64_energy_oil prices

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					Tough financial forces and lousy summer
weather seem to be determined to try and take
charge of the wholesale power supply
Prices tumbled throughout the middle of June to fresh lows. Annual gas costs are today 15%
lower than the same time last year, while annual force costs fell to a two-year low and are 22%
down year-on-year.

Falling force costs dragged yearly spark spreads down 7% to £3.4/MWh, and even which
reliable stalwart coal is having a difficult time of aspects, with slipping costs buffering the fall of
dark spreads slightly to a £17.9/MWh premium to spark spreads.

So what's been setting off these price crashes? Well, concerns regarding debt in the Eurozone
countries hasn't helped. Greece lurches from crisis to crisis plus even the election of the modern
government is doing small to allay worries regarding its long-term future. But it's slowing
financial development inside the US and China that has actually forced international vitality
markets downwards. Brent Ameratex Crude Oil tumbled to $97.6/bl, its lowest level since
January 2011, plus yearly API coal dropped to a hot 20-month low of $95.4/t.

But, all of this is good news for consumers. While you could be lost out on which 'BBQ summer'
the forecasters guaranteed us, both domestic plus commercial end-users have watched power
prices drop inside real terms. A fall in inflation has furthermore assisted to stabilise the retail
marketplace, however, the big difference has been at the pumps, where motorists have finally
started to find the numbers found on the forecourts going down instead of up. This, combined
with lower electricity and gas costs, has provided the British economy a short respite, during
that it has a chance to drive up creation plus 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 nonetheless about 6%
higher 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 inside no little measure with all 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 and into July has been the atrocious weather the UK
has experienced. Lower than average June temperatures plus storm following 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 various folks to do anything they wouldn't usually do inside June - they turned the
heating up. The result was that though the national system decreased 0.1%, the regional
program climbed 2.2%. To date, summer demand (measured from April 1st) was down 7.8%
found on the national system yet 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 force generation is down year-on-year,
consumption by households plus small companies has risen. This signifies which gas
expenditure is acting because a barometer for the productiveness of the UK economy and whilst
the big consumers could be trying, homes and companies are continuing to ride out the worst of
the economic storm, putting a more positive face on what has been a difficult limited months.

How costs can fare inside the next limited weeks depends 3 points - the resolution (or
otherwise) of the Eurozone crisis, and the financial condition of the US and China. If they start to
wobble you could see prices commence to climb back up again.

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