The price of energy commodities seems to have continued to be at a high level this year. Sentiment from the Russia-Ukraine conflict that has not subsided became the main catalyst that kept prices of various energy commodities high.
Referring to Bloomberg, the price of West Texas Intermediate (WTI) oil on Friday (6/5) was at US$ 109.77 per barrel. Throughout April to May, it was recorded that oil prices were stable, moving higher above US$ 95 per barrel. If calculated since the end of 2021, oil prices have managed to strengthen 45.95%.
Meanwhile, natural gas prices were even more wildly strengthening. On Friday (6/5), natural gas prices fell 8.43 percent to US$ 8.04 per mmbtu from US$ 8.78 per mmbtu which was the highest price level. However, within a week, natural prices still soared 11.03% from US$ 7.24 per mmbtu. Meanwhile, year to date, the increase has even touched 124.58%.
No different, coal prices are also in a similar trend. It was noted that the price of coal at ICE Newcastle on Friday (6/5) was at the level of US$ 341.65 or strengthened 21.99% in the past week. Meanwhile, if calculated since the end of the year, coal prices managed to increase by 177.43%.
Director of TRFX Garuda Berjangka Ibrahim assessed that the trend of strengthening energy commodity prices in recent times was the impact of Russia's decision to counterattack by stopping exports of natural gas, oil and coal. This led to a significant reduction in supply, particularly in European countries.
“Especially for natural gas, the interruption of gas supply to Bulgaria and Poland has resulted in an energy crisis in the European region. The increase in natural gas prices cannot be avoided as supply becomes tighter," said Ibrahim when contacted by Kontan.co.id.
At the same time, natural gas production in the United States also declined along with gas storage which was 21% lower than last year.
Meanwhile, the price of coal in the end also increased because many countries made it a substitute for natural gas. Unfortunately, the global supply of coal itself is still limited, especially with China, which again implemented a lockdown due to the increase in Covid-19 cases.
According to Ibrahim, the increase in energy commodity prices can also have a long impact because it will trigger high inflation. With rising inflation, the US dollar will also experience strengthening and this will make commodity prices also increase. This will ultimately hamper the process of European economic recovery.
“So the sentiment for energy commodity prices going forward is the continuation of the Russia-Ukraine war. As long as the war rages on, it is unlikely that the price of energy commodities will decline,” Ibrahim added.
Based on Ibrahim's estimation, as long as the conflict is still heating up, the price of natural gas in the future could penetrate the level of US$ 9 per mmbtu. Then, world oil prices will move past US$ 115 per barrel, and coal prices could rise to above US$ 350 per ton.
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