Al Attiyah Foundation's Weekly Energy Market Review - Sep 19, 2020
IndraStra Global

Al Attiyah Foundation's Weekly Energy Market Review - Sep 19, 2020

By Al Attiyah Foundation


Al Attiyah Foundation's Weekly Energy Market Review - Sep 19, 2020

Oil prices were unchanged on Friday after a Libyan commander said a blockade on the country's oil exports would be lifted for a month, while supportive signals from an OPEC+ meeting lifted futures. Both the US and Brent crude benchmarks posted weekly gains after Saudi Arabia pressed allies to stick to production quotas, Hurricane Sally cut US production, and banks including Goldman Sachs predicted a supply deficit. 


Brent fell 15 cents to settle at $43.15 a barrel on Friday but rose 8.3% for the week. US oil futures rose 14 cents to settle at $41.11 a barrel and gained 10.1% for the week. After a steady week, market sentiment fell on Friday after eastern Libyan General Khalifa Haftar announced he would lift his blockade of oil output for one month. The blockade had slashed Libyan production to just over 100,000 barrels per day (bpd) from around 1.2 million bpd previously. It was unclear how quickly Libya could increase production.


On Thursday, the key panel for OPEC and its allies pressed for better compliance with oil output cuts against the backdrop of falling crude prices. The group warned that rising Covid-19 cases in some countries could curb energy demand despite initial indications of a decline in oil stocks. The panel did not recommend any changes to their current output reduction target of 7.7 million bpd, or around 8% of global demand.


In the Gulf of Mexico, US producers started rebooting rigs following a five-day closure due to Hurricane Sally. Another tropical depression in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more oil facilities. The US oil rig count, an early indicator of future output, fell by one this week to 179, its lowest since mid-August, energy services firm Baker Hughes Co said.


Bechmark Oil Crude Prices - Sep 19, 2020


Gas Markets


Asian spot LNG prices rose last week, supported by spot demand from China and South Asia, while supply remained curtailed in Australia and the US. The average LNG price for November delivery into North-East Asia was estimated at about $4.80 per million British thermal units (mmBtu), up five cents from the previous week. The price for October delivery was estimated at about $4.60 per mmBtu, also up five cents. 


Demand from buyers ahead of winter is supporting prices, while plant shutdowns in Australia and the US continue to restrain supply. China’s Sinopec purchased ten cargoes for delivery between November and March next year, higher than the initial eight cargoes that it had sought, while Guangzhou Gas bought one cargo for delivery in the second half of October.


In the US, Cameron LNG's export plant in Louisiana appeared to move closer to returning to service after lingering power outages from Hurricane Laura have kept it shut since late August, which could cap price increase in the spot market. However, with Hurricane Sally making landfall on the US Gulf Coast last week, LNG production maybe once again affected. Henry Hub prices fell 9% last week, settling at $2.05/mmBtu on Friday.


In Europe, both the TTF and NBP continued to trade at a premium to the October contract, closing at $3.95/mmBtu and $3.88/mmBtu respectively. European Commission President Von der Leyen’s speech yesterday, which was widely anticipated to propose increasing the EU 2030 climate goal from 40% to 55%, translated into higher carbon prices and firmed gas demand. Potentially bolstered gas demand may push more coal burn out of the power mix. 


Benchmark Gas Prices

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