Energy Market Report for 03/02/12
Prices for electricity and gas fluctuated throughout the week, finishing with a small decrease for week-ending 3 February 2012.
Main drivers
Considerable volatility in markets during the week. Initial falls due to:
- LNG deliveries into UK
- System coping well with lower temperatures
Prices subsequently rallied on the back of:
- Severe weather warning issued Tuesday night
- Downturn in Russian gas supplies to Europe
Outlook
Considerable uncertainty remains as to short-term price trends amidst differences of opinion about the likely longevity of the current spell of cold weather.
Russian gas availability for export to continental Europe has come under considerable pressure from rising domestic demand, leaving many European countries needing to source gas elsewhere, and this is having a huge impact on short-term gas and electricity prices, with the wholesale price of day-ahead gas having risen by 40% in a week.
However, to date, this is having only a very limited impact on prices further out, with markets poised to react to movements in domestic demand based on temperatures over the next couple of weeks.
The situation in the Arabian Gulf remains tense, with Iran threatening to stop oil exports to the EU ahead of the embargo planned from 1 July, while the US continues to bring pressure to bear on Far Eastern countries to participate in increased sanctions.
The market therefore remains finely balanced, with scope for prices to move up or down depending on events in the near future. An increase in temperatures in the UK may result in prices falling, and clients are therefore advised to monitor the market carefully in order to be able to take advantage of any reductions.
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.
