Prices of energy commodities on the Standard and Poor’s Goldman Sachs Commodity Index fell 11% in the first half of 2017, according to the U.S. Energy Information Administration. It was the largest decline of any commodity group on the index, which includes livestock, industrial metals, precious metals and agriculture. The other commodities on the index had higher prices at the end of June than at the first of the year.
“Supply-side developments unique to energy commodities likely contributed to the divergence,” according to the EIA. West Texas Intermediate (WTI) and Brent crude oil prices account for 70% of the energy prices on the index, which “tends to follow major price movements in the crude oil market.” In the first half of 2017, WTI crude oil prices fell 12%, and Brent prices declined 14%.
Oil production cuts by the Organization of the Petroleum Exporting Countries didn’t reduce global liquid fuels inventories, and the cuts were recently extended through March 2018. The cuts were offset by production increases in OPEC countries not subject to the restrictions along with a rise in production in the United States and Brazil.
Petroleum-based products including reformulated gasoline blendstock for oxygenate blending, ultra-low sulfur diesel and gasoil account for 24% of the energy index. The price of reformulated gasoline blendstock for oxygenate blending, which is the petroleum-based component of motor gasoline, declined 7% between January and June, according to the EIA. “Gasoline prices exhibit seasonality and typically increase ahead of the summer driving season, which likely contributed to less of a decline in prices compared with crude oil and other petroleum products.”
Natural gas makes up the remaining 6% of the energy index. Through June, natural gas prices fell the least among the energy commodities.