Brent is staying above $113 as recent strong economic data points towards a global recovery.
Manufacturing in China and the United States grew this month at the quickest pace in about two years while data suggests German growth picked up, increasing optimism about the state of the world economy and fuelling hopes that demand for oil will go up.
Tensions in the Middle East remain, also supporting oil prices. Iran is a key supporter of Syrian President Bashar al-Assad, and a government official said that any attack on Syria is an attack on Iran.
Egyptian President Mohamed Mursi has declared a month-long state of emergency in three cities along the Suez Canal where dozens of people have been killed in anti-government protests over the past four days. UN Security Council envoys are visiting Yemen for the first time as a US-backed power transfer deal is in danger of faltering, plunging the country back into chaos. Yemen flanks Saudi Arabia and major shipping lanes, and is struggling with multiple conflicts.
UK gas prices started to drop last week as the recent cold snap began to subside. Prices jumped on supply concerns as Gassco announced a two-month extension to an unplanned outage at Troll. The 35 mcm/d Troll A outage is expected to last until 1 April due to uncertainty regarding replacement of a compressor unit. Stronger Brent prices are supporting gas prices further out the curve.
Despite low LNG availability and the Troll outage, supply is not expected to be an issue. Overall UK gas demand was down by 9% in 2012 from the year before, mainly due to losses in the power sector.
Almost 300 million cubic metres was taken from the long-range Rough storage last week, in addition to 260 mcm from medium-range facilities as the cold weather has pushed British demand to winter highs. The prospect of milder UK temperatures into early February will provide an opportunity for medium-term storage capacity holders to refill facilities.
Figure: UK storage, mcm (Source: ICIS Heren)
Figure: UK gas demand, mcm/d (Data: National Grid)