Oil Prices Plunge, Threatening US Strategy
Perhaps no one could have imagined what has happened. Entering 2023, just within the first two trading days, international oil prices have already experienced a significant drop.
Taking the WTI crude oil futures price as an example, on the first trading day, it fell by 3.8%, from $81.5 to $77.2. Then, on the second trading day, it plummeted again, from a high of $77.4 to a low of $72.73.
Now, the oil price has returned to the level of December 12th, and the two-day decline has completely erased the fluctuating increases of the past half month.
01, Disappointment in the United States
A significant drop in oil prices may be good for many countries, but for the United States, it may not be, and it could very well lead to the complete failure of the United States' previous strategic layout.
We often hear from news reports that Biden has made many efforts to suppress oil prices, but in reality, maintaining relatively high oil prices is beneficial for the United States.
Firstly, the cost of developing shale oil in the United States is about $60 per barrel, so low oil prices are not conducive to shale oil production.
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Secondly, higher oil prices lead to higher inflation, providing a perfect excuse for the Federal Reserve to continuously raise interest rates in order to harvest globally.
In terms of direct benefits, the increase in energy prices is uneven; relatively speaking, the United States can be self-sufficient, but Europe can only rely on imports. Therefore, the higher the energy prices rise, the more American traders earn.
However, the natural gas that had previously made them a substantial profit has also seen a noticeable decline in price during this period.02, Natural Gas Plunges
Since the beginning of last year, due to the continuous outbreak of energy crises, gas prices once "soared."
The price of natural gas in Europe has ranged from euros to 35 euros over the past decade, but after the conflict, it once exceeded 300 euros.
In that wave of rapid gas price increases, American traders made a fortune, simply by loading liquefied natural gas produced in the United States onto tankers and shipping it to Europe to reap several times the profit.
But now, it appears that natural gas prices have fallen, currently hovering around 85 euros, with the profit margin significantly narrowing.
One of the main factors contributing to the current decline in natural gas prices is the decrease in industrial gas demand in Europe. The economic condition of Germany's chemical industry has noticeably deteriorated over the past year. In the chemical industry, natural gas accounts for 44% of energy consumption.
Additionally, more than 30% of chemical products are derived from natural gas.
Another reason is Europe's warm winter, which has also led to a reduction in the demand for natural gas.
It is predicted that over the next two weeks, temperatures in central and southern Europe will be higher than usual, and due to the warming climate, the demand for heating will be lower than anticipated.Regardless of whether it's a decline in crude oil prices or a drop in natural gas prices, both are good news for Europe, signifying that Europe's inflation is likely to start peaking and then receding in the near term.
Good news for Europe may not be good news for the United States.
Previously, many European companies had to consider relocating to the United States due to the energy crisis, which could have allowed the U.S. to gain a substantial amount of Europe's high-quality cutting-edge manufacturing industries.
However, it now appears that the decline in energy prices is causing European companies to reassess whether the costs of relocation are worthwhile.
In summary, the United States' painstaking efforts may yield minimal results.
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