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%.
Research & Development ICDX Girta Yoga revealed that tight supply was the main catalyst that raised energy commodity prices throughout this year due to the Russia-Ukraine conflict. Russia, as one of the largest producers of energy commodities, was actually hit by an embargo that caused tight supplies.
Several steps have been taken, but Yoga sees that it is not enough. For example, OPEC+'s decision to increase production from 400,000 barrels per day (bpd) to 432,000 bpd. This figure is considered too low to encourage the world's oil supply which was drastically reduced due to the cessation of Russian exports.
“So going forward, OPEC+ will have to increase its daily production if it wants to stabilize oil prices. In addition, the coordinated release of oil carried out by the United States and IEA members of 240,000 bpd starting in May is expected to be a positive catalyst," said Yoga when contacted by Kontan.co.id.
Meanwhile, for natural gas, the conflict effect is much more significant because the European Union imports 41% of its natural gas needs from Russia. This means that as long as the conflict lasts, the supply of natural gas will continue to be disrupted and will become tighter. Yoga sees that there is currently little hope that the price of natural gas will be corrected during the war and the embargo on Russia will continue.
According to him, the sentiment that is expected to reduce the increase in natural gas prices in the future is the cooperation plan between the United States and the European Union to supply natural gas. Reportedly, the United States will supply 15 billion mmbtu of natural gas this year to the European Union.
The same thing happened in the coal market. The Russia-Ukraine conflict has disrupted global coal supply considering that Russia is one of the largest exporters after Australia, Indonesia and China. At the same time, China is also being overshadowed by a supply shortage due to the implementation of the lockdown.
“This means that going forward, the development of the Russia-Ukraine conflict and the embargo on Russian energy products will still be the main sentiments that the market pays attention to. If the situation continues, energy commodity prices will still be high, but if the situation improves, prices are expected to fall,” he added.
Yoga projects that currently world oil prices could move towards US$ 120 per barrel. Meanwhile, natural gas and coal prices are estimated to reach US$ 9.25 per mmbtu and US$ 425 per ton, respectively.
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