BAKU, Azerbaijan, March 12
By Leman Zeynalova – Trend:
With a small rise in stocks and warmer weather on the horizon, European natural gas prices are expected to fall in the coming months, Trend reports with reference to the UK-based Capital Economics research and consulting company.
“The war in Ukraine continued to boost coal prices this week but, perhaps rather surprisingly, natural gas prices fell. The EU has announced a two-third reduction in gas imports from Russia by the end of this year and an accelerated push for renewable energy. Elsewhere, the US gas price fell as warmer spring temperatures are expected in the next couple of weeks,” said the company.
As for the oil market, Capital Economics notes that the price of Brent crude spiked to above $130 per barrel at the start of the week on the back of new sanctions on Russian oil imports by the US and UK.
“Neither are large importers of Russian oil compared with Europe and China. That said, the sanctions are a step closer to our extreme scenario of a blanket ban on Russian energy, which could keep oil prices at $120-140pb for most of this year. Meanwhile, the IEA has called on OPEC+ to increase production and is on standby to release more reserves,” reads the report released by the company.
Capital Economics suspect commodity prices will continue to whipsaw around in the weeks ahead, as markets move quickly to discount the war in Ukraine and its consequences into commodity prices.
“On balance, though, the risks to prices are still very much skewed to the upside, not least as the West could further tighten restrictions on Russia’s commodity exports. In fact, in a scenario where there is a complete ban by the West on imports of Russian energy, we think the price of crude oil (Brent) could quickly reach $160 per barrel (from a little over $110 currently),” the report says.
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