Photo Credit: Flash 90
Equipment at an oil well. (illustrative only, file photo)

Oil prices in the U.S. dropped to around $27 per barrel last week, worrying investors and raising the hopes of those who placed their bets on the Leviathan gas field in Israel.

Oil supplies in the U.S. right now are glutted, to be blunt.

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U.S. West Texas Intermediate (WTI) crude futures were down 44 cents at $27.01 per barrel, within a squeak to the one-day $26.19 per barrel in January, the lowest since 2003. Brent crude futures traded at $30.67 per barrel, down 17 cents.

Chart analysts said crude prices may be just days away from falling to $25 a barrel – the price in April 2003 – or below, as weakening technicals put more pressure on the market, according to Reuters.

Japan is celebrating the National Foundation Day, a public holiday, and China’s New Year holiday lasts all week, so trading activity in Asia has remained low. The Hang Seng index in Hong Kong resumed trading after being closed for the Lunar New Year holiday.

Nevertheless, British Petroleum (BP) forecast on Wednesday that demand for energy will increase in the next 20 years due to growth in world population and economy. The firm made its rosy prediction in its 2035 Energy Outlook report, commenting that although oil demand may decline, the demand for gas and renewable energy will grow. Gas remains the fastest-growing fossil fuel, according to the report, rising by 1.8 percent per year, compared to oil’s 0.9 percent growth. Renewable sources of energy such as solar and wind are projected to grow at around 6.6 percent per year.

Israel’s Leviathan natural gas field is just starting to make its debut into the market.

An Israeli-Turkish consortium, the Edeltech Group and Zorlu Enerji, has signed the first contract with the Leviathan development group, Texas-based Noble Energy, Israel’s Delek Drilling and Avner Oil.

Leviathan, believed to contain approximately 22 trillion cubic feet of natural gas, will provide six billion cubic meters of the energy resource to the Israeli-Turkish consortium at a cost of $1.3 billion over a period of 18 years.

Recently another natural gas reservoir was discovered by ISRAMCO and Modiin Energy LP off the coast of Israel, along the borders of the mammoth Tamar gas field, the first one to be discovered beneath Israel’s Mediterranean waters.

The licenses for Daniel East and Daniel West, as the reservoir has been designated, “have the greatest potential since Leviathan.”

The reservoir is about the same size as Tamar, which currently serves much of Israel’s needs. The next step is drilling to test the potential prospects of the reservoir – but trading for the field is already brisk on the Tel Aviv Stock Exchange (TASE).

A seven-year gas deal with Egypt was announced last year by the Tamar partners with Dolphinus Holdings, with five billion cubic meters of natural gas to be sold for $1.2 billion in the first three years. As with Leviathan, Noble Energy, Delek Drilling and Avner Oil are the partners who operate Tamar. The gas was to run through the underwater pipeline built nearly a decade ago by East Mediterranean Gas (EMG).

The Tamar natural gas field has been producing its precious energy resource for the domestic market since 2013.

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