Tough economic forces and bad summer weather appear to be determined to try and take charge of the wholesale energy supply marketplace. Prices tumbled throughout the middle of June to modern lows. Annual gas prices are now 15% lower than the same time last year, whilst annual energy costs fell to a two-year low and are 22% down year-on-year. Falling power costs dragged annual spark spreads down 7% to £3.4/MWh, plus even that reliable stalwart coal is having a hard time of things, with slipping prices buffering the fall of dark spreads somewhat to a £17.9/MWh premium to spark spreads. So what's been setting off these price crashes? Well, concerns about debt in the Eurozone countries hasn't aided. Greece lurches from crisis to crisis plus even the election of the hot government is doing little to allay worries regarding its long-term future. But it's slowing financial growth in the US plus China that has actually forced international stamina markets downwards. Brent Ameratex Energy Crude Oil tumbled to $97.6/bl, its lowest level because January 2011, plus annual API coal dropped to a fresh 20-month low of $95.4/t. However, all of this is good news for consumers. While we might be missing out on which 'BBQ summer' the forecasters promised us, both domestic plus commercial end-users have seen vitality costs drop inside real terms. A fall in inflation has also helped to stabilise the retail marketplace, but the big difference has been at the pumps, where motorists have finally started to find the numbers on the forecourts going down rather of up. This, combined with lower electricity and gas costs, has given the British economy a short respite, during which it has a chance to drive up creation and keep the fragile heart of UK PLC beating for a while longer. Ironically, it's been the biomass market which has held the fort. Despite biomass contracts dropping, with costs for 2013 down 1% to £88.5/t, costs are nevertheless around 6% high than this time last year. They've recovered from their four-year low and are at their highest level for five months. This boost has been assisted in no tiny measure with the approval of the plans for a 40MW staw-fuelled biomass plant inside Snetterton, Norfolk, that have finally been given the go-ahead. The real headline grabber throughout June plus into July has been the atrocious weather the UK has experienced. Lower than average June temperatures plus storm after storm has resulted in a rise in UK gas demand. Supply peaked at 223.1mcm on 11th June, inside the center of the bad weather. Industry watchers believe which the unseasonably bad weather has encouraged many people to do anything they wouldn't usually do in June - they turned the heating up. The outcome was that though the national system decreased 0.1%, the territorial program climbed 2.2%. To date, summer demand (calculated from April 1st) was down 7.8% on the national program however up a staggering 31.1% found on the regional program, compared to the same time last year. What this indicates is the fact that whilst gas demand for power generation is down year-on- year, expenditure by households plus small businesses has risen. This means that gas consumption is acting as a barometer for the productiveness of the UK economy plus while the big users could be trying, homes plus companies are continuing to ride out the worst of the economic storm, placing a more positive face on what has been a difficult few months. How prices usually fare inside the upcoming few weeks depends three elements - the resolution (or otherwise) of the Eurozone crisis, plus the economic condition of the US and China. If they commence to wobble we might see costs start to climb back up again.
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