Oil prices settled slightly lower on Friday but recorded a weekly gain as Middle East tensions and disruptions to oil output offset concerns about the Chinese and global economies. Brent futures settled 54 cents lower at $78.56 a barrel. U.S. West Texas Intermediate crude fell 67 cents to close at $73.41.
For the week, Brent gained about 0.5% while the U.S. benchmark rose over 1%. In China, slower-than-expected economic growth in the fourth quarter raised doubts about forecasts that demand there will drive global oil growth in 2024. In the Middle East, geopolitical risks supported prices for the week.
On Friday, tensions escalated in Gaza as Israeli forces pushed further towards the south, while earlier in the week, the U.S. launched new strikes against Houthi anti-ship missiles aimed at the Red Sea. Although conflict in the Middle East has not shut any oil production, supply outages continued in Libya.
In the U.S., about 30% of oil output in North Dakota, the country’s third largest producing state, remained shut due to extreme cold, the state’s pipeline authority said on Friday. Output had been cut by some 700,000 bpd, or more than half, midweek. It could take a month for production to return to normal levels, the state regulator said on Friday.
Asia spot LNG slip below $10/Mmbtu despite Red Sea tensions
Asian spot liquefied natural gas (LNG) prices dipped below $10 per million British thermal units (mmBtu) for the first time in nearly eight months, as ample inventories and mild weather outweighed geopolitical tensions in the Red Sea.
The average LNG price for March delivery into north-east Asia fell to $9.50 per mmBtu, down almost 6% from last week, industry sources estimated. The fall in prices, however, has spurred more spot cargo purchases by Asian buyers.
Lower prices have incentivised a spate of tenders and purchasing by Asian buyers — a reaction not mirrored in Europe — to help slow falls and widen the spread between northeast Asian and European delivered LNG markets, analysts said. Pricing falls last week have been driven by weaker European gas prices, as the region looks to an exceptionally mild spell following the present cold snap, they added.
Even with more diversions away from the Suez Canal from last Friday, the market has shown little reaction. Earlier last week, Qatar, stopped sending tankers via the Red Sea amid growing regional tension, with at least three tankers changing courses to take the longer Cape of Good Hope route. Two vessels from Russia’s Yamal LNG also diverted away from the Red Sea.
— By The Al-Attiyah Foundation