Concerns about disruptions in regional supplies continue to weigh on commodity markets, pushing crude oil into the “$100” era. Natural gas Aluminum and nickel prices continue to rise.

Volatility in the commodity markets is showing a ripple effect. Influenced by the Russia-Ukraine conflict, crude oil prices have surged above $100 per barrel, and natural gas prices in Europe have also risen accordingly.

As a major supplier to the global aluminum and nickel industries, Russia also wields significant influence over the global market. Gold The trend in the industrial sector: Recently, London aluminum prices hit another all-time high, while London nickel prices have remained stubbornly at elevated levels. Analysts point out that persistently high oil and gas prices will drive up electricity prices in Europe, thereby pushing up costs for downstream industries as well.

The situation of crude oil supply shortages will continue.

Starting in December last year, international oil prices have been steadily rising from their temporary low point, with an increase of over $30 per barrel in just two months. Among them, Brent crude oil futures prices have risen from $70 per barrel to around $100 per barrel today; WTI crude oil futures have climbed from $65 per barrel to over $95 per barrel now.

This month, the Russia-Ukraine conflict has continued to escalate, fueling growing market panic and at one point prompting a massive influx of capital seeking safe-haven assets. However, subsequent positive developments in U.S.-Iran nuclear negotiations have brought some relief to the geopolitical situation, and as oil prices surged to new highs, investors began taking profits and accelerating their withdrawal from the market.

Xi Jiarui, an oil analyst at Jin Lian Chuang, told a reporter from the 21st Century Business Herald that in February, the total open interest in WTI crude oil futures initially rose and then fell, ultimately showing a noticeable decline. From the perspective of risk appetite among on-exchange funds, both long and short positions saw sustained reductions throughout February.

The International Big Three Petroleum In this month’s report, institutions have all raised their forecasts for global oil demand growth this year. The prevailing view is that the shortage in crude oil supply will intensify. Xi Jiarui noted that, in response to persistently high oil prices, the United States and its allies plan to continue releasing strategic petroleum reserves. However, EU member states remain divided on whether to participate in any potential release of crude oil reserves, as local laws impose strict requirements on such actions.

On the other hand, OPEC and its oil-producing allies will continue to maintain the current production increase of 400,000 barrels per day in March, which, for the current international crude oil market, will fail to provide any significant relief. Xi Jiarui noted that, in the short term, the crude oil market will still face a supply gap, and funds that had previously pulled out sharply will re-enter the market, helping to keep oil prices at high levels.

Following the surge in oil prices, the natural gas market is also experiencing unusual activity. People's Visual

European natural gas prices have surged strongly.

Following the surge in oil prices, the natural gas market is also experiencing unusual activity.

On February 24, the benchmark European natural gas price, TTF, surged by more than 50%, reaching €132.71 per megawatt-hour—a new high since 2022. In Northeast Asia, the spot price of LNG rose by over 30%, climbing to $36.90 per million British thermal units, also hitting its highest level since 2022.

In addition to geopolitical tensions, European markets are concerned that Russia’s natural gas supplies to Europe could be disrupted due to insufficient reserve stocks, driving prices to continue rising.

Russia is one of the world’s three largest crude oil producers and a major natural gas producer. Europe is highly dependent on Russia’s natural gas resources. In 2021, due to factors such as rising demand driven by economic recovery, global LNG plant maintenance, and declining production capacity, European natural gas inventories reached their lowest levels in years. As a result, local natural gas prices in Europe continued to soar, placing significant pressure on the region’s economic and social development due to soaring energy costs.

Currently, Russia’s natural gas supplies to Europe remain steady, but the tight situation in the natural gas market is likely to persist in the near term.

Jin Lian Chuang’s analysis points out that the recent escalation of geopolitical tensions will prompt shipments of LNG from regions such as the United States and Qatar to shift toward the European market, creating intense competition with the Northeast Asia region. It is expected that in the first half of 2022, LNG prices in both Northeast Asia and Europe will continue to remain at high levels.

Li Yong, an analyst at Dongwu Securities, pointed out that in the short term, the EU will find it difficult to identify alternative energy sources at affordable prices. The high energy prices will significantly increase smelting plants' costs, thereby supporting stronger prices for downstream smelting products.

In the Chinese market, with temperatures recently rising, domestic gas prices have entered a downward trend, which will to some extent affect domestic companies' enthusiasm for importing LNG.

LME aluminum prices hit a record high.

On February 28, LME aluminum rose once again to a new all-time high, briefly breaking through $3,500 per ton and continuing to hit record highs. Earlier, on February 24, LME nickel prices surged to as high as $25,400 per ton, reaching their highest level since 2022 and posting a year-to-date increase of over 20%. Currently, LME nickel prices have retreated to around $24,600 per ton.

According to data from “MySteel,” Russia is the largest primary aluminum producer outside of China. As Russia’s sole primary aluminum producer, Rusal’s equity-based primary aluminum output in 2021 was approximately 3.9 million tons, accounting for about 5.6% of the global total production for that year. Its aluminum processing products are primarily exported to Europe, Russia, the Commonwealth of Independent States, Asia, and the Americas.

Russia is also a major global supplier of nickel. According to a research report by Shenwan Hongyuan (000166), Russia’s nickel exports account for 7% of the global total and 42% of global exports to Europe.

Li Qi, General Manager of the Copper, Lead, and Zinc Division at Shanghai Steel Union, noted that the current situation has sparked market concerns about the global production, supply, and exports of nonferrous mineral resources. Since Russia’s share in the supply of copper, lead, and zinc is relatively low, the market has remained relatively calm, being more influenced by domestic demand, inventory levels, and changes in tax and fiscal policies related to scrap metals.

In the context of heightened geopolitical tensions, the safe-haven function of precious metals has been amplified, leading to a sharp rise in gold prices recently. Since February, London gold prices have climbed from $1,780 per ounce to a peak of $1,974 per ounce—a gain exceeding 10%—and have shown a positive correlation with U.S. Treasury real interest rates. Currently, London gold prices have retreated to around $1,900 per ounce.

A research report by Shenwan Hongyuan Securities points out that in 2021, soaring natural gas prices in Europe triggered a sharp increase in electricity prices. Europe is a major production hub for energy-intensive metals such as electrolytic aluminum, zinc, and industrial silicon, accounting for approximately 11%, 15%, and 6% of global total capacity, respectively. If Europe’s energy challenges persist, the high electricity costs faced by related smelting companies are expected to impact the supply and pricing of these products.