Euro 4,60 PLN and gasoline 6 PLN?

Global economic growth is driving oil, gas and coal prices. And the situation on the market - concerns about the collapse of the Chinese development company Evergrande and waiting for FED message - weakens the zloty. As a result, fuel prices at gas stations are inexorably approaching PLN 6 per liter of 95 petrol.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Raw materials continue to become more expensive

Economies recovering from pandemic constraints results in increased demand for energy resources. The increase in industrial production increases the demand for oil, natural gas or carbon. In addition, the mobility of societies is constantly reviving, which increases the demand for crude oil for the production of gasoline and fuel for aircraft. Since the beginning of the year, the price of a barrel of Brent crude oil has increased by 45,96%, while the price of natural gas has jumped 108%. and coal by almost 120 percent. These increases translate into the prices of gasoline, heating oil and coal for individual consumers and industry. In regulated markets, such as the gas market, price increases are delayed, but cannot be avoided. The increase in these prices will also affect the prices of electricity, the prices of which usually increase from the new year. The draft tariffs for 2022 currently submitted to the Energy Regulatory Office assume an increase in the price of electricity by up to 40%, which would translate into an overall increase in bills by 20-25%.

Brent crude oil gained 3,48% last week, but on Monday its prices fell by over 1,5%. to $ 74,13 a barrel. Prices have recently been driven by data showing the US's lowest oil inventories in more than 2 years, which shows that oil demand is growing along with the disappearance of subsequent pandemic constraints. Currently, the market is waiting for the FED meeting and possible signals to limit the asset purchase action. Should this happen, it may result in a weakening of the dynamics of economic growth, and thus lower demand for raw materials in the future. Investors' concerns also relate to the slowdown in China, which is the largest recipient of raw materials and energy.

Likewise, natural gas prices rose in response to unusually strong summer supply and demand disruptions - the last such major supply shock was the output constraint associated with Hurricane Ida. Gas prices may increase during the winter peak and in the case of gas extraction in the US by 20%. below pre-crisis levels. But prices will fall when production increases in response to high prices. At that time, the export of American LNG gas to Europe and Asia will also increase, where the shortages are greater than in the USA. Coal prices have also increased spectacularly, which improves the financial situation of Polish mines. Poland is responsible for 96 percent. hard coal supply in the European Union (hard coal is also mined in the Czech Republic, and lignite in, inter alia, Germany and Bulgaria). However, the rises will primarily affect electricity prices.

Uncertainty comes from China

Concerns about the consequences of bankruptcy, the second largest Chinese developer, Evergrande and waiting for the statement after the FED meeting, are behind the zloty depreciation. On Monday, the prices for one euro were over PLN 4,60, which is the highest level in six months. Similarly, we have to pay PLN 3,93 for the dollar. Further perturbations with Evergrande may weaken our currency even more temporarily.

These two effects - long-term related to the growing demand for energy commodities and short-term - related to concerns about the current situation in China and the maintenance of growth, which weakens the zloty, met. The effect of this is a very likely increase in fuel prices in the coming days. This may mean that at many stations the price of EU95 petrol will increase from PLN 5,90 to over PLN 6. When paying so much for fuel, it is good to consider whether it would be worth earning on such increases. An opportunity for this may be an appropriately diversified investment portfolio based on various assets, including raw materials and fuels.