In the Middle East, the Iran-backed Houthis political group stated that it charged an international airport and airbase in Saudi Arabia with drones. While the Saudis have not verified the aggression, Riyadh has been consistently opposing the Houthis since 2015 in Yemen.
What made the developments even more remarkable was that President Joe Biden led the State Department to remove the Houthis’ terrorist designation, possibly setting up a diplomatic dispute with Saudi Arabia. Political analysts consider that the decision would lessen the US partnership with the Kingdom.
But why would this matter? In current months, the Saudis have been an instrumental force in supporting global crude markets, providing US oil and gas producers to ramp up production. The nation declared that it would reduce output to offset Libya, Kazakhstan, and Russia’s expanded production capacities. Should the US-Saudi Arabia alliance decline, there might not be much of an encouragement for Riyadh to go out of its way to balance the crude oil sector, particularly with the market beginning to contract.
Arctic Cold Not Enough for Natural Gas
It was a whirlwind week for natural gas prices as the so-called bridge fuel has disappointed to keep any momentum. After cutting $3 on a couple of occasions throughout the February 8 to February 12 trading week, the energy commodity could not meet market expectations of expanding to as much as $3.30. So, what is going on with natural gas?
On the cover, it would seem that natural gas would be posting a massive rally. Many US parts are covered with Arctic-like colds and heavy snowfall, ending in improved energy demand and production freeze-offs. This could also be one of the coolest Februarys on record.
The principal issue is that the US holds an extensive amount of natural gas supplies. If production would be influenced by freeze-offs, there is still enough inventory to meet demand. Unless freezing conditions stay in March, the US can maintain ample levels of stock. As stated by the latest weather forecasts, freezing temperatures are projected to disappear toward the end of the month, with the weather anticipated to approach seasonal norms once again.
The past week’s EIA supply report did not help natural gas prices either. The US government reported a smaller-than-expected departure of US stocks. Domestic inventories fell 171 billion cubic feet for the week closing February 5. This is lower than the median calculation of 181 billion cubic feet.