The rally continues: the index for energy resources determined by the German-based Hamburg Institute for International Economics (HWWI; www.hwwi.de) continued to rise in December 2021, with the US dollar index increasing 5.7% to 279.7 points. The institute said prices developed inconsistently, with a further increase for natural gas and coal and a decline in the cost of crude oil.

According to the HWWI researchers, falling crude prices reflected market uncertainty regarding increasing Covid-19 infections worldwide, which suggest demand will fall. In addition, supply rose in December, strengthened by three factors: First, despite low prices, OPEC is sticking to its monthly schedule for ending production cuts, and the cartel increased daily output a further 400,000 bbl as planned; second, the US government brought crude to market from state reserves; and finally, US refiners expanded production as high crude prices in the fall made shale oil production appear lucrative one again.

Coal prices, on the other hand, rose month-on-month in December largely due to an increase in Australian prices.

Quotations for natural gas also increased in December versus the previous month (see Plasteurope.com of 13.12.2021), and considerably so, with European natural gas up almost 26%. The rise was rooted in the shortage of European natural gas supplies from Russia’s Gazprom. In addition, the winter season has further increased European natural gas consumption, which has caused prices to skyrocket as natural gas storage facilities are increasingly depleted.

Unlike in Europe, US consumers enjoyed falling natural gas prices in December as supply exceeded domestic demand. Thanks to the high price level in Europe, increasing amounts of natural gas are being transported from the New World to the Old.