Oil Steady While Traders on Sidelines as OPEC+ Talks Drag On
IndraStra Open Journal Systems
IndraStra Global

Oil Steady While Traders on Sidelines as OPEC+ Talks Drag On

By the Al-Attiyah Foundation


Oil Steady While Traders on Sidelines as OPEC+ Talks Drag On


Oil prices steadied on Friday as OPEC+ ministers resumed talks on raising oil output the day after the United Arab Emirates blocked a deal, which could delay plans to pump more oil through the end of the year. Brent crude futures rose 33 cents to settle at $76.17 a barrel, after rising 1.6% on Thursday, while U.S. West Texas Intermediate (WTI) crude futures fell 7 cents to settle at $75.16 a barrel, having jumped 2.4% on Thursday to close at their highest since October 2018. On Thursday, both benchmark contracts rose after OPEC+ sources said the group aimed to hike output by less than expected. 


OPEC+ are set to meet again on Monday after UAE opposed the proposals, which also included extending the pact on output to the end of 2022. The long rally in prices could be undermined if OPEC+ nations go their separate ways and add to supply as they see fit. 


WTI was on track for a 1.5% rise for the week, with the U.S. crude market expected to tighten as refinery runs pick up to meet recovering gasoline demand. Brent was largely steady on the week, as the market assessed fuel demand concerns in parts of Asia where cases of the highly contagious COVID-19 Delta variant are surging. Also, the rise in oil prices is contributing to global inflation, slowing the economic recovery from the coronavirus crisis.


Citi analysts said they do not expect WTI to climb to a premium to Brent as they project U.S. oil output to pick up at the end of 2021 and grow further in 2022.


Meanwhile, the number of U.S. oil rigs, an early indicator of future output, rose by four, to 376 in the week to July 2, its highest since April 2020, according to energy services firm Baker Hughes Co.


Benchmark Oil Prices


Global Gas Prices Rally on Hot Summer and Storage Demand


Asian spot LNG prices spiked to a fresh eight-year seasonal high last week, as demand remained robust globally for power generation needs in summer. The average LNG price for August delivery into northeast Asia was estimated at about $14 per metric million British thermal units (mmBtu), up $1.50 from the previous week, trade sources said. This is the highest that spot prices have climbed for this time of the year since 2013, Reuters data showed. 


Global prices for natural gas are at multi-year highs, with hot temperatures driving up demand for power generation and air conditioning in the northern hemisphere and as traders in some regions replenish stocks ahead of winter. Demand from Latin America was also firm as drought-affected Brazil's hydropower, boosting its LNG imports, trade sources said. Argentine Energy Company (IEASA) is also seeking four cargoes for delivery in August and September. Elsewhere, buyers in Bangladesh and Pakistan have paid above $13 per mmBtu for cargoes to be delivered in July to meet summer air-conditioning demand. Gail India is seeking a cargo for delivery in July into Dahej in a tender that closes on Friday, while India's Petronet likely did not award tender seeking cargoes for delivery in the third quarter, industry sources said. Russia's Sakhalin Energy likely awarded a cargo for August loading at about $13.70 to $13.95 per mmBtu on a delivered basis. In a knock-on effect of high spot Asian LNG prices, benchmark European gas prices soared last week with the British and Dutch front-month contracts both hitting record highs on Thursday. 


U.S. natural gas futures on Friday rose to a fresh 30-month high ahead of the Fourth of July holiday weekend with a drop in output due to a problem with a natural gas liquids pipeline in West Virginia and on soaring global gas prices. The U.S. price increase came despite forecasts for less hot weather and lower demand over the next two weeks than previously expected. Front-month gas futures rose 1.1%, to settle at $3.70 per mmBtu, their highest close since December 2018 for the fifth day in a row.


Benchmark Gas Prices


IndraStra Global is now available on
Apple NewsGoogle News, Flipboard, Feedburner, and Telegram

DISCLAIMER: The views expressed in this insight piece are those of the author and do not necessarily reflect the official policy or position of IndraStra Global.