Oil settles up, notches weekly gain on tight supply

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Blue coloured hull large liquefied natural gas (LNG) carrier with 4 LNG tanks sails along the sea.

Doha, Qatar: Oil prices settled higher on Friday, up about 6% on a week-on-week basis, as worries about supply from the Middle East mounted and as reining outages tightened refined products markets. Brent crude futures rose 56 cents, or 0.7%, settling at $82.19 a barrel. US West Texas Intermediate crude futures closed 62 cents or 0.8% higher, at $76.84 a barrel.

Oil futures rose throughout the week, buoyed after Israeli Prime Minister Benjamin Netanyahu’s rejection of a Hamas ceasefire proposal on Wednesday. Last week’s rise followed a 7% loss in the prior week. On Thursday, the bombing of the southern border city of Rafah helped boost oil prices by around 3%. Israeli forces on Friday continued deadly air strikes on the Gaza Strip.

Crude futures were supported by strength in gasoline and diesel prices as significant US refinery downtime, both planned and unplanned, tightened product markets. Gasoline futures rose about 9% in the week to $2.34 per gallon while heating oil futures increased by 11% to $2.96 per gallon. US domestic production returned last week to a record 13.3 million barrels per day level, according to the US Energy Information Administration. Last month, cold weather caused widespread shut-ins in oil producing regions.

Asian spot liquefied natural gas (LNG) prices dipped last week, remaining below $10 per million British thermal units (mmBtu) for the fourth week running, with a limited outlook for recovery due to tepid demand and strong inventories. The average LNG price for March delivery into north-east Asia lost $0.10 last week to $9.50 per mmBtu, industry sources estimated.

Some parts of north-east Asia has seen some demand, especially China, but this is generally expected to slow in the coming days on the back of the Lunar New Year holiday, analysts said. North-east China is still expected to have a cold end to its heating season, with overnight temperatures from mid-February until at least late March set to remain several degrees Celsius below long-term averages, suggesting scope for a short delay to the typical end of the region’s heating season in mid-March.

In Europe, benchmark Dutch gas prices eased to their lowest levels in two weeks as weather forecasts turned milder and Norwegian gas flows recovered after outages curbed supplies earlier last week.

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