Correlation between gas prices and oil product prices

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Definition
This graph shows the evolution of prices for long-term natural gas supply contracts in Europe (BAFA: import price in Germany), the market price for natural gas on the London stock exchange (NBP Spot) and the price of oil products represented by the Brent index (€/barrel).


Analysis

This indicator underlines the strong correlation between the prices of gas and oil products. Long-term natural gas supply contract prices are in fact indexed on the Brent price. The three to six month discrepancy in the long-term contract prices as compared to the Brent price is due to the smoothing of the indexing formulas.

After a certain stability (between 80 and 90€/bl), the Brent index has drastically dropped : it was divided by 2 between June 2014 and January 2015. Import prices and the average sport price for NBP gas should follow the same trend during the 2nd semester of 2016.

Source SOeS, World Data Bank (2016)