Oil edged lower on Friday, falling more than 2 percent on the week as COVID-19 cases surged globally and with the oil supply set to rise in coming weeks. Brent crude futures settled at $41.92 a barrel, down two cents, while US West Texas Intermediate (WTI) crude futures lost six cents to $40.25 a barrel.
Brent dropped 2.9 percent for the week and WTI sunk 2.1 percent In the world’s top oil consumer, the US, infections are rising in the Midwest, while New York City, which was hit hardest in the spring, is considering renewed shutdown mandates.
More than 200,000 people have died of the virus in the nation. US fuel consumption remains sluggish as the pandemic constrains travel and hampers economic recovery. The four-week average of petrol demand last week was 9 percent below a year earlier.
In other parts of the world, daily increases of COVID-19 infections are hitting records and new restrictions are being put in place to limit travel. India reported 86,052 new coronavirus cases on Friday and was set to overtake the US by next month as the world’s worstaffected nation, while the WHO warned the global death toll could double to two million before a successful vaccine is widely used.
Subsequently, Indian, throughput by crude oil refiners in August fell 26 percent from a year ago, the most in four months, as demand ebbed because the pandemic is hindering industrial and transport activity. At the same time, more crude oil entering the global market threatens to beef up supply and push prices lower.
The US oil and gas rig count rose by six to 261 in the week to 25 September, energy services firm Baker Hughes Co said. Libya has recently boosted production, while, Iranian oil exports have risen sharply in September in defiance of US sanctions, three assessments based on tanker tracking showed. Asian spot LNG prices edged up this week amid spot buying in the region and a possibility of higher consumption in winter due to cold weather.
The average LNG price for November delivery into North East Asia was estimated at $4.90 per million British thermal units (mmBtu), $0.10 mmBtu above last week’s level. There was demand from Indian, Taiwanese, and South Korean buyers this week, among others.
Rising demand and prices in Asia are expected to help more cargoes to be exported from the US in the coming months. Traders expect that no more than five cargoes for November loading were likely to be cancelled, after dozens were rejected this summer. Buyers usually have to notify some US producers by the 20th of each month about cargo rejections for the month after the coming new month.
China’s imports of LNG will likely grow 10 percent this year as companies scoop up cheap supplies for increasing industrial use and robust residential demand. With its total natural gas use likely expanding at 4-6 percent this year, China is the only major bright spot on the world gas market, as global demand is set to fall by about 4 percent due to COVID-19 lockdowns.
LNG imports are set to hit a record 65-67 million tonnes this year, which could see China overtake Japan as the world’s top buyer by 2022. In Europe, both the TTF and NBP gained last week, closing at $4.00/mmBtu and $4.10/mmBtu respectively. The bullish sentiment was mainly owed to the maintenances at a Norwegian field. Furthermore, Dutch storages revised their inventories, leaving more spaces for the remainder of the season.
