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Oil and gas market recap: Week ending 6th January

Hydrocarbon Engineering,

US crude stocks declined week on week last week and bearish fundamental indicators could put a lid on soaring Asian LNG spot prices. In the US, the weekly US gas storage draw was a bit larger than the market consensus. Looking at Europe, support for day ahead gas prices will persist.

Global oil markets

US crude stocks decline week on week

Last week, US refiners brought down crude inventories for end of year tax purposes. This sent overall commercial stocks tumbling for the largest weekly crude stock draw in over 10 years. The four major products did however, have another very large stock build.

Weak weather and propane prices

In the US once more, weak weather fundamentals will exert a downward pressure on propane prices again. European petrochemical sector demand should however, help stabilise the price. In Asia, a large availability from the Middle East is coinciding with adequate stocks, while lower contract price settlements and easing backwardation have done little to spur buying interest.

US ethanol

For the week ending 28th December, prices decreased for a third week in a row. Production of ethanol in the US has dropped due to a reduction in levels over the Christmas period.

Natural gas markets


PIRA sees several reasons that the support for day ahead prices will persist at current or higher levels in the next few weeks. Supply has reacted to lower demand in rapid form, with Dutch gas output cuts and LNG reloads balancing the loss of weather induced demand in the past few weeks.

Asia LNG spot prices

End of year holidays in Europe and Asia have stifled trading activity over the last month, however, a few bearish indicators have popped up that could put a lid on soaring spot prices in Asia for the winter. Prices have dropped significantly in Europe already due to a change of weather and a surge in pipelines gas, which has made LNG more expendable. Furthermore, Korean nuclear power generation rebounded significantly.

Adapted from press release by Claira Lloyd.

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