Doha: Oil prices ended the last week more than 5 percent higher, with global benchmark Brent edging up on Friday to settle at a two-year high, as strong US economic data and expectations of a rebound in global demand outweighed concerns about more supply from Iran once sanctions are lifted. Brent crude futures settled at $69.63 a barrel on Friday, its highest close since May 2019, while, US West Texas Intermediate was at $66.32.
Analysts expect global oil demand to rebound closer to 100 million barrels per day in the third quarter on summer travel in Europe and the United States following widespread COVID-19 vaccination programmes. Though, rising coronavirus infections in Asia continues to put pressure on prices.
Robust economic data from the United States, the world’s largest economy and oil consumer, also lent support as the number of Americans filing new claims for unemployment benefits fell to the lowest since mid-March 2020. However, the prospect of more Iranian oil coming on to the markets, capped the gains.
More than 34 million Americans were expected to take to the highways between May 27 and May 31, the holiday weekend which marks the start of the summer driving season. But they face gasoline prices at about $3.04 a gallon on average, the most expensive since 2014. Also, in the United States, crude output jumped 14.3 percent in March to 11.2 million barrels per day, after being hit by a cold snap in February, the government said in its latest monthly report. The oil rig count, an early indicator of future production, has risen for nine months in a row, according to energy services firm Baker Hughes.
Asian spot prices for LNG rose this week, as buyers stocked up the power-generating fuel on anticipation that a warmer-than-usual summer will spur demand for air-conditioning units. The average LNG price for July delivery into Northeast Asia was estimated at about $10.30 per million British thermal units (mmBtu), up 70 cents from the previous week, industry sources said. Supply coming from the United States, which hit historical levels last month, decreased last week with export plants entering seasonal maintenance, adding to a strained market. Trafigura sold a cargo to Vitol for delivery between July 17 and July 21 in Tianjin, China, with a premium of $1.45 per mmBtu over European LNG prices, according to traders. Premiums over $1 per mmBtu tend to compensate for the longer trip costs to Asia, attracting ships to head East. According to one trader, some buyers were, nevertheless, resistant to pay for cargoes offered well above the $10 per mmBtu range. Petronas sold two cargoes for delivery between July 7 and 8, and July 23-24 to North Asia for slightly more than $10 per mmBtu, another trader said.
US natural gas futures rose on Friday to their highest in more than a week, buoyed by forecasts for warmer weather in two weeks and a projected increase in LNG exports. Higher temperatures in two weeks were expected to boost demand for fuel to power generators and keep air conditioners humming.
Still, traders said demand next week was likely to be similar to this week, kept in check by mild weather and the Memorial Day holiday yesterday. Front-month gas futures rose 2.8 cents, or 0.9 percent, to settle at $2.99 per mmBtu, their highest close since May 18.
