Brent Oil Tops $106, Gas in Amsterdam Nears €82.59

The price of a barrel of Brent crude oil topped $106.04 this morning, September 11. Futures for European natural gas on Amsterdam’s TTF market ranged between €80 and €82.59 per megawatt hour, according to Biznis Kurir. Serbia’s state news agency Tanjug reported a narrower range for the same morning, putting gas at close to €80.51 per megawatt hour, while data from Investing.com pointed to a value of €80 per megawatt hour. The price of U.S. WTI (West Texas Intermediate) crude stood at around $101.09 a barrel for futures contracts the same morning. Tanjug published its report at 8:47 a.m., Biznis Kurir at 9:32 a.m.

European Markets Slip in Morning Trade

The rise in energy prices is coinciding with losses on European stock markets. Germany’s DAX is down 0.30 percent this morning, Russia’s MOEX is off 0.11 percent, and London’s FTSE has slipped 0.57 percent. The declines extend a slide that began the day before, driven by higher energy costs and inflation concerns.

Weeks of Steady Gains

We reported earlier when Brent first broke through the $100 mark and European gas was trading around €77 per megawatt hour. The rally has continued without a pause since then. The day before this morning’s jump, on September 10, Brent rose another 4.1 percent and crossed $105 a barrel for the first time since May. U.S. crude oil rose 4.3 percent the same day, to $100.17, Biznis.rs reported at the time, citing Serbia’s Beta news agency.

Why Prices Are Climbing

The war with Iran is cited as the reason for the rally, as it is disrupting the global flow of crude oil. The supply disruption is deepening inflation worries and adding pressure to the bond market, which has contributed to the drop in stocks on Wall Street. U.S. President Donald Trump said on Wednesday that oil prices are unlikely to fall before November’s congressional midterm elections.

Gasoline and Diesel at Record Highs

The wartime spike in oil prices is already feeding through to fuel and other product prices in the United States. The average price of gasoline on September 10 was $4.22 a gallon, about 32 percent higher than a year earlier. Diesel, the fuel that weighs most heavily on shipping and production costs, hit a record $5.94 a gallon on Friday and has kept climbing since, up nine cents from that Friday level. Higher fuel costs are squeezing household budgets and pushing up the price of goods through higher transport costs.

The reaction was visible on Wall Street on September 10 as well: the S&P 500 fell 0.6 percent, on course for a fourth straight loss, the Dow Jones dropped about 300 points, also 0.6 percent, and the Nasdaq fell 0.9 percent. In Europe the same day, Germany’s DAX lost 0.6 percent and France’s CAC 40 fell 1.3 percent, while Asian markets closed lower, with the exception of Japan.

The rise in energy prices has spilled over into other markets too. Gold is trading this morning at $4,393.50 a troy ounce, down 0.30 percent on the day. The euro is worth $1.1639 on foreign exchange markets. Wheat fell 0.74 percent, to 735.75 cents a bushel.

What’s Next for Oil Prices?

The short-term direction will depend on how the war between Israel and the United States on one side and Iran on the other unfolds, since that conflict is what triggered the current rally, as well as on next week’s report from the U.S. Energy Information Administration on crude oil inventories. That report typically moves the price of a barrel in either direction, depending on whether inventories rise or fall, and the market is watching it as the next key marker after this morning’s jump to $106.