[AKEI NEWSLETTER 17호]"Energy prices soar..." "The demand for substitu…
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"Energy prices soar..." "The demand for substitution of crude oil is also increasing."
As energy prices soared, demand for substitution of crude oil seems to have expanded. Amid the continued imbalance in crude oil supply and demand, international oil prices are expected to continue to strengthen, adding to concerns.
According to the "International Raw Material Market Trend" released by the Bank of Korea on the 28th, international oil prices (based on Dubai oil) have recently risen to around $80 a barrel.
Alternative demand rose sharply as gas to oil switching expanded due to the recent surge in energy prices such as natural gas. OPEC+ has refused to continue to demand additional production from major countries such as the United States, maintaining the scheduled increase in production (average 400,000 barrels per day).
Prices of natural gas (based on the Dutch TTF Exchange) and coal (based on the Australian Newcastle Exchange) fell 8.8% and 26.4%, respectively, compared to the previous month. Natural gas prices are affected by Russia's expansion of natural gas supply to Europe.
The non-ferrous metal index (average from November 1st to 24th) fell 2.2 percent from the previous month. Aluminum prices are expected to be affected by easing power shortages due to China's permission to increase coal production and expected withdrawal of export tariffs by Russia.
On the other hand, the Standard & Poor's (S&P) grain index (average from November 1st to 24th) rose 6.2% compared to the previous month. Somaek prices rose 8.3% due to concerns over a drop in exports to Russia and worsening weather in major countries. Corn prices also rose 6.2 percent due to expectations of a decrease in the U.S. sowing area due to rising fertilizer prices.