Oil prices are close to USD120/bbl, fueled by reaccelerating global economic growth, strong global monetary stimulus that has largely continued unabated, and worries about oil supply losses growing along with increasing Middle East turmoil. A limiting factor for price is the negative feedback impacts into global economic growth from higher prices.
Colder than normal weather remains bullish for demand, which supports spot price movements. Concern over tighter supply seems to outweigh the weak underlying demand.
Variations to weather forecasts and the need for storage gas withdrawals will continue to dictate spot prices over the next few weeks. Long-range storage has been running at full withdrawal rates this year, with daily withdrawals averaging 40 mcm since 6 January. UK gas stocks fell by 22% in the seven days to 13 February and are 24% lower than at the same time last year, which has led to some concerns over the amount of injection required over the coming summer and upward pressure on summer prices.
Asian LNG prices have surged higher over the past four weeks in reponse to competition from South America as well as a recurrence of output problems at LNG plants. Asian spot prices are now around USD21/mmBtu - twice the UK NBP price.