Energy Market Report for 06/01/12

Prices for both electricity and gas fell during week-ending 6 January 2012:

Electricity ended the week:

- 3.9% lower than the previous week
- 6.6% lower than last month
- 10.7% lower than this time last year

Gas ended the week:

- 0.3% lower than the previous week
- 0.9% lower than last month; but
- 1.9% higher than this time last year

Prices fell throughout the week, with the largest losses coming at the start of the week.

Main drivers:

- Good level of LNG deliveries
- Temperatures remaining above seasonal norms
- Demand levels remain subdued, both domestically and in continental Europe
- Falling carbon and coal prices
- High levels of gas in storage
- Return of nuclear capacity to the grid following planned outage

Outlook:

Energy market remains bearish due to:

• Continued weak demand resulting from continued warm weather and a downturn in global economic trends;
• A comfortable supply position with high storage levels and regular deliveries of LNG; and
• Continued poor European economic news

However:

• News from the US was much more encouraging, suggesting that their economic recovery is continuing; and
• Geopolitical tensions over Iran threaten gas and oil supplies

While prices are expected to continue to fall in the short-term, clients are advised to carefully monitor news from the Middle East as any supply side shocks arising out of the current Iranian situation could cause prices to rise steeply.

If you have any queries about energy procurement or wish to know how the current energy prices may affect your business, please contact us on 029 2002 2888 or email info@uesenergy.co.uk