Doha, Qatar: Oil fell on Friday as the release of some hostages in Gaza reduced the geopolitical risk premium. Brent crude futures settled down 84 cents, or 1%, at $80.58 a barrel, while US.
West Texas Intermediate crude fell $1.56, or 2%, from Wednesday’s close to $75.54. There was no settlement for WTI on Thursday owing to the US Thanksgiving holiday. The first group of hostages freed from captivity in Gaza returned to Israel on Friday, on the first day of a planned four-day truce during which further exchanges of hostages for Palestinian detainees were released by Israel.
Meanwhile, OPEC+ group, comprising of the Organization of the Petroleum Exporting Countries and allies including Russia, prepares for a meeting this week that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.
OPEC+ surprised the market last Wednesday by delaying the Nov. 26 policy meeting to Nov. 30 after producers struggled to reach a consensus on output levels. Elsewhere, recent data and fresh aid to China’s indebted property sector can be viewed as positive for the oil markets in the near-term.
Asian spot liquefied natural gas (LNG) prices were little changed this week, slipping slightly from the previous week, as demand was weak and inventories remained high in both Northeast Asia and Europe. The average LNG price was at $16.40 per million British thermal units (mmBtu), estimated industry sources, versus $16.70/mmBtu the previous week.
The market still sees the absence of major Northeast Asian buyers. China’s re-selling of volumes for December may also indicate a well-balanced Chinese market with limited interest for securing additional spot cargoes. Meanwhile, Japan has approved a plan by the country’s top power generator JERA to hold a surplus of LNG in the winter as a strategic reserve in case of supply disruptions.
Europe’s market fundamentals have also been bearish, as healthy supplies and high storage levels offset cooler temperature forecasts. Underground storage has remained at 99% capacity, constraining LNG imports into European terminals.
