The “shock wave” of the European energy crisis seems to be greater than imagined.
On the evening of October 14, the International Energy Agency released its monthly report. The International Energy Agency said that the natural gas crisis is spreading to the oil market. In the next six months, gas-to-oil switching may increase demand by 500,000 barrels per day, and it has raised its forecast for crude oil demand growth this year by 300,000 barrels per day to 5.5 million barrels per day. 10,000 barrels/day, and slightly raised demand in 2022 to 3.3 million barrels/day. The agency said that crude oil demand in the next six months will be mainly affected by gas-oil switching, and the international energy crisis may threaten the global economic recovery.
“Due to the accelerated global economic recovery, serious shortages in the supply of natural gas, liquefied natural gas and coal have triggered a sharp increase in energy supply prices and caused a large-scale market shift to petroleum products for substitution.” International the Energy Agency said.
At the Russian Energy Week held on October 13, Putin said that oil prices are likely to hit US$100 per barrel. Goldman Sachs, Citigroup and other international investment banks also have a bullish attitude towards oil prices in the fourth quarter.
Recently, Citigroup predicts that Brent crude oil may reach $90 per barrel this winter. Jeff Currie, global head of commodities at Goldman Sachs, said in a recent interview with Bloomberg that if this winter is colder than previous years, oil prices may accelerate in the near future, with prices soaring to US$90 per barrel.
Tony Sycamore, a senior analyst at Jiasheng Group, told the Futures Daily reporter that high natural gas prices provide support for rising oil prices because the demand for natural gas to shift to fuel oil and distillate oil has increased to a certain extent. Refinery margins and supporting crude oil prices. “Although it seems that oil prices have lost some momentum now, it is important to note that as supply constraints exist and demand remains strong, there is a real possibility that oil prices will exceed US$90 per barrel.”
Tony Sycamore emphasized that October is often the time when oil prices reach their peak in a year, so it would not be surprising if there is a certain “overshoot” in prices. “It’s just that we have gradually entered a period of seasonal weakening of oil prices. When the oil price exceeded US$76.98 per barrel in August, I once said that as the oil price had returned to near the previous high at that time, the oil price may begin to correct, but the upper resistance level Continue to rise, oil prices continue to overshoot.”
It is worth noting that data released by the U.S. Energy Information Administration on October 14 showed that U.S. commercial crude oil inventories last week were 427 million barrels. , an increase of 6.1 million barrels month-on-month, significantly exceeding market expectations. As of early morning today, WTI crude oil futures closed at US$81.31/barrel, an increase of 1.08%; Brent crude oil futures prices closed at US$84/barrel, an increase of 0.99%.
The Kaiyuan Securities macroeconomic team analyzed that compared with past energy crises around the world, it is not difficult to find that this round of energy crisis has both primary and secondary energy crises. feature. In the short term, with the arrival of winter and the seasonal rebound in overall electricity consumption, coupled with the difficulty in significantly expanding the supply of traditional energy products, this round of energy crisis may further ferment. In the medium and long term, under the background of global carbon neutrality, the “collision” between the shrinking traditional energy production capacity and the large fluctuations in the supply of green new energy, and the overlay energy storage system takes a long time to establish, the outbreak of the energy crisis may be greater than in the past. become more frequent.
Tony Sycamore believes that the energy crisis in Europe is the result of a variety of variables. First, Europe’s “green policy” is quite radical and hopes to achieve control goals of reducing emissions and increasing the proportion of new energy in the energy structure; second, in the post-epidemic era, the global economy is gradually restarting, and energy demand has also grown explosively; The third is the uncertainty of new energy supply. Especially in the UK, 25% of energy demand comes from new energy. However, the weather this summer seems to be relatively mild and wind power generation is insufficient, so the demand for natural gas has increased significantly. In addition, geopolitical factors are also one of the potential factors pushing up natural gas prices.
In the past 10 years, the proportion of traditional energy power generation such as coal in Europe and the United States has continued to decline, while the proportion of wind power and hydropower has increased significantly. However, since the beginning of this year, wind power generation in Europe and hydropower generation in the United States have plummeted due to extreme high pressure and drought weather respectively. To fill the gap, demand for thermal power generation (mainly using coal, oil and natural gas) has surged in Europe and the United States, which has led to a surge in natural gas prices in Europe and the United States, which in turn has pushed up electricity prices.
Wind power has always been an important part of European power generation. Among them, British wind power accounted for 23% of the UK’s power supply in 2020. However, the supply of wind power is unstable. Affected by weather conditions, wind power generation decreases, and part of the power demand gap needs to be supplemented by natural gas. UK wind power generation averaged 2,500 MWh in September, well below the level of the same period last year (5,700 MWh), thus boosting natural gas demand. According to Reuters data, natural gas power demand in the UK was 57 million cubic meters per day in September, which was higher than the same period in 2020 and 2019, which were 51 million cubic meters per day and 48 million cubic meters per day.
“In addition to the obvious inflationary effects of rising energy prices, high natural gas prices have also had a negative impact on food production. Natural gas is used to produce ammonia from fossil fuels and to extract energy for Mining phosphate rock. Ammonia and phosphate are important components of commercial fertilizers needed to grow a large number of crops.” Tony Sycamore said that overall energy supplies in Europe are under strain due to poor profitability and restrictive ESG policies.state, cold winters in the Northern Hemisphere may exacerbate the problem. It is not ruled out that natural gas prices will exceed the $10/million British thermal equivalent in December 2000 in the future. “This is a very painful price.” </p
