Oil gives pockets a break and is still cheaper than before the war in Ukraine

The international price of oil offers these days one of the few positive news for citizens, since this month it remains below the psychological level of one hundred dollars a barrel. Currently, the Brent rate is at $95 and the Texas at $89, according to the London and New York markets. In both cases, the prices are lower than those they had before the war in Ukraine began on February 24 of this year. This drop in crude oil, 14% so far in August, also drags down fuel prices, which is a great relief for consumers, since fuels mean for companies and the self-employed in Spain a significant percentage of their costs. The drop in oil and fuel means that, for the moment, the prices of, for example, gasoline, diesel and aviation kerosene do not rise any more in a few weeks in which trips are multiplying due to the summer holidays . Fuels are down There are even already drops in fuel prices. In this month, gasoline has dropped an average of 5% and diesel another 4%, according to data from the EU oil bulletin. The average price of gasoline is 1,861 euros per liter and that of diesel is 1,854 euros. To these data must be deducted the 20 cents discount per liter approved by the Government last April. Despite this drop in August, it should be remembered that current average prices are 26% more expensive than at the beginning of the year, in the case of gasoline, and 38% in diesel. And that these fuels reached record highs in the last weeks of June, when the first registered an average price of 2,142 euros per liter and the second of 2,100 euros. This represented increases of 45% and 56%, respectively, in the first half of the year. This situation provoked mobilizations of the carriers and protests from all sectors due to the increase in costs and that in most cases they cannot pass it on to their products. The two main reasons why oil remains down are the fear of an economic recession in the most industrialized countries and the verification of the slowdown in China, whose economy only grew by 0.4% in the second quarter. Closing of factories in China due to the heat In addition to the paralysis of numerous economic sectors in that country due to the Covid outbreaks and the drastic measures implemented by the authorities, there is now the strong heat wave that it is suffering and that has forced the activity to stop in important factories to ration electricity consumption and that citizens can use the air conditioning to cope with temperatures above 42º. Thus, the province of Sichuan, where 50% of the country's lithium is produced, is rationing the supply of electricity to its factories. Some 80% of the power generated in the region relies on hydroelectric dams, but rivers in the area have dried up over the summer, according to the Ministry of Aquatic Resources. The local government has ordered industries in 19 of the 21 cities to suspend production until Saturday. Several companies, including aluminum producer Henan Zhongfu Industrial and fertilizer producer Sichuan Meifeng, announced on the stock exchange that they were suspending production. A plant in the province operated by Taiwanese giant and Apple supplier Foxconn has also suspended production, the Taiwanese news agency CNA reported. Eastern provinces such as Zhejiang, Jiangsu and Anhui, which depend on power from the west of the country, have also issued power restrictions for industrial customers, according to local media. Gas and electricity continue to rise While oil is giving consumers a break in general, gas and electricity continue to be at very high levels. The TTF gas futures reached 220.11 euros per MWh on Monday, the highest value since the historical records of March, at the beginning of the war in Ukraine, according to AleaSoft Energy Forecasting. During the second week of August, the price trend was bullish after the decline recorded the previous week. The high demand for gas in Europe to fill the storage to the maximum in the face of a critical situation in winter is leading to this sharp rise in prices, along with the fear of further reductions in the flow of gas from Russia. To this situation must be added the maintenance tasks on the Norwegian continental shelf. MORE INFORMATION The rise in gas prices by 113% in one month, anticipation of a complicated autumn The lack of refineries, behind the high prices of fuels For their part, the prices of electricity futures for the last quarter of the year registered increases in most of the markets analyzed at AleaSoft. The price reached by the French EEX market is particularly noteworthy, which in the session on Monday, August 15, had a settlement price of 975.55 euros per MWh. In fact, France and Germany today register an average price of 552 euros per MWh, and Italy 538 euros. In Spain it will be less than half: 236.1 euros. This figure is the sum of the resulting price in the wholesale market auction (139.30 euros per MWh) and the compensation to gas companies (96.8 euros per MWh) for the cap on the cost of gas. From the Ministry for the Ecological Transition they affirm that without this cap, the average price today would be 338.72 euros.

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