-What happened last week?
One of the most important developments last week was the U.S. President Donald Trump's remarks about the Nord Stream II pipeline that plans to carry 55 billion cubic meters of natural gas from Russia to Germany under the Baltic Sea. Trump, in reference to the project, which will become operational in 2020, said on the first day of the NATO summit in Brussels, 'Germany is totally controlled by Russia because they will be getting from 60 to 70 percent of their energy from Russia with a new pipeline.'
'We are supposed to be protecting you from Russia, but why are you paying billions of dollars to Russia for energy?' he enquired.
Trump has been critical of NATO since last year and demands that other members pay their fair share of the NATO defense budget instead of letting the U.S. carry most of the financial burden of the organization. With his business acumen, Trump also views the situation as an opportunity to increase U.S.' LNG exports to European countries.
With its high-energy demand, Europe could be a new market for American LNG exports, but there is only one operational terminal for LNG exports in the U.S. at the moment -- Cheniere Energy's Sabine Pass terminal in the state of Louisiana.
Nine LNG export projects have been approved by the U.S.' Federal Energy Regulatory Commission (FERC) so far, but only five are currently under construction and13 export projects are pending a decision, according to FERC data.
The U.S.' exports of LNG totaled around 20 billion cubic meters (bcm) last year; while only 2 bcm, or 10 percent of this amount, was imported by European countries, according to the U.S.' Energy Information Administration (EIA) data.
-Brent crude posts 6 percent daily decline
The price of Brent crude oil posted a daily decline of 6 percent on Wednesday, after Libya lifted force majeure on oil ports, while the American dollar showed gains against other currencies.
After closing at $78.88 per barrel on Tuesday, the price of the international benchmark ended Wednesday at $74.15 a barrel to mark a 6 percent daily decline. During trading hours, Brent crude fell to its lowest level since June 21 at $73.06 per barrel.
American benchmark West Texas Intermediate (WTI) ended Thursday trading at $70.55 per barrel, posting a 4.7 percent fall after closing Tuesday at $74.03 a barrel. During trading hours, WTI dropped to as much as $70.03 per barrel -- the lowest level since June 26.
The sudden decrease in crude prices came after Libya’s state-run National Oil Corporation announced earlier that it lifted force majeure on its eastern oil ports. The move is expected to see the country ramp up its output and increase global supply.
In addition, the value of the U.S. dollar, in which crude prices are indexed to, increased against other currencies on Wednesday. The U.S. dollar index, comprising a basket of currencies; the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, jumped by around 0.7 percent.
-U.S. crude oil stocks show steep decline last week
Crude oil inventories in the U.S. posted a steep decline last week, falling at a rate almost three times the market expectation, according to the country's Energy Information Administration (EIA) data on Wednesday.
Commercial crude oil stocks were down 12.6 million barrels, or 3 percent, to 405.2 million barrels for the week ending July 6. The market expectation was a decline of 4.5 million barrels. Commercial stocks had increased by 1.2 million barrels during the previous week.
Strategic petroleum reserves, which are not included in the commercial stocks, remained unchanged at 660 million barrels over the same period.
Gasoline inventories were down 0.7 million barrels, or 0.3 percent, to 239 million barrels -- in line with market expectations of a decrease of 0.7 million barrels. Gasoline stocks were down by 1.5 million barrels on the previous week.
The U.S.' crude oil production rose only by 29,000 barrels per day (bpd) and remained almost unchanged at 10.9 million bpd for the week ending July 6, according to the EIA. The data showed that all increases in crude production came from the state of Alaska last week. This marked the 24th time in the last 26 weeks that crude oil output in the country showed an increase.
The country's crude oil production is expected to average 10.8 million bpd this year, and 11.8 million bpd next year, according to the EIA's short-term energy outlook for July.
-EIA revises up oil price forecast
EIA revised its crude oil price forecast for 2018 and 2019, according to its Short-Term Energy Outlook (STEO) report for July released on Tuesday.
The price estimate for international benchmark Brent crude increased to $73 per barrel for the second half of this year, and anticipated an average of $69 a barrel next year, the EIA said. In the June report, Brent crude was expected to average $71 a barrel in 2018 and $68 per barrel in 2019.
The price estimate for American benchmark West Texas Intermediate (WTI) is expected to average $67 per barrel this year, and $62 a barrel next year, according to the July report. The EIA said in its June report that it anticipated WTI to average $64.50 a barrel in 2018 and $62 per barrel in 2019.
-Fitch downgrades Turkey's rating
Global ratings agency Fitch Ratings downgraded Turkey's long-term foreign currency rating on Friday to 'BB' from 'BB+' with a negative outlook.
Fitch said in a statement that it believes downside risks to macroeconomic stability have intensified due to a widening of the country’s current account deficit.
'In Fitch's opinion, economic policy credibility has deteriorated in recent months, and initial policy actions following elections in June have heightened uncertainty,' it said.
The agency said it expects the current account deficit to widen to 6.1 percent of GDP in 2018 due to higher fuel prices and higher household consumption.
'The fall in the lira, combined with Fitch's forecast of lower oil prices and the ongoing tourism recovery, will cause the deficit to narrow to 4.1 percent in 2019,' the statement said.
Fitch said Turkey's large gross external financing requirement leaves it vulnerable to shocks.
The agency, however, said healthy external demand, a continued recovery in tourism, infrastructure spending, and employment growth would support the economy. The economy is forecast to grow by 4.5 percent in 2018 and 3.6 percent in 2019, according to Fitch.
'Turkey is a large and diversified economy with a vibrant private sector,' the ratings agency said.
-What to expect this week?
Investors and the markets will closely watch the U.S. companies’ second quarter financial results this week.
Among energy companies, Kinder Morgan will release its results on Wednesday, while Baker Hughes, General Electric and Schlumberger will release their net income and revenue for April-June period this year on Friday.
The U.S.' weekly change in crude oil production and inventories will be announced on Wednesday, while the change in the U.S.' oil rig count will be announced on Friday.
The Federal Reserve Chairman Jerome Powell will begin his two-day testimony in the Congress on Tuesday.
OPEC will hold its 7th International Seminar in Vienna on Friday and Saturday.