energy-natural gas_614656

							Tough economic forces plus lousy summer
weather appear to be determined to test and take
charge of the wholesale energy supply
marketplace.
Prices tumbled throughout the middle of June to new lows. Annual gas prices are now 15%
lower than the same time last year, while yearly force costs fell to a two-year low plus are 22%
down year-on-year.

Falling energy costs dragged yearly spark spreads down 7% to £3.4/MWh, and even that
reliable stalwart coal is having a hard time of factors, 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 cost crashes? Well, concerns regarding debt inside the
Eurozone countries hasn't helped. Greece lurches from crisis to crisis and even the election of a
fresh government is doing small to allay fears about its long-term future. However it's slowing
financial development in the US plus China that has really forced international energy markets
downwards. Brent Ameratex Crude Oil tumbled to $97.6/bl, its lowest level since January 2011,
and annual API coal dropped to a hot 20-month low of $95.4/t.

However, all of the is wise news for customers. While you could be lost out on which 'BBQ
summer' the forecasters promised us, both domestic plus commercial end-users have watched
power costs drop inside real terms. A fall inside inflation has also assisted to stabilise the retail
market, yet the big difference has been at the pumps, where motorists have finally started to
find the numbers found on the forecourts going down rather of up. This, combined with lower
electricity plus gas fees, has given the British economy a brief respite, throughout that it has a
chance to drive up production and keep the fragile heart of UK PLC beating for a while longer.

Ironically, it's been the biomass marketplace which has held the fort. Despite biomass contracts
dropping, with prices 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 helped inside no little measure with all the approval of
the plans for a 40MW staw-fuelled biomass plant in Snetterton, Norfolk, which 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 and storm following storm has
resulted in a rise inside UK gas demand. Supply peaked at 223.1mcm on 11th June, inside the
middle of the bad weather. Industry watchers believe which the unseasonably bad weather has
encouraged several people to do something they wouldn't usually do in June - they turned the
heating up. The result was which 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 system yet up a staggering 31.1% on the territorial system, compared to the same
time last year.

What this indicates is that whilst gas demand for force generation is down year-on-year,
expenditure by households and little companies has risen. This means which gas consumption
is acting because a barometer for the productiveness of the UK economy plus whilst the big
consumers might be trying, homes plus companies are continuing to ride out the worst of the
financial storm, putting a more positive face on what has been a difficult limited months.

How costs might fare inside the next limited weeks depends 3 items - the resolution (or
otherwise) of the Eurozone crisis, plus the financial condition of the US and China. If they start
to wobble we might see costs begin to climb back up again.