Page 5 - Policy Economic Report - June 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

In May, crude spot prices averaged lower, reversing all previous gains, mainly due to heavy selling in the
oil futures market and changes in the market's perception of short-term oil market outlooks. The decline
in prices was more pronounced in the light sweet Brent benchmark, as the selloff from speculators was
concentrated in ICE Brent futures and options contracts. Lower gasoline and diesel crack spreads in major
trading hubs added downward pressure to light sweet crudes.

Hedge funds and other money managers closed a large volume of bullish futures and options positions in
the ICE Brent futures market, while sharply raising short positions to their highest since November 2020.
This fuelled volatility and accelerated the decline in oil futures prices. Combined futures and options net
long positions in ICE Brent and NYMEX WTI dropped to their lowest level since last January. Between late
April and the week of 28 May, hedge funds and other money managers sold an equivalent of 144 mb of
oil in Brent and WTI futures and options positions.

Natural gas spot prices at the US Henry Hub benchmark averaged $2.12 per million British thermal units
(MMBtu) in May 2024. Henry Hub's natural gas prices advanced for a second consecutive month in May,
increasing by ~33%, m-o-m. Prices rallied on the back of higher domestic cooling demand amid warmer-
than-expected weather and an increase in US LNG demand, particularly from the Asian region. However,
prices remained at historical lows (at an average of $2.1/mmbtu in May), capped by strong domestic
production.

JUNE 2024 Page | 4