Rising prices of Russian gas to China and oil is falling

Rising prices of Russian gas to China and oil is falling

Rising prices of Russian gas to China and oil is falling

Rising prices of Russian gas to China and oil is falling

The trading week began with declining oil prices, while an upcoming meeting of the Federal Reserve had a key role. 

Evest follows developments in the trading market in the following report:

Russia is raising the price of gas exported to China.

The price of Russian gas supplies to China in the third quarter of 2021 rose to $171 per thousand cubic meters after $147 in the second and $121 in the first quarter,
according to data from the General Customs Administration of the People’s Republic of China.

Russian gas futures are supplied to China via the Siberian gas pipeline, which is linked to the price of fuel oil and gas oil at 9 acres,
and the price of gas changes every three months. 

Since supplies began at the end of 2019,  they have only been declining,
following the downward trend in oil prices.

The minimum was passed in the first quarter of this year.

Among gas suppliers through pipelines, Russia continues to supply China with gas at the lowest price.

In July 2021, Turkmenistan received $238 per thousand cubic meters of gas, Kazakhstan – $195, Uzbekistan – $193, Myanmar – $362.

The Asian Platts JKM Spot Index (Japan and Korea mark – reflects the spot market value of goods shipped to Japan, South Korea, China and Taiwan) rose in July to $503 per thousand cubic meters; Russian liquefied natural gas was sold to China in July at an average of $441 per thousand cubic meters. In Europe,
the average spot price was also $441 per thousand cubic meters during July.

Negotiations for the supply of Russian gas

Negotiations for the supply of Russian gas to China have been going on for a long time (a framework agreement on key delivery conditions was signed again in October 2009),
and the partners were not in a hurry: They were all expected to get the most favorable price. 

The annexation of Crimea led to an acceleration of negotiations,
and thus a radical change in Russia’s relationship with Europe, Gazprom’s main gas buyer.

Russian policy needed to break through in the eastern direction, and it was exactly two months from the moment signing the decree on the annexation of Crimea to the signing of the gas contract via the “Eastern Route.”

In July, supplies rose to 888 million cubic meters from 862 million cubic meters in June,
while an average of 29 million cubic meters is provided daily.

OOO Gazprom dobycha Noyabrsk, which operates Chayanda, reported that in July four gas wells were operated in the field in the area of Integrated Gas Processing Unit No. 3 (UKPG-3), and low-temperature gas separation lines were operated in UKPG.

Oil prices declined

Oil prices declined on Monday under the strength of the US dollar before a two-day meeting of the Federal Reserve system began.

Experts interviewed by Bloomberg say the Federal Reserve Board meeting on September 21-22 could lay the groundwork for reducing asset buybacks,
which currently stand at $120 billion a month.

“The outlook for Fed stimulus cuts is putting pressure on the oil market,” said Vandana Hari,
founder of Vanda Insights, a Singapore-based consultancy.

The factors that had supported oil prices in the past week, in particular,
the significant reduction in raw material reserves owing to the slow recovery in production in the Gulf of Mexico, had not yielded any results.

The cost of Brent crude futures for November on the London Stock Exchange ICE Futures by 8:15 Moscow time on Monday is $74.8 per barrel,
$0.54 (0.72٪) lower than the closing price of the previous session. 

As a result of Monday’s trading, these futures fell $0.33 (0.4%) – to $75.34 per barrel.

The price of West Texas Intermediate crude futures for October in electronic trading on the New York Mercantile Exchange (NYMEX) fell to $71.35 per barrel,
$0.62 (0.86%) lower than the final value of the previous session.

On Friday, these futures fell by $0.64 (0.9%) – to $71.97 per barrel.

At the end of last week, the price of Brent crude has risen by 3.3% and West Texas Intermediate by 3.2%.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling,
and Swedish krona), added 0.16% on Monday.

A stronger US currency reduces the attractiveness of commodities, including oil, to investors.

Positive trading in Asia today

Stock indices in Asia and the Pacific show positive dynamics on Monday: Japan’s Nikkei 225 rose by 0.58% and China’s CSI300 by 1%.

While US S&P 500 futures lost 0.75%.

New weekly losses on Wall Street

The U.S. stock market closed in the red zone on Friday against the backdrop of weaker-than-expected US consumer confidence data.

Over the past week, the Dow Jones index has fallen by 0.1%, the S&P 500 – 0.6%,
and the Nasdaq composite – 0.5%.

Thus, the consumer confidence index, calculated by Michigan University,
at the beginning of September was 71 points compared to 70.3 points the previous month.

Analysts expected the index to rise to 72 points on average.

In general, US stock market trading in recent days has been quite volatile owing to mixed economic signals,
as well as the uncertainty associated with the spread of the new Delta strain. 

According to analysts, US stock indices dynamics are unstable,
as investors do not know how to evaluate the latest statistics and their potential impact on the Fed’s further actions.

Rising prices of Russian gas to China and oil is falling

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