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AfrOil NEWSBASE GLOBAL ROUNDUP (NRG) AfrOil

NRG: Looking beyond the crisis

Oil prices have found support on signs of recovering fuel demand and compliance with OPEC+ cuts

COMMENTARY WELCOME to the sixth edition of NewsBase’s the short-term supply and demand balance is
Roundup Global (NRG), in which our team of more complicated than simply looking to China.
international editors provide you with a snap- While the Asian giant is the world’s second-larg-
shot of some of the key issues affecting their est buyer of the fuel, a fundamental weakening in
regional beats. Get the NRG Oil & Gas Editor’s global demand has driven prices to record lows
Picks to your inbox every week for free. Just click this year.
here. Before COVID-19 hammered LNG demand,
Oil benchmarks have lost ground over the prices were already in a tailspin because of
past week, with Brent dipping back under $40 unseasonably warm winter temperatures and the
per barrel amid growing fears of a second coro- steady commissioning of new export projects.
navirus (COVID-19) wave following a fresh While China’s LNG imports are anticipated
outbreak in Beijing. But prices have also been to remain robust for the rest of the year, demand
supported by signs of recovering fuel demand from Japan – the world’s largest importer of
and OPEC+ producers complying with agreed the super-chilled fuel – is not expected to fully
production cuts. recover this year.
With market conditions changing so rapidly, The Japan Gas Association (JGA) said last
the main focus of governments and companies week that city gas demand had fallen by 10% year
remains their short-term response. But some on year in April and by more than 20% in May,
are also beginning to look ahead to a post-cri- owing to the national lockdown imposed.
sis world, adopting new strategies for cleaner “An impact from the coronavirus pandemic
energy, drawing up plans to build up import on our business is quite significant,” Reuters
capacity and signing off on new upstream quoted JGA chairman Michiaki Hirose as saying
investments. on June 11. Japan’s LNG imports fell by 8.8% y/y
in April to 5.13mn tonnes, Ministry of Finance
COVID-19 drags on Asian gas demand data showed in May.
A surge of new COVID-19 cases has taken some Between unusually high inventory levels
of the steam out of the oil price recovery, with and weak demand, unnamed industry sources
Brent crude trading around $38.20 per barrel on warned S&P Global Platts on June 12 that not
June 15. even a hotter-than-average summer could
Analysts have warned that oil demand recov- improve the outlook.
ery is likely to be a lengthy affair, with all eyes The effect is already being felt by the world’s
trained on Chinese import figures to give some largest exporter of the fuel – Australia. Austral-
sense of pricing trajectory. ian gas exporters shipped 93 cargoes in May –
For the natural gas export sector, however, amounting to 6.4mn tonnes.

Week 24 17•June•2020 www. NEWSBASE .com P7