Shocks in supply drives energy prices
An attack on Saudi-Arabia’s oil production led to a sudden jump in oil prices, while surpluses of natural gas led to a decrease in the Norwegian producer price index (PPI). The PPI excluding energy products increased marginally, mainly due to higher basic metal prices. In total, PPI remain unchanged in September.
Increase in prices for crude oil, while price for natural gas decrease
A negative supply shock led to higher crude oil prices in September due to the involuntary shutdown of production in Saudi Arabia. The oil price peaked at $ 67.68. As the oil production resumed prices fell back to similar levels as before the attack. Nevertheless, oil prices rose by around 4.5 per cent in September. Unlike crude oil, prices on refined petroleum products went down 3.7 percent from August. The decline is due to lower prices of propane and gasoline.
The price of natural gas shifted downwards again after an increase in August. The price increase was short-lived this time and price movements are now more in line with the observed long-term trend. Higher supply and reserves of natural gas, and lower coal prices, pushed the price of natural gas down. Several analysts expect natural gas prices to remain at low levels for the time being.
Prices on power supply decreased by 2.7 per cent in September. High coverage of water in the reservoirs and increased wind power production in the Nordic region explains the drop in prices.
Price of nickel continues to rise
In early September, Indonesia's authorities announced that they will stop exporting nickel ore. They plan to build their own smelting plants to develop new industry. The export ban will apply from January 2020. By producing nickel, Indonesia can start production of car batteries and create a new domestic electrical vehicle industry. Indonesia is the second largest exporter of nickel ore and therefore has a major impact on world market prices. The uncertainty surrounding the export ban has led to a sharp price increase of 86 percent since 2017.
Nickel is an important export product for Norway and the price increase impacts the PPI. The price of basic metals increased by 3.6 per cent in September.
Figure 1. Price indices. 2015=100
|Total PPI||Basic metals|