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Market News The energy crisis broke out! Brent crude oil breaks through $80! European natural gas prices skyrocketed by 500% in one year

The energy crisis broke out! Brent crude oil breaks through $80! European natural gas prices skyrocketed by 500% in one year

On September 28, the worldwide energy crisis continued to ferment, and Brent crude oil hit US$80 per barrel for the first time since October 2018! European natural gas prices have soared to a seven-year high, soaring by 500% in one year!

2021-09-28
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On Tuesday (September 28), the worldwide energy crisis continued to ferment, and US crude oil prices continued to soar and may usher in six consecutive rises. Brent crude oil hit US$80 per barrel for the first time since October 2018, and natural gas prices soared to Seven-year high.


People panic buying leads to energy shortages across the UK


This national crisis began last week with a small problem that was limited to one company: BP said that due to insufficient truck drivers, the company was forced to close a handful of 1,200 British gas stations and restrict them. To other gas stations. Government officials reassure the people on TV that there is no shortage of fuel, but it is of no use. The government has taken measures to issue 5,000 temporary visas to truck drivers, but business leaders and labor unions say this is not enough.

The British company Hoyer, which provides fuel transportation services for BP, may face a driver strike. Some drivers of the company will vote on whether to go on strike this week. Hoyer said that some drivers decided not to accept the company's July proposal to raise salaries by more than 20%.

The European energy crisis spreads


As the world strives to withdraw from coal and increase the use of clean energy, countries rely on natural gas at an unprecedented level. While exporting countries such as Russia are reducing exports, countries are bidding up prices to compete for natural gas supply. Inventories of European reserve facilities are at historically low levels over the same period. Moreover, the more stable air flow reduces the amount of wind power generation, and the aging nuclear power plants are being phased out. Because of energy shortages, European governments have also issued warnings about power outages and forced shutdowns of factories.

European natural gas prices have skyrocketed by nearly 500% in the past year, approaching record highs. This has forced some local fertilizer producers to reduce production, and more producers are expected to follow up, which will increase farmers' production costs and may increase global food inflation.

(Daily chart of main natural gas contracts)

Brent crude oil breaks through $80


ICE Futures European Exchange Brent crude oil November contract has risen for six consecutive years since last Tuesday, breaking through the $80 mark strongly because there are signs that the market is in short supply and inventories are falling.

(Daily chart of the November contract of oil distribution)

Goldman Sachs previously raised its estimate for the price of Brent crude oil at the end of the year from US$80 to US$90 per barrel due to the accelerated recovery of fuel demand after the economy emerged from the Delta strain and the impact of Hurricane Ida on production, resulting in global supply nervous.

Goldman Sachs said in a report on September 26: "Although we are looking to increase oil in the long run, the current global supply and demand gap is larger than we expected. The recovery of global demand under the Delta epidemic has even exceeded our market expectations. Estimated median forecast, and global supply is still lower than our forecast below the median estimate of the market."

Due to the persistent lack of investment and maintenance delays caused by the epidemic, members of the Organization of Petroleum Exporting Countries and their allies (ie OPEC+) were caught off guard against the rebound in demand, and it was difficult to increase production.

Stephen Brennock of PVM, an oil broker, said: "The tight supply in the U.S. also supports prices, and the supply disruption in the Gulf of Mexico has exacerbated the decline in inventories."

He added that the general rise in overall energy products has also boosted the European benchmark crude oil.

"The soaring price of natural gas has fueled rumors about its demand for alternative fuels, including oil."

With the new crown vaccination boosting energy demand and leading to a decline in US inventories, oil prices have soared this year. And soaring natural gas prices have prompted people to bet that crude oil will benefit from overflowing demand as users seek alternatives. Trafigura Group, one of the world's largest commodity traders, is one of the institutions that predicts that oil prices will rise.
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