cargoes to replace Gorgon volumes in the past two weeks, traders said. Some buyers in Japan and China have also been buying cargoes, but said overall demand was still subdued.
