Trump pledge he would propose Congress a payroll tax cut, relief for small business and for hourly workers in a bid to avert a recession as global market are in turmoil. The U.S. President underlined the measures would be “very dramatic” and provide “substantial relief” to help reign in fears over the coronavirus. “This blindsided the world” he commented, “and I think we handled it very well.”
Energy prices partially recover
Trump’s planned financial measures helped energy and stock markets stage a cautious recovers. Brent crude edged up an was last trading at $36.90 per barrel, still substantially lower than last week’s $50 per barrel levels. The US benchmark West Texas Intermediate (WTI) crude gained 7 percent in value to $33.28 a barrel.
LNG prices under long-term supply contracts will fall as they are linked to crude oil, though US volumes will be less volatile as they are sometimes linked to the US benchmark Henry Hub.
In US natural gas, the New York Mercantile Exchange (NYMEX) front-month future rose to $1.81 per MMBtu and the Henry Hub day-ahead price was little changed at $1.72 per MMBtu.
The oil price fall had little effect on the Japan-Korea Marker (JKM) price for Asian spot LNG. This was already at a seasonal low because of market over-supply. The Platts JKM spot LNG price for Asia was last at $3.10 per million British thermal units, slightly down on the previous day’s $3.11 per MMBtu.
The UK National Balancing Point (NBP) price that guides LNG prices for the Atlantic Basin was last at $2.85 per MMBtu. The main natural gas price on Continental Europe, the Dutch Title Transfer Facility (TTF), was at $2.90 per MMBtu.
Looking ahead with Atlantic Basin futures, the US Gulf Coast LNG prices from the Intercontinental Exchange, dropped during the past week because of the supply glut. The front-month April 2020 price was at $2.390 per MMBtu, down from $2.490 per MMBtu the previous day. The May LNG future was at $2.449 per MMBtu, down on the previous day’s $2.450 per MMBtu.
Futures move above $3.000 per MMBtu to $3.574 for the October 2020 contract and to $4.337 per MMBtu for the December 2020 contract. The US GC LNG future traded on ICE is a settled derivatives contract available through to April 2022 and based on the average free-on-board (FOB) Gulf Coast LNG price.
Saudi Arabia launched price war with Russia
Analysts said the world’s top producers including Saudi Arabia, Russia and other Middle East nations are now involved in a price war. The standoff started after OPEC and Russia failed to reach an agreement on lowering oil production quotas. Russia evening refuted the Saudi Aramco-led proposal to prop up the coronavirus-hit oil market by further reducing production. The standoff sparked a 10% drop in prices on Friday.
Angered by Russia’s refusal, Saudi Aramco escalated the situation further by cutting its April selling prices by $6 to just $8, in an effort to put pressure on Gazprom and retake market share. The Saudis also announced to raise its production in April to more than 10 million barrels per day, apparently to compete with Russian oil in Europe as well as Asia.
Some analysts noted that Gazprom had hinted that the real target of the price ware would be U.S. shale oil producers, because OPEC and Russia are “fed up with cutting output and just leaving them with space.“