Energy Market Report for 20/01/12

Prices for both electricity and gas fell slightly during week-ending 20 January 2012.  Prices fell at the start of the week reflecting a comfortable system and the downgrading of the credit rating of 9 Eurozone nations. Prices subsequently rose slowly throughout the rest of the week.

Main drivers

• Firming crude oil prices
• Profit taking on the markets
• Forecasts of colder weather
• Shortages of LNG imports.

Outlook

• The markets remain sluggish with considerable uncertainty about the direction prices will take. The system has coped very easily with demand to date, and with UK economy still struggling and an on-going lack of resolution of the Eurozone crisis, demand may remain muted.
• However, economic recovery in the US is strong and forecasters are now predicting colder than average temperatures in North West Europe for February to April, due to disruption of the Gulf Stream.
• On Monday 23 January EU ministers agreed an embargo on Iranian oil with affect from 1 July 2012, which seems likely to cause a firming of oil prices and gas prices also likely to rise.
• LNG imports have been in short supply recently leading to speculation about the potential impact of a production problem on another flexible supply source, although gas storage levels remain very high at present.

Given the above, we could see energy prices rising over the next few weeks and clients are advised to continue to monitor the situation and be prepared to react quickly should that happen.

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.