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Friday, April 12, 2024

Despite profit-taking, the price of oil still records a weekly rise


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As the dollar rose and oil speculators took profits after a robust run, oil prices dropped by more than $1 per barrel on Friday. Crude benchmarks posted their third consecutive weekly increase. While US West Texas Intermediate crude futures slid $1.47, or 1.9 percent, to close at $75.42 a barrel, Brent crude futures ended the day at $79.87 per barrel, down $1.49, or 1.8 percent. In the course of the session, the US dollar index fell to a 15-month low; however, as investors gathered before the weekend, the index began to rise. Because of the decreased demand for oil caused by a stronger dollar, investors using foreign currencies must pay more for petroleum.

However, the rise may pick up again this week as the market may be supported by supply cutbacks, plans to top off the US strategic reserve, reducing inflation, and other factors.

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Due to increased worries about a market tightening in the upcoming months due to supply interruptions in Nigeria and Libya, oil prices increased by about 2% on a weekly basis. Due to a local protest, some oilfields in Libya were shut down.

A suspected leak at a terminal led Shell to halt loadings of Forcados crude oil from Nigeria. While the loss from the Nigerian outage is estimated at 225,000 bpd, the disruption in Libya is stopping an estimated 370,000 bpd.

Low EU stocks and muted demand cause a drop in Asia LNG prices.

Last week, Asian spot prices for liquefied natural gas (LNG) fell as sluggish demand in Northeast Asia and large gas supplies in Europe continued to put pressure on prices. According to industry sources, the average LNG price for August deliveries to north-east Asia dropped 12.5% from the previous week to $10.80 per million British thermal units (mmBtu).

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In Europe, gas prices at the Dutch TTF hub dropped last week to $8.85 per mmBtu as Norwegian gas production resumed and the weather forecast indicated a mild fourth quarter through winter, according to analysts. High subsurface gas reserves in the area and ongoing robust Norwegian gas production are expected to leave limited room for LNG absorption as the seasons change and before European heating demand increases. Natural gas futures in the US stayed close to a three-week low on Friday as a result of projections for cooler weather in the US Northeast, an increase in output, and lower fuel supply to the nation’s LNG export plants since some facilities are still undergoing maintenance. Front-month gas futures dropped to $2.54 per mmBtu last week.

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