Key Pricing Indicators - Commodity Prices

Document Sample
Key Pricing Indicators - Commodity Prices Powered By Docstoc
					                                                                                                                                                                                                                                                                                                             Monthly Pricing Trends Report
                                                                                                                                                                                                                                                                                                             May 2009


Key Pricing Indicators – Commodity Prices:
                                                                                                                                     (21 April 2009)                                  (11 May 2009)                                                                                                     % Change


                                     GBP/US$                                                                                         1.4621                                           1.5110                                                                                                                3.34 %

                                     WTI (nearest month)                                                                             $46.64 per bbl                                   $57.79 per bbl                                                                                                    23.91 %

                                     Brent (nearest month)                                                                           $49.66 per bbl                                   $57.02 per bbl                                                                                                    14.82 %

                                     Electricity (October Annual – b/load)                                                           4.41 pence per kWh                               4.62 pence per kWh                                                                                                    4.76 %

                                     Gas (October Annual Contract)                                                                   1.63 pence per kWh                               1.69 pence per kWh                                                                                                    3.68 %



Commentary/Forecasts:
Since the April Report, we have seen a further recovery in stock markets and also commodity prices with Brent oil, in particular, up 15%. In the UK there are signs of
improved retail activity and stirrings in the property markets although there is considerable debate as to whether the recovery is real or illusionary. Signs that the fiscal
stimulus in China is having an effect should underpin commodity prices and a weaker US dollar is likely to lead to further upward pressure on the oil price.
While we considered that a decoupling of the oil price from the gas price in the UK was a possibility given the arrival of LNG cargoes at the new or recently expanded
terminals in South Wales and the Isle of Grain, this has not yet occurred. As a consequence, oil prices continue to dictate UK electricity prices. The widening spreads
between the 12-month and two year energy contracts strongly suggests that the upward pressure on prices will remain.
Currently, courtesy of the recession, there is a significant generation margin in the market. However the expected withdrawal of coal plant capacity over the coming
months, for the purposes of shepherding remaining hours under the EU Large Combustion Plant Directive or the fitting of emission control equipment, could see this
margin substantially eroded during the summer months. We are glad to see that the UK Budget has provided tax breaks to stimulate investment in the North Sea, an
issue which we highlighted in our April report.
Despite the recent price moves, UK energy prices still remain at favourable levels but as we have stressed in previous Reports, the risk is asymmetrical with the
likelihood of an increase in prices outweighing the odds of a decrease. As a consequence, we are continuing to take advantage of this pricing to place clients into
longer term contracts.


Relative Pricing Movements: Electricity
                                                                          Annual Electricity Baseload                                                                                                                                                     Electricity Forward Prices
          92
          88                                                                                                                                                                                                                                               £/MWh - Dec 08 - Apr 09
          84                                                                                                                                                                               £58
          80                                                                                                                                                                               £56
          76                                                                                                                                                                               £54
          72
                                                                                                                                                                                           £52
          68
          64
                                                                                                                                                                                           £50
£ / MWh




          60                                                                                                                                                                               £48
          56                                                                                                                                                                               £46
          52                                                                                                                                                                               £44
          48
                                                                                                                                                                                           £42
          44
          40
                                                                                                                                                                                           £40
          36                                                                                                                                                                               £38
          32                                                                                                                                                                                                8                    8                    8                    9                     9                    9                     9                     9                    9                     9                    9
                                                                                                                                                                                                       00                   00                   00                   00                    00                   00                    00                    00                   00                    00                   00
          28
                                                                                                                                                                                              2   /2               2   /2               2   /2               1   /2                1   /2               2   /2                2   /2                3   /2               3   /2                4   /2               4   /2
          24                                                                                                                                                                               /1                   /1                   /1                   /0                    /0                   /0                    /0                    /0                   /0                    /0                   /0
          20                                                                                                                                                                          01                15                   29                   12                   26                    09                       23                   09                    23                   06                   20
                 06           06            6           06         - 06         6      0 7 r-07       7      7     7      7      08 r -08       8      8     8      8      0 9 r-09
            n-           r-          y -0          l-            ep          v-0 Jan -             y-0 J ul-0 ep- 0 o v-0     n-            y -0 Ju l-0 ep -0 o v- 0    n-
          Ja          Ma           Ma           Ju           S            No              Ma    Ma             S     N      Ja     Ma     Ma             S     N      Ja      Ma                   Apr 09 Annual                                                      Oct 09 Annual                                                   Apr 10 Annual                                                   Oct 10 Annual




Relative Price Movements: Oil / Gas
                                                                                             Brent                                                                                                                                                           Gas Forward Prices
                                                                                         Forward Month
                                                                                                                                                                                                                                                           £/MWh - Dec 08 - Apr 09
                                                                                                                                                                                           £22.0
           135                                                                                                                                                                             £21.0
                                                                                                                                                                                           £20.0
           115                                                                                                                                                                             £19.0
                                                                                                                                                                                           £18.0
$ / bbl




                 95                                                                                                                                                                        £17.0
                                                                                                                                                                                           £16.0
                 75                                                                                                                                                                        £15.0
                                                                                                                                                                                           £14.0
                 55                                                                                                                                                                        £13.0
                                                                                                                                                                                                            08                   08                   08                   09                   09                    09                   09                    09                   09                   09                   09
                 35                                                                                                                                                                                    20                   20                   20                   20                   20                    20                   20                    20                   20                   20                   20
                                                                                                                                                                                              1   2/               1   2/               1   2/               0   1/               0   1/                0   2/               0   2/                0   3/               0   3/               0   4/               0   4/
                                            0 7 08 0 8 08 08 08        0 8 09 0 9 09                                                                                                       1/                   5/                   9/                   2/                   6/                    9/                   3/                    9/                   3/                   6/                   0/
                    0 7 07 07 07 07                                                                                                                                                    0                    1                    2                    1                    2                     0                    2                     0                    2                    0                    2
                  n- ar - ay- Ju l- e p- ov- a n- ar- a y- Jul- ep- ov- an - ar- a y-
           Ja         M M          S     N    J   M M           S   N    J  M M                                                                                                                    Apr 09 Annual                                                  Oct 09 Annual                                                       Apr 10 Annual                                                   Oct 10 Annual



                                     NUS Consulting Group Ltd. │ Regent House Queensway Redhill RH1 1QT │Tel. 01737 78 1200
                                     Any forward looking statements expressed herein are strictly the opinion of NUS Consulting Group and it makes no warranties concerning the accuracy of such
                                     views and projections. The electricity and gas markets are highly dynamic and volatile and influenced by multitude of factors. NUS Consulting Group is
                                     providing this information (including the opinions contained herein) as information for the review and consideration of its clients