Energy prices continue to drop

Published:

Significant price reductions on most energy goods caused a further decrease in the Producer Price Index in April. Natural gas had a positive price development, but only due to a weak Norwegian krone.

The price of crude oil continued to decrease, and the price in April 2020 was about 50 per cent lower than the price level in April 2019. WTI did at some point in April reach a negative price. The Brent Blend didn't follow all the way, but had a significant price drop as well, of more than 18 per cent. Lower demand due to the global lockdown may have contributed to the price reduction in April. Currency fluctuations had a visible effect as well: the price of natural gas measured in USD dropped slightly in April, but in NOK, the price actually had a marginal increase.
Refined petroleum had the biggest impact on the PPI in April: with a price fall of 31,8 per cent. The same trend was seen in the electricity market: the system price at Nord Pool dropped by more than 40 per cent from March to April.

Figure 1. Price index. 2015=100

PPI excluding energy goods Energy goods
Jan. 2013 91.68 127.71
Feb. 2013 91.68 129
Mar. 2013 92.46 130.22
Apr. 2013 92.39 130.89
May 2013 92.55 125.44
June 2013 92.29 125.43
July 2013 92.88 130.38
Aug. 2013 93.69 131.77
Sep. 2013 93.52 133.08
Oct. 2013 94.03 131.11
Nov.2013 94.16 132.24
Dec. 2013 94.5 135.71
Jan. 2014 95.42 135.65
Feb. 2014 95.5 133.85
Mar. 2014 95.44 126.82
Apr. 2014 95.7 125.33
May 2014 95.77 123.13
June 2014 95.75 124.14
July 2014 96.61 121.85
Aug. 2014 97.11 119.62
Sep. 2014 97.38 119.27
Oct. 2014 97.63 118.5
Nov.2014 98.21 111.32
Dec. 2014 99.2 110.64
Jan. 2015 100.35 99.63
Feb. 2015 100.46 103.88
Mar. 2015 100.16 106.96
Apr. 2015 99.83 107.36
May 2015 99.43 107.66
June 2015 99.48 108.23
July 2015 99.71 103.09
Aug. 2015 99.84 94
Sep. 2015 99.8 93.66
Oct. 2015 99.76 94.85
Nov. 2015 100.6 94.82
Dec. 2015 100.59 85.85
Jan. 2016 100.32 77.74
Feb. 2016 100.41 72.93
Mar. 2016 100.41 75.13
Apr. 2016 100.29 76.59
May 2016 100.44 81.33
June 2016 100.3 86.65
July 2016 100.45 87.27
Aug. 2016 100.49 83.9
Sep. 2016 99.55 81.95
Oct. 2016 98.83 86.73
Nov. 2016 98.84 91.41
Dec. 2016 99.26 100.84
Jan. 2017 99.46 101.31
Feb. 2017 100.48 106.37
Mar. 2017 100.5 103.81
Apr. 2017 101.04 97.99
May 2017 101.45 95.48
June 2017 100.98 90.14
July 2017 101.08 87.77
Aug. 2017 100.9 89.01
Sep. 2017 100.56 95.99
Oct. 2017 100.18 102.3
Nov. 2017 101.27 108.55
Dec. 2017 101.02 115.99
Jan. 2018 102.6 121.7
Feb. 2018 103.08 114.42
Mar. 2018 102.72 116.21
Apr. 2018 102.77 124.58
May 2018 103.48 126.75
June 2018 103.6 132.44
July 2018 103.67 135.4
Aug. 2018 103.84 136.68
Sep. 2018 104.01 140.56
Oct. 2018 104.33 150.34
Nov. 2018 104.12 141.52
Dec. 2018 104.13 131.52
Jan. 2019 105.57 130.64
Feb. 2019 105.44 131.94
Mar. 2019 105.61 126.44
Apr. 2019 105.87 127.88
May 2019 105.91 125.34
June 2019 106.72 112.21
July 2019 107.15 108.73
Aug. 2019 107.1 108.16
Sep. 2019 107.69 107.53
Oct. 2019 107.95 107.44
Nov. 2019 107.23 112.28
Dec. 2019 108.29 120.93
Jan. 2020 107.94 117.69
Feb. 2020 109.1 107.06
Mar. 2020 109.52 87.07
Apr. 2020 112.06 75.69

Price increases in manufacturing

Despite the decline in energy prices, most industries within manufacturing had a positive price development in April. Food industry, metal industry and several other industries not directly related to energy production, had price increases. This may indicate that Norwegian manufacturing industries are not as badly affected by the corona pandemic as the energy sector. Furthermore, the weak Norwegian currency may have improved the profitability of Norway's export businesses. Imported goods, on the other hand, may have become more expensive measured in NOK. During uncertain times, people tend to buy more alternative currencies. This reflects on the gold price, which has increased by more than 30 per cent so far this year.