Energy commodity prices increased in second half of 2017
The spot energy index in the Standard and Poor’s (S&P) Goldman Sachs Commodity Index (GSCI) ended 2017 16 percent higher than the beginning of the year due to increased crude oil and petroleum product prices.
The index fell by approximately 20 percent in the first half of the year. At the end of 2017, it was still lower than in 2011 through 2014.
Two major crude oil benchmarks, West Texas Intermediate (WTI) and Brent, make up 70 percent of the weighting in the S&P GSCI energy index. For this reason, the energy index typically follows major price movements in the crude oil market.
Crude oil prices increased for the second year in a row after the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC countries implemented a crude oil production-cut agreement, which took effect in January 2017 and will last through the end of 2018. Economic growth in both developed and emerging markets also contributed to the increased demand for oil.
Ultra-low sulfur diesel (ULSD), Petroleum-based products and gasoil together made up 24 percent of the S&P GSCI energy index. ULSD saw the most significant price increase among energy commodities.
Gasoline prices increased less than distillate and crude oil prices did, and U.S. gasoline consumption growth slowed from 2016 to 2017.
Natural gas made up the other 6 percent of the S&P GSCI energy index. It was the only energy commodity price that declined in 2017.
After hitting their highest point in two years at the end of 2016, Henry Hub natural gas prices fell during the first few months of 2017 due to warmer weather and higher-than-average inventory levels at the end of the winter heating season. Prices then remained fairly flat for the majority of the second half of 2017. The U.S. used less natural gas for electricity generation during the summer of 2017 than summer 2016. U.S. exports of natural gas, however, hit a record high in 2017, with Mexico receiving the highest amount of U.S. exports.
