Doha: Oil prices inched higher on Thursday, helped by late-day buying in a low-volume session to close out the week. The market-built gains Wednesday night as Britain and the European Union reached a post-Brexit trade deal, reversed those gains, and then rebounded during the US session to end modestly higher. US West Texas Intermediate (WTI) crude settled to $48.23 a barrel, while Brent crude futures settled at $51.29. Volumes were light on the last trading day before the Christmas holiday, as both benchmarks slipped. For the week, US crude fell 1.6 percent while Brent lost 2 percent .
Markets have rallied sharply since late October as vaccines progressed to approval in numerous countries. Still, worldwide, infections are growing, and the pandemic will cloud investors’ outlook for several months. While the Brexit deal supported the market last week, the impact of Covid is the dominant driver as the market waits for the wider distribution of vaccines.
New strains of the coronavirus, which appear to spread the disease more rapidly, have hit the United Kingdom, Nigeria, and other countries. However, at least four drug-makers expect their COVID-19 vaccines to be effective against the new fast-spreading variant of the virus that is raging in Britain and are performing tests that should provide confirmation in a few weeks.
Asian spot prices for LNG remain at the highest in more than six years last week, with growing shipping rates adding to a supply crunch and high demand for heating. The average LNG price for February delivery into North-East Asia was estimated at $12.50 per million British thermal units (mmBtu), up $1.30 from the previous week ($11.20). Winter in Asia continued to drive strong demand for heating gas, with temperatures in Beijing, Tokyo, Shanghai, and Seoul expected to be lower than average over the next two weeks, weather data from Refinitiv Eikon showed.
According to traders, supply shortages in Malaysia, Indonesia, Norway, Nigeria, and Qatar are making China, the world’s second-largest importer of the super-chilled fuel, turn to supply from the US. The amount of US gas flowing to export plants are resultantly at record levels. Local gas pipeline prices below $3 per mmBtu make the conversion to liquid profitable and improves prospects for new projects in 2021. However, congestion in the Panama Canal, through which US LNG usually finds a shorter route to Asia, is helping to push freight rates up.
