Energy Market in the Past Week: U.S. Giant Gains Access to Russia

Project "Sakhalin-1". Image.

The meeting between Vladimir Putin and Donald Trump did not yield breakthrough progress, but it was generally smooth, with both sides expecting further progress in the future. Moreover, Moscow has opened a door for ExxonMobil, an American company, to return to Russia. This move eased the tension in the energy market, where Russia holds one of the key positions. However, the current situation is not optimistic for oil-producing countries as oil prices are falling.

Oil

The meeting between Putin and Trump in Alaska eased the oil market. The price of North Sea Brent crude, as a benchmark, continued to fall throughout the week, from $66.6 per barrel to $65.8 per barrel.

Although the negotiations in Alaska did not result in a peace agreement, both sides expressed satisfaction. Donald Trump stated that not all terms had been agreed upon, but he supported a peace agreement rather than a ceasefire.

This development did not end the conflict in Ukraine, but it brought hope that things are moving in the right and peaceful direction. Russia's own measures also became one of the reasons for the decline in crude oil prices in the oil market. The Russian president signed an executive order allowing ExxonMobil, an American company, to reclaim its shares in the "Sakhalin-1" project under certain conditions.

At the same time, data from China once again prevented oil prices from falling further.

Reuters reported: "Data from the Chinese government shows that industrial production growth has slowed to the lowest level in eight months, and retail sales growth has also slowed to the lowest level since December last year. Despite the increase in crude oil processing in this world's second-largest oil consumer, these data still affected market sentiment."

Experts told the news agency that the global surplus of crude oil could reach 890,000 barrels per day. Although this number is not small, it is still insufficient to replenish the strategic reserves of Western countries.

Natural Gas

The decline in European natural gas prices exceeded that of oil. The one-month delivery price of natural gas on the Netherlands TTF exchange fell from $395 per thousand cubic meters to $379 per thousand cubic meters. This is the lowest price in 16 months.

Bloomberg reported: "In the lead-up to the historic summit between U.S. President Donald Trump and Russian President Vladimir Putin, European natural gas prices fell to the lowest level in over a year."

The report also pointed out that few traders expect Russian pipeline gas to return to the European market soon — even if a ceasefire in Ukraine is achieved.

Traders said: "Any tightening or easing of sanctions on Russian energy products could have a significant impact on global supply."

For European coal companies, the current situation is unattractive. Coal prices also fell. The one-month delivery price of coal at the Antwerp-Rotterdam-Amsterdam (ARA) port dropped from $101 per ton to $98 per ton.

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