Energy Market Report for 25/05/12
Following several weeks of steadily falling prices, the market stabilised last week, with little overall movement, and considerable uncertainty over future direction. Please see details below:
- Eurozone debt concerns
- Warming weather
- Recovery in oil and equities
Concerns over the Eurozone crisis persist, and with the gas and power systems well supplied and with temperatures rising above seasonal norms, prices might be expected to keep falling.
However there is some sentiment in the market that the impact of Greece and Spain has already been factored in, and indeed some analysts believe that the falls in price seen in the last two weeks have been too severe. Tensions with Iran appear to be rising again, and with the weather predicted to cool again, this may provide some upward price pressure.
The unpredictability is being exacerbated by very low liquidity in the market, a situation that is likely to worsen as we approach a long bank holiday. The week ahead is therefore expected to produce considerable volatility in market prices, and while the majority of factors suggest an overall bearish trend, any concerns over supply side could quickly reverse this position.