Oil prices up after Basra spill, but log weekly decline: Al Attiyah Foundation
Doha: Oil prices rose slightly on Friday as a spill at Iraq’s Basra terminal appeared likely to constrain crude supply, but remained down on the week on fears that hefty interest rate increases will curb global economic growth and demand for fuel.
Brent crude futures settled at $91.35 a barrel, up 51 cents, while WTI crude futures settled at $85.11 a barrel, up 1 cent. Both benchmarks were down by nearly 2 percent on the week, hurt partly by the US dollar’s strong run, which makes oil more expensive for buyers using other currencies.
Oil exports from Iraq’s Basra oil terminal are being gradually resumed after they were halted due to a spillage, which has been contained, Basra Oil Company said. Meanwhile, investors are bracing for a large increase in US interest rates, which could lead to a recession and reduce fuel demand.
The Federal Reserve is widely expected to raise its benchmark overnight interest rate by 75 basis points at a September 20-21 policy meeting. Recession fears coupled with higher US interest rate expectations made for a potent bearish cocktail. The market also was rattled by the International Energy Agency’s outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.
Asian spot LNG prices were unchanged on the week, with Japan and South Korea well supplied and a new floating terminal in Europe beginning operations. The average LNG price was $46 per million British thermal units (mmBtu), unchanged from the week before, industry sources estimated. China’s ample inventory and COVID-19 lockdown have cut its gas needs, with LNG demand so far down around 20 percent year-on-year.
In Europe, the new Dutch EemsEnergyTerminal, with a capacity of 8 billion cubic metres (bcm) per year, got its first cargo on September 8 and started flowing gas into the onshore gas network a week later. The new terminal is expected to run at full capacity over the coming months, providing a new access route to the high-priced German market.
Meanwhile, the market is closely watching for any news on whether the 15 million tonnes per annum (mtpa) US Freeport plant will restart on time in November after a fire in June, and any signals of early winter cold spells or news about hurricanes that could impact the US Gulf production. In the United States, front-month gas futures fell 56 cents last Friday, to settle at $7.76 per mmBtu, their lowest close since August 8. For the week, the front-month was down about 3 percent.
