Oil prices retreated on Friday as investors weighed expectations of a rise in OPEC+ supply starting in October, alongside dwindling hopes of a hefty U.S. interest rate cut next month, following data showing strong consumer spending.
Brent crude futures for October delivery settled $1.14 lower at $78.80 a barrel, marking a decline of 0.3% for the week. U.S. West Texas Intermediate crude futures settled down $2.36 to $73.55, a drop of 1.7% in the week. OPEC and allies is set to proceed with a planned oil output hike from October, as the Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand.
Libya’s National Oil Corporation said recent oilfield closures have caused the loss of approximately 63% of the country’s total oil production, as a conflict between rival eastern and western factions continued. Meanwhile, investors responded to new data that showed U.S. consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month. Lower rates can boost economic growth and demand for oil.
Asia spot prices rise on supply concerns,
geopolitical tensions
Asian spot liquefied natural gas (LNG) prices rose last week as outages in LNG facilities in Australia and Malaysia sparked supply concerns, although buying interests from China remained limited due to higher price levels.
The average LNG price for October delivery into north-east Asia LNG-AS was at $14.00 per million mmBtu, industry sources estimated. The market was paying close attention to U.S. Freeport LNG, which had a brief shutdown after a fire safety suppression system in the control room of the pretreatment facility unexpectedly activated during routine maintenance. Elsewhere in Asia, ongoing heatwaves have resulted in some interest for spot volumes from Japanese and Indian buyers for September-October delivery over the past week.
In Europe, gas prices rose most of the week as a ramp up in maintenance in Norway is curbing supplies to Europe and Britain, with some outages extended and risks remain over Russian flows via Ukraine. In the U.S., natural gas futures eased about 1% on Friday on bearish forecasts for slightly less heat over the next two weeks than previously expected, which should reduce the amount of gas power generators burn needed for cooling.
— By the Al-Attiyah Foundation