An aerial view of a pilot boat and large crude oil tanker cruising in the open ocean.
Doha, Qatar: Oil rose 1 percent on Friday as an increasing number of oil tankers diverted course from the Red Sea following overnight air and sea strikes by the US and Britain on Houthi targets in Yemen. Brent crude futures settled 88 cents, or 1.1 percent, higher at $78.29 a barrel. US West Texas Intermediate crude futures climbed 66 cents, or 0.9 percent, to $72.68. While the diversions were expected to push up the cost and time it takes to transport oil, supplies have not yet been impacted, analysts and industry experts noted, easing some of the earlier gains in prices.
For the week, Brent was down 0.5 percent and WTI 1.1 percent lower. Earlier in the week, sharp price cuts by top exporter Saudi Arabia and a surprise build in US crude stockpiles spurred supply worries. Although the lack of shipping through the Red Sea does create transportation issues for some crude supplies, the impact on the physical oil markets is, thus far, minimal, analysts said.
The escalation has fed worries the Israel-Hamas war could widen into a broader conflict in the Middle East, disrupting oil supplies. Diversion of tankers around South Africa will also push up freight rates as ships take longer routes. The Red Sea, a key route between Europe and Asia, accounts for about 15 percent of the world’s shipping
traffic.
Asian spot liquefied natural gas (LNG) prices slid for an eighth consecutive week to hit their lowest levels in seven months, as healthy storage levels in both Europe and northeast Asia continued to weigh on prices. The average LNG price for February delivery into north-east Asia dropped nearly 10 percent to $10.10 per million British thermal units (mmBtu) from $11.20 last week, industry sources estimated, its lowest level since June 9.
Despite colder weather arriving and forecast to continue in Europe, the slide in flat price gas markets has continued as stocks remain healthy for this point in heating season, analysts said. Lower LNG prices have prompted Asian importers, largely from China and India, to snap up spot cargoes this week, though Chinese demand may cool around the Lunar New Year holiday period in mid-February. LNG stocks held by major power utilities in Japan were at 2.51 million metric tons as of January 7.
This is 24 percent above the five-year average from 2018-22 for the end of January. In Europe, despite the cold weather, gas prices continued to ease as investors are confident that the cold spell will be over soon, and that inventories are well filled to meet the rest of the winter demand.
