Despite what looks like bullish…
Oil has largely given up…
Despite the recent drop in natural gas prices in Europe thanks to unseasonably warm weather, the commodity is set to end 2022 with a significant overall gain.
What’s more, per a Reuters report, gas investors could look forward to another strong year in 2023 as most signs point to a sustained rally in natural gas in an environment of tight supply and solid demand.
"From a fundamental perspective, the setup for most commodities next year is more bullish than it has been at any point since we first highlighted the supercycle in October 2020,” Reuters quoted a Goldman Sachs commodities outlook today.
The rally in gas prices began last year as demand in Europe began to rise on the underperformance on renewables while supply had to catch up. The situation escalated massively this year after Russia’s invasion of Ukraine and the EU’s response, which took the form of a series of sanction packages.
In its turn, Russia started cutting gas supplies to Europe and later in the year, after the sabotage of Nord Stream 1 by a party that remains unnamed despite the conclusion of the investigation, the only conduit for Russian gas for Europe was the pipeline that goes through Ukraine.
Earlier this month, Russia’s Deputy Prime Minister Alexander Novak said Moscow was ready to resume gas flows via the Yamal-Europe pipeline as well.
"The European market remains relevant, as the gas shortage persists, and we have every opportunity to resume supplies," Novak said, as quoted by TASS. "For example, the Yamal-Europe Pipeline, which was stopped for political reasons, remains unused,” he added.
Besides gas, the other winner this year in commodities was coal. Contrary to expectations, the dirtiest fossil fuel made a veritable comeback in 2022 because of the European gas crisis and the limited supply of gas and consumption increased significantly, as did prices.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.