Doha: Oil prices fell about 2 percent on Friday, pressured by swelling output from Libya and fears that rising COVID-19 infections may slow the recovery in the global economy and fuel demand. Still, hopes for a vaccine kept crude futures on track for a second straight weekly gain. Brent crude fell 1.7 percent, to settle at $42.78 a barrel on Friday, while US West Texas Intermediate (WTI) crude futures fell 2.4 percent, to end the session at $40.13 a barrel. However, for the week, both notched gains of more than 8 percent.
Signs of rising production in the US added to bearish sentiment, with US oil rigs rising by 10 to 236 last week, according to Baker Hughes data, their highest since May. Still adding some pressure to prices, US government data showed crude inventories rose by 4.3 million barrels last week. Analysts had expected a draw of 913,000 barrels.
New COVID-19 infections in the United States and elsewhere, are at record levels, and tightening restrictions should lead to fuel demand recovering more slowly than many had hoped. WTI and Brent benchmarks also jumped last week after data showed an experimental COVID-19 vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90 percent effective. But on Thursday, the International Energy Agency (IEA) said global oil demand was unlikely to get a significant boost from vaccines until well into 2021.
Analysts say tougher restrictions on mobility, to deal with sky-rocketing COVID-19 cases, mean OPEC and its allies may hesitate to loosen output curbs as planned in January. The group known as OPEC+ is due to hold a Joint Ministerial Monitoring Committee this week, which will give some indications of what the producers may decide at the next ministerial meeting on December 1.
Asian spot prices for LNG rose last week, against weak Chinese demand, record-high US exports, and better production expectations in Malaysia. The average LNG price for December delivery into North-East Asia was estimated at between $6.80-$6.90 per million British thermal units (mmBtu). Asian LNG prices have more than tripled since July’s low of $2.00, and bullish sentiment deepened in September and October due to a wave of supply disruptions.
The election of Joe Biden in the US presidential run last weekend raised expectations of a possible contraction in shale gas incentives. An eventual slowdown in production recovery in the US, as demand heats up, could restrict supply and pressure prices. US natural gas futures edged up on Friday as exports continued to hit fresh record highs, and on forecasts for cooler weather and more heating demand in coming weeks.
Analysts expect gas demand to restore over December but still noticeably below seasonal norms.
