Posted by Geoscience Adm… on Wed, 03/27/2019 - 10:04

Article by Adam Becis, Principal Reservoir Engineer

Oil prices have dropped from multi-year highs in October, reflecting the global economic slowdown. Oil prices have been buffeted by the US ban on Iranian oil imports, continued US-China trade arguments and rising US interest rates. The global supply/demand crude balance has shifted again to over-production and markets are predicting that demand growth will be limited by global economic weakness. 

Recognising this, OPEC and allied oil-producing nations agreed in December to a cut of 1.2 million barrels per day in oil production for the first six months of 2019. The Brent-WTI spread has continued to hold despite downward pressure from a reduction in Iranian oil in the market on the back of the US ban. This has been due to US crude output staying strong and Permian output continuing to be limited by pipeline export capacity.

ERCE global price update graph

Source: ERCE

Asian spot LNG prices increased during the northern hemisphere winter, with the Japanese LNG spot price hitting a three-year high of $11.70/MMbtu in December. European prices have declined over the last quarter as a milder start to winter has kept demand lower than usual with further pressure due to plentiful supply from the combination of Russian inflows and LNG imports. Henry Hub showed an uptick in October and November as inventory concerns coupled with cold weather pushed up prices. Milder weather in December returned prices to below $4/MMbtu.

ERCE global price update gas

Source: ERCE

Our Clients have access to our latest research on current oil and gas prices and analytics. Examples of this work are in the charts shown below and in our Energy Price Review. To learn more and keep up with the latest trends download the Energy Price Review today (https://www.erce.energy/analytics) or contact our London, Singapore or Australia offices.

ERCE glocal price update oil and gas energy analytics price review

Source: ERCE