Energy Commodities Price Outlook Economic Forecast

Energy Commodities Price Outlook

What to expect in Vienna

Energy prices continued to rise in the third quarter and at the beginning of Q4, supported mainly by an increase in prices for coal, crude oil and U.S. natural gas. Coal prices surged during Q3, reflecting strong import demand and tightening supply in China, following restrictions on production aimed to reduce pollution. Crude oil prices rose mildly in the third quarter as a return to supply in Canada—following the wildfires in the spring—and higher production in Iran and Saudi Arabia offset the impact on prices from OPEC’s announcement of a deal to limit oil output. Furthermore, U.S. natural gas prices increased in Q3, buttressed by higher demand for air conditioning, declining production and increased exports to Mexico and South America.

OPEC’s announcement in Algeria to cap production at between 32.5 and 33.0 million barrels a day was clear: freezing production levels is necessary for stock draws to accelerate and prices to trend higher. The agreement should put an end to two years of unrestrained production, but important details, including target outputs for individual countries, are still to be decided and agreed upon at the upcoming 30 November meeting. Iran, Libya and Nigeria are likely to be exempted from the production cap due to earlier output losses, leaving Saudi Arabia and the economies of the Gulf Cooperation Council (GCC) bearing the burden. The decision by OPEC to abandon production quotas in favor of a market-share strategy in November 2014 and the recent announcement to limit production have led to a debate about OPEC’s effectiveness in managing the markets. Doubts about the cartel’s ability to effectively cut production when it next meets in November have intensified, as members outside OPEC have shown little sign of agreeing over where the cuts should fall.

There are legitimate reasons to remain skeptical about the agreement, but analysts believe that OPEC’s action could accelerate the ongoing market rebalancing process. Analysts surveyed by FocusEconomics expect energy commodities prices to increase 22.2% year-on-year in Q4 2016, which has been revised up from the 19.6% increase they forecast last month.

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Energy Commodities Historical Price Data

2011  2012  2013  2014  2015  
Brent Crude Oil111.4  111.67  108.69  98.9  52.42  
WTI Crude Oil94.9  94.08  97.97  93.02  48.68  
Gasoline2.9  3.04  2.92  2.66  1.94  
Natural Gas3.99  2.76  3.73  4.34  2.61  
Thermal Coal121.86  98.17  85.83  72.54  60.38  
Coking Coal 296.67  252.1  209.72  158.35  121.38  
Uranium57.02  48.86  38.66  33.44  36.81  
Gasoil930.8  953.38  918.88  837.79  488.16  
Ethanol2.73  2.37  2.51  2.39  1.6  

Note:
Brent Crude Oil prices in USD per barrel (bbl).
WTI Crude Oil prices in USD per barrel (bbl).
Gasoline prices in USD per gallon (gal).
Natural Gas prices in USD per Million of British Thermal Units (MMBtu).
Thermal Coal prices in USD per metric ton (mt).
Coking Coal prices in USD per metric ton (mt).
Uranium prices in USD per pound (lb).
Gasoil prices in USD per metric ton (mt).
Ethanol prices in USD per metric ton (mt).
All prices are average of period (aop).

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Price forecasts and historical data for Energy, Metals and Agricultural Commodities

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