International oil prices continued to rise, with WTI crude oil exceeding US $100 / barrel, up 5% as of press time
Worried about the supply of international crude oil, natural gas, aluminum and nickel prices
The fluctuation of commodity market has a linkage effect. Affected by the conflict between Russia and Ukraine, the price of crude oil rose above US $100 / barrel, and the price of natural gas in Europe also rose.
As an important supplier of global aluminum and nickel industry, Russia also controls the trend of global metal industry. Recently, Lun aluminum hit another record high, and Lun nickel prices hovered at a high level. Analysts pointed out that high oil and gas prices will drive higher electricity prices in Europe, and the costs of downstream industries will also rise.
crude oil supply shortage will continue
Since December last year, international oil prices have surged all the way from a phased low, with an increase of more than $30 / barrel in just two months. Among them, the Brent crude oil futures price has risen all the way from $70 / barrel to about $100 / barrel today; WTI crude oil futures rose from $65 / barrel to more than $95 / barrel.
This month, the conflict between Russia and Ukraine continued to ferment, and the market panic increased, which once led to a large number of funds entering for risk avoidance. However, the nuclear negotiations between the United States and Iran entered a benign development channel, and the geopolitical situation has also been alleviated to some extent. After the oil price hit a new high, the funds began to take profits and accelerate the withdrawal.
Xi Jiarui, a crude oil analyst at jinlianchuang, told the 21st Century Business Herald that in February, the total position of WTI crude oil futures increased first and then decreased, and finally there was a significant shrinkage. From the perspective of fund risk appetite on the floor, there was a continuous reduction of multiple short positions in February.
In this month’s report, the three major international oil institutions all raised their expectations for the growth of global oil demand this year. The mainstream view is that the shortage of crude oil supply will intensify. Xi Jiarui said that in view of high oil prices, the United States and its allies plan to continue to release strategic crude oil reserves, but EU member states have differences on whether they should participate in the release of potential crude oil reserves, which are strictly required by local laws.
On the other hand, oil exporting countries and their oil producing allies will still maintain an increase of 400000 barrels per day in March, which can not significantly alleviate the current international crude oil market. Xi Jiarui said that there will still be a gap in the crude oil market in the short term, and the funds withdrawn sharply in the early stage will re-enter the market to support the high operation of oil prices.
European gas prices rose strongly
Following the jump in oil prices, changes have also occurred in the natural gas market.
On February 24, the European natural gas benchmark price TTF jumped by more than 50%, reaching 132.71 euros / MWh, the highest since 2022; The spot price of LNG in Northeast Asia rose by more than 30%, reaching US $36.90/million British heat, also reaching the highest value since 2022.
In addition to geopolitical tensions, the European market is worried that due to the shortage of reserve stocks, the natural gas delivered by Russia to Europe may be interrupted, driving the continuous rise of prices.
Russia is one of the world’s three largest crude oil producers and a major natural gas producer. Europe is highly dependent on Russia’s natural gas resources. In 2021, due to the rising demand caused by economic recovery, the maintenance of global liquefied gas devices, the decline of production capacity and other reasons, the European natural gas inventory was at the lowest level for many years, the local natural gas price in Europe continued to soar, and the rise of energy cost brought great pressure to the local economic and social development.
At present, Russia’s natural gas transmission to Europe continues, but the recent tension in the natural gas market may continue.
Jinlianchuang analysis pointed out that the recent geopolitical upgrading will shift the shipping LNG of the United States, Qatar and other places to the European market, forming a strong competitive pattern with Northeast Asia. It is expected that the LNG of Northeast Asia and Europe will continue to hover at a high level in the first half of 2022.
Soochow Securities Co.Ltd(601555) analyst Li Yong pointed out that in the short term, it is difficult for the EU to find alternative energy with appropriate price. The high energy price will greatly increase the cost of smelters and support the strengthening of the price of downstream smelting products.
In the Chinese market, with the recent rise of temperature, China’s gas price has entered a downward channel, which will affect the enthusiasm of Chinese enterprises to import LNG to a certain extent.
Lun aluminum prices hit a record high
On the day of February 28, Lun aluminum rose again from the previous historical high, once breaking through 3500 US dollars / ton, and continued to hit a record high; Prior to this, on February 24, the price of Lun nickel reached the highest of US $25400 / ton, the highest since 2022, with an increase of more than 20% during the year. At present, the price of Lun nickel has dropped to around 24600 US dollars / ton.
According to the data of “my steel network”, Russia is the largest primary aluminum producer except China. As the only primary aluminum producer in Russia, Rusal’s equity output of primary aluminum in 2021 was about 3.9 million tons, accounting for about 5.6% of the total global output in that year. Its aluminum processing products mainly flow to Europe, Russia, CIS countries, Asia and the Americas.
Russia is also a major global nickel supplier Shenwan Hongyuan Group Co.Ltd(000166) research report points out that Russia’s nickel export trade accounts for 7% of the total global exports and 42% of the total global exports to Europe.
Li Qi, general manager of Shanghai Ganglian E-Commerce Holdings Co.Ltd(300226) copper lead zinc division, said that the current situation has triggered concerns about the production, supply and export of global non-ferrous mineral resources. Due to the relatively low proportion of copper, lead and zinc supply in Russia and the relatively calm market performance, it is more affected by the changes of China’s demand, inventory and waste metal fiscal and tax policies.
Under the geopolitical tension, the hedging function of precious metals has been amplified, and the gold price has risen sharply recently. Since February, the London gold price has risen from US $1780 / oz to the highest US $1974 / oz, an increase of more than 10%, showing a positive relationship with the real interest rate of US bonds. At present, the price of lunjin has dropped to around $1900 / ounce.
Shenwan Hongyuan Group Co.Ltd(000166) securities research report pointed out that the price of natural gas in Europe rose sharply in 2021, driving the jump of electricity price. Europe is a major producer of high energy consuming metals such as electrolytic aluminum, zinc and industrial silicon, and its production capacity accounts for about 11%, 15% and 6% of the total global production capacity. If the European energy problem continues and the power cost of relevant smelting enterprises is high, it is expected to have an impact on the supply and price of relevant products. (source: 21st Century Business Herald)
