Energy market for a week: Asia has an appetite for LNG for Europe

Oil and gas prices went in different directions. Despite the threat of a major war, black gold has fallen in price. But the cost of gas in Europe has risen to the highest level in the last eight months. Besides geopolitics, there are other valid arguments.

Oil

The murder of senior representatives of Hamas and Hezbollah strained the market, and he again felt the threat of a major war. Oil quotes in the second half of the week exceeded $ 81 per barrel. However, boring economic data turned everything upside down again. According to the results of the week, the benchmark North Sea Brent fell from $ 80.5 to $ 76.7.

"We went from a demand—driven market to a geopolitical one for maybe two days, and then we absolutely crashed on all of this economic data," Matador Economics chief economist Tim Snyder told Reuters.

On the one hand, US job growth slowed more than expected in July. On the other hand, economic data from China has increased the risk of a sluggish global economic recovery. Data from LSEG Oil Research showed that crude oil imports to Asia in July fell to the lowest level in two years.

OPEC+ countries have again reaffirmed their commitment to the plan to maintain cuts, but this has not affected anything so far.

Gas

The European gas market was hotter. During the week, the cost of supplies for a month in advance on the TTF exchange immediately increased by $ 54 — from $ 370 to $ 424 per thousand cubic meters. This is the maximum price since December 2023.

The gas market turned out to be more sensitive to global shocks and promises by Iran and the Lebanese Hezbollah to avenge the death of the head of the Hamas political council and one of the leading Hezbollah commanders.

At the same time, traders had other good arguments to play for higher prices.

Europe still has high gas reserves, and industrial demand is low. However, heat returned to some parts of the region.

In addition, the demand for LNG in Asia continues to grow, and companies there are buying more and more cargoes that could have gone to Europe. And this is happening despite the fact that the freight rates of gas carriers for flights across the Pacific Ocean continue to grow.

The cost of coal also went up behind gas prices. During the week, the supply of rock fuel to the European hub Antwerp-Rotterdam-Amsterdam (ARA) for the month ahead increased from $ 114.2 to $ 121.9 per ton.