Doha: Oil settled down $2 a barrel on Friday and ended the week markedly lower. The drop comes as traders worry that future US interest rate hikes could weigh on demand and amid signs of ample crude and fuel supply. On Thursday, two Fed officials warned additional hikes in borrowing costs are essential to curb inflation.
The sentiments lifted the US dollar, making oil more expensive for holders of other currencies. Brent crude futures dropped $2.14 or 2.5 percent, to $83.00 a barrel, falling 3.9 percent week on week. West Texas Intermediate (WTI) US crude fell $2.15, or 2.7 percent, to $76.34, a 4.2 percent drop from last Friday’s settlement.
Various signs of ample supply also weighed on the market. Russian oil producers expect to maintain current volumes of crude oil exports, despite the government’s plan to cut oil output in March, the Vedomosti newspaper said on Friday, citing sources familiar with companies’ plans.
The latest snapshot of US supplies, released on Wednesday, showed crude inventories in the week to Feb. 10 rose by 16.3 million barrels to 471.4m barrels, their highest level since June 2021. Meanwhile, the oil rig count, an early indicator of future output, fell by two to 607 in the week to Feb. 17.
Asian liquefied natural gas spot prices slipped for a ninth consecutive week, leaving them down more than 40 percent since the start of the year as demand remains weak. The average LNG price was $16 per mmBtu, industry sources estimated, down $1 or 5.9 percent from the previous week. Prices are currently down 77 percent from record peaks of $70.50 hit in August.
The spot market seems to have found a temporary floor, weakness is still evident market wide, but a recent emergence of awarded tenders have kept rates buoyant, analysts said. Tenders had been awarded last week to Taiwan’s CPC, China’s CNOOC, Japan’s Kansai Electric and Bangladesh’s RPBCL.
In Europe, the Dutch benchmark gas contract TTF fell to a fresh 17-month low on Friday on the back of a comfortable supply outlook, and as good storage levels and moderate weather limited demand.
In the US natural gas futures plunged about 5 percent to a 28-month low on Friday on forecasts for less cold weather and lower heating demand this week than previously expected. Meanwhile, Freeport LNG had sought permission from federal regulators last week to restart operations at its idled export plant that was shut due to a fire last June.
