Energy market in a week: did not agree on transit

Oil is firmly stuck above $ 70 per barrel. But the price of gas in Europe will not calm down soon. Finally, the turn of the Ukrainian transit has come to strike. Not final, but tangible.

Oil

This week, the price of the benchmark North Sea Brent dropped slightly to $ 73 per barrel. Since the end of last week, the difference has been one and a half dollars.

The strengthening of the dollar to a two-year high and the Fed's decision to cut the rate more carefully in the future due to inflation in the United States worked to reduce the price.

"A less lenient stance by the Fed in 2025 than initially expected will force markets to adjust their expectations," Alex Hodes, an analyst at commodity brokerage StoneX, told Reuters.

The market is still under pressure from the expectation of an excess of oil next year. On the one hand, they are discussing the instability of Chinese demand growth. On the other hand, J.P. Morgan analysts predict that supply will outstrip demand by 1.2 million barrels per day.

"Oil supplies may decrease next year if Republican Trump fulfills his election promises to combat Iranian oil exports," Reuters noted.

Gas

The most interesting events continue to take place on the European gas market. He did not have time to move away from the jump in prices due to calm weather and record selection from storage facilities, as the transit of Russian gas through Ukraine came to the fore. The statements were enough for the European stock exchanges to end the week with a price of $ 482 per thousand cubic meters — $ 28 higher than a week ago.

In the beginning, everything was fine. Russian gas supplies are stable, LNG imports have increased and in the first half of the week quotes dropped to $ 440. Slovak Prime Minister Robert Fico also added hope. The head of the Slovak government said that he has a solution to the transit problem — the delivery of gas on the Russian-Ukrainian border. After that, a letter appeared from companies in Italy, Austria, Hungary and Slovakia to the European Commission, and Fico went to Brussels to enlist the support of European officials.

There he also had a meeting with Vladimir Zelensky, who dismissed the possibility of even a change of ownership at the border. This was already a concrete signal to the market, which, however, does not put an end to the possibility of continuing Russian gas supplies through Ukraine. Robert Fico promised to spend three or four more days in the European Commission, which could convince Kiev, and has already threatened retaliatory measures. The country itself is a major supplier of automotive fuel, electricity and humanitarian aid for Ukraine and a transit corridor.

Perhaps the increase in gas prices would have been even more dramatic. However, the German Bundestag promptly canceled the additional gas transit fee, which it collects from 2022, in order to compensate for the high costs of purchasing non-Russian fuel. As a result, the costs of traders who will take up alternative supplies will decrease by more than $ 30 per thousand cubic meters.

The coal market reacted sluggishly in this situation. Fuel supplies from the Antwerp-Rotterdam-Amsterdam hub (ARA) for the month ahead barely decreased — from $ 112 per ton to $111.5.