BAKU, Azerbaijan, Oct.15
By Leman Zeynalova - Trend:
There is a high risk that prolonged or extreme weather events could see stockpiles remain lower than average for longer, setting the stage of continued high energy prices (above our current forecasts) throughout 2022 at least, adding to the risk of energy consumption curtailment at the expense of economic output, Trend reports with reference to Fitch Solutions.
“Energy and power prices have been soaring in recent months, in response to record shortages of coal and natural gas in multiple markets creating a positive feedback loop for energy commodities as consumers switch fuels, pushing prices higher across the board. Underperforming renewables are also placing strain on power grids with unseasonal weather remaining a key risk. We except energy price volatility to remain high throughout the Northern Hemisphere Winter with prices expected to climb even further before eventually topping out as demand falls in response to elevated prices and warmer weather, paring back gains but leaving prices substantially higher than long-term averages,” the company said in its latest report.
The company notes that high energy prices globally are leading to widening impacts on industries in the form of lower output, rising production costs and exacerbating existing supply chain issues.
“The impacts to industry are spreading rapidly. Rising energy cost are supporting gains in crude oil prices as markets in Europe and Asia seek relief by switching fuels where possible add near-term demand for oil products, such as heating oil. We expect oil prices to continue to be elevated throughout Q4 2021 as natural gas prices are set to remain high as concerns for severe weather remain a major risk for volatility. This in turn will put downward pressure on refiner margins, although the switchover to Winter fuel blends will see refinery throughput curbed supporting recent price gains for transport fuels.”
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