Oil prices settled higher on Thursday after an early decline as investors covered short positions ahead of the long weekend and on news that the European Union might phase in a ban on Russian oil imports. Brent futures settled up $2.92, or 2.68%, at $111.70 a barrel. U.S. West Texas Intermediate futures closed $2.70 or 2.59% higher at $106.95 a barrel. The New York Times reported that the EU was moving toward adopting a phased-in ban on Russian oil, to give Germany and other countries time to arrange alternative suppliers. A phased-in ban would force European buyers to seek alternative sources, some of which in the near term are being met by Strategic Petroleum Reserve releases, but in the future, more supplies coming out of the ground will be required, according to analysts. The IEA had warned on Wednesday that roughly 3 million barrels per day of Russian oil could be shut in from May onwards due to sanctions or buyers voluntarily shunning Russian cargoes. However, on the demand side, Chinese refiners are set to cut crude throughput this month by about 6%, a scale last seen in the early days of the COVID-19 pandemic two years ago, to ease bulging fuel inventories during recent lockdowns.
Asian LNG prices stable on weak
Asian spot liquefied natural gas prices were stable last week due to muted demand from Asia amid a lockdown in China, that has allowed European gas prices to maintain a premium to keep LNG cargoes flowing to the continent. The average LNG price for May delivery into north-east Asia was estimated at $33.00 per metric million British thermal units (mmBtu), unchanged from the previous week. Europe’s TTF gas benchmark continues to retain a premium over Asian spot LNG prices, keeping flows of LNG into the bloc very strong, analysts said. The LNG market remains tight and Europe will still need to bring in large amounts of LNG to prepare for next winter and to hit storage targets, another factor to support prices going forward. Europe has imported 15.4 billion cubic meters (bcm) of LNG in March, a 32% increase from the previous month, according to Refinitiv Eikon data, and is expected to continue to attract large number of volumes, especially from the United States. In China, a lockdown due to zero-tolerance Covid-19 policy has weighed on gas demand and is proving bearish for Asian LNG prices. However, prices will likely rise once the current wave of COVID-19 infections runs its course.
— By The Al-Attiyah Foundation