may 2015 utilities market report

Utilities Market Report May 2015 Smarter Spending > www.expense-reduction.co.uk Energy prices eased again during April with gas prices down 4.5% to 1.58 p/kWh and electricity prices also down 2.8% to 4.41 p/kWh. Coal prices were down 2% at $60/tonne but oil prices rebounded more than 20% closing the month at $67.00/barrel. Daily Market Price Report – Annualised Baseload Gas (p/therm) Electricity (£/MWh) Whilst every reasonable care is taken in the compilation of the information contained within this document, any opinions expressed, errors or omissions are not the responsibility of the publisher. > News > News Oil prices have responded to data showing a reduced number of oil rigs in the US, cancellation of conventional mainstream drilling and shale projects, higher global demand and continued geopolitical tension in the Middle East. The traditional correlation between gas and oil prices now seems rather weaker. Gas prices fell again as the UK saw the arrival of more liquid natural gas cargoes from Qatar and a drop in temperature towards the end of the month failed to give substantial support to the market. Asian prices for LNG remain below UK prices and it is likely that forecast excess LNG supplies from Papua New Guinea, Australia, the USA and Russia will find their way to the European spot market. UK gas storage is presently at 20% capacity as compared with over 50% this time last year and at the same time we are in the midst of the traditional maintenance season with some Norwegian fields carrying out a more intense programme than in past years . This could put pressure on efforts to re stock in advance of the winter season, but thus far supply to the UK has kept up with demand. Uncertainty remains over the status of the Groningen gas field and the Dutch Government will decide whether to reduce output on 1 July, however for the time being operations have been suspended at just one field thought to be most at risk of earthquake. Equally the status of the UK’s largest (Rough) gas storage facility is uncertain with indications that the reduced capacity could extend into next winter. Both of these factors could lend support to UK gas prices. Electricity prices have tracked the movements in the wholesale gas market, however the annual increase in the Climate Change Levy together with the application of new Electricity Market Reform charges for Capacity Market and Contracts for Difference go some way to mitigate price falls. Overall current energy prices remain below historical average prices and represent good value; however continued volatility is likely in the gas market. 40 45 50 55 60 65 70 75

Upload: david-brassington

Post on 08-Aug-2015

11 views

Category:

Documents

0 download

Report

Download

Embed Size (px):

TRANSCRIPT

Page 1: May 2015 Utilities Market Report

Utilities Market ReportMay 2015

Smarter Spending > www.expense-reduction.co.uk

Energy prices eased again during April with gas prices down 4.5% to 1.58 p/kWh and electricity prices also down 2.8% to 4.41 p/kWh. Coal prices were down 2% at $60/tonne but oil prices rebounded more than 20% closing the month at $67.00/barrel.

Daily Market Price Report – Annualised Baseload Gas (p/therm) Electricity (£/MWh)

Whilst every reasonable care is taken in the compilation of the information contained within this document, any opinions expressed, errors or omissions are not the responsibility of the publisher.

> News

Oil prices have responded to data showing a reduced number of oil rigs in the US, cancellation of conventional mainstream drilling and shale projects, higher global demand and continued geopolitical tension in the Middle East. The traditional correlation between gas and oil prices now seems rather weaker.

Gas prices fell again as the UK saw the arrival of more liquid natural gas cargoes from Qatar and a drop in temperature towards the end of the month failed to give substantial support to the market. Asian prices for LNG remain below UK prices and it is likely that forecast excess LNG supplies from Papua New Guinea, Australia, the USA and Russia will find their way to the European spot market.

UK gas storage is presently at 20% capacity as compared with over 50% this time last year and at the

same time we are in the midst of the traditional maintenance season with some Norwegian fields carrying out a more intense programme than in past years . This could put pressure on efforts to re stock in advance of the winter season, but thus far supply to the UK has kept up with demand.

Uncertainty remains over the status of the Groningen gas field and the Dutch Government will decide whether to reduce output on 1 July, however for the time being operations have been suspended at just one field thought to be most at risk of earthquake. Equally the status of the UK’s largest (Rough) gas storage facility is uncertain with indications that the reduced capacity could extend into next winter. Both of these factors could lend support to UK gas prices.

Electricity prices have tracked the movements in the wholesale gas market, however the annual increase in the Climate Change Levy together with the application of new Electricity Market Reform charges for Capacity Market and Contracts for Difference go some way to mitigate price falls.

Overall current energy prices remain below historical average prices and represent good value; however continued volatility is likely in the gas market.