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April 2012 Energy Index - Bord Gáis Energy

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Following months of steadily rising wholesale fuel prices, the April Bord Gáis Energy Index stabilised at 154. …

Following months of steadily rising wholesale fuel prices, the April Bord Gáis Energy Index stabilised at 154.
In euro terms, having hit a month end closing high in March, oil prices finally receded in April as both market tightening and geopolitical tensions eased.
Supply constraints, storage withdrawals and cool weather supported UK Day-ahead gas prices and a weaker euro amplified this movement.

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  • 1. Bord Gáis Energy Index April 2012
  • 2. Bord Gáis Energy Index April 2012 Bord Gáis Energy Index Remains High in April Index up 6% in 2012 Bord Gáis Energy Index (Dec 31st 2009 = 100) OVERALL SUMMARY: 12 Month Rolling Energy Index Graph Data 31 October 2009 Average 87.80 Following months of steadily rising wholesale 31 January 2009 92.10 Bord Gáis Energy Index 30 November 2009 87.15 12 Month Rolling Average fuel prices, the April Bord Gáis Energy Index 28 February 2009 31 March 2009180 30 April 2009 87.77 76.86 77.63 31 December 2009 31 January 2010 88.29 88.92 stabilised at 154. 31 May 2009 84.37 28 February 2010 90.20 In euro terms, having hit a month end closing 30 June 2009 90.81 31 March 2010 92.51 31 July 2009 88.62 30 April 2010 95.31 31 August 2009 88.35 30 September 2009 31 October 2009 85.76 92.39 31 May 2010 30 June 2010 97.49 99.22 high in March, oil prices finally receded 30 November 2009 31 December 2009 31 January 2010 140 94.82 100.00 99.62 31 July 2010 31 August 2010 101.09 102.82 in April as both market tightening and geopolitical tensions eased. Points 28 February 2010 103.17 30 September 2010 104.97 31 March 2010 104.57 31 October 2010 106.66 30 April 2010 111.22 31 May 2010 30 June 2010 110.49 111.64 30 November 2010 31 December 2010 108.89 111.88 Supply constraints, storage withdrawals and cool weather supported UK Day-ahead 31 July 2010 111.05 100 31 January 2011 114.76 31 August 2010 109.16 30 September 2010 111.50 28 February 2011 117.91 31 October 2010 30 November 2010 112.64 121.67 31 March 2011 121.41 gas prices and a weaker euro amplified this movement. 30 April 2011 124.45 31 December 2010 135.86 31 January 2011 134.21 31 May 2011 126.97 28 February 2011 140.96 30 June 2011 128.88 31 March 2011 146.51 31 July 2011 131.18 60 30 April 2011 147.76 31 May 2011 140.73 31 August 2011 133.64 30 June 2011 134.54 30 September 2011 135.59 31 July 2011 138.57 31 August 2011 138.69 Jan-09 Apr-09 October 2011 31 Jul-09 Oct-09 Jan-10 137.54 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 30 September 2011 134.89 31 November 2011 139.53 31 October 2011 136.14 31 December 2011 140.15 31 November 2011 143.88 31 January 2012 141.01 31 December 2011 143.22 31 January 2012 144.43 31 February 2012 142.38 31 February 2012 156.81 1 Mth  0% 3 Mth  6% 12 Mth  4% Euro consumers of Brent crude oil will welcome the news that in April, the first drop in the monthly price of oil, in euro terms, since September 2011 was recorded. Lower oil prices coincided with news that after 30 months of oil market tightening, where global demand outstripped supply, relief finally arrived in the first quarter of 2012. This is a result of OPEC pumping more oil and demand waning as rising prices and the weakening economic backdrop undermined consumer’s appetite for oil. However, should the euro continue to weaken versus the US Dollar, European consumers may not feel all or any benefits of future Brent crude oil price falls. Using April month end closing prices, should the euro weaken to 1.20 versus the US Dollar because of renewed solvency concerns in Europe, oil prices would have to fall $11 or 10% just to maintain the current euro price of a barrel of Brent crude. Oil Index OIL Oil Graph Having stabilised in March, the price of a 180 Data 31 January 2009 28 February 2009 65.78 67.03 barrel of crude oil started to decline in April, falling 2% in euro terms. According to the 31 March 2009 68.43 30 April 2009 70.72 31 May 2009 85.34 30 June 2009 31 July 2009 90.70 92.57 International Energy Agency, ‘the tide of remorseless market tightening’ that has seen 31 August 2009 89.31 140 30 September 2009 86.74 31 October 2009 93.84 30 November 2009 31 December 2009 96.36 100.00 demand outstrip supply and stocks levels being eroded over the prior ten quarters (Q3 Points 31 January 2010 94.62 28 February 2010 104.90 09 to Q4 11), finally turned in Q1 2012 due 31 March 2010 112.38 30 April 2010 121.16 31 May 2010 111.65 30 June 2010 112.54 to an increase in OPEC crude supply and 100 31 July 2010 110.19 sluggish oil demand. There is now growing 31 August 2010 108.17 30 September 2010 111.13 31 October 2010 109.88 30 November 2010 31 December 2010 121.18 130.36 confidence that the key OPEC producers can step into the breach and replace lost Iranian 31 January 2011 135.62 28 February 2011 149.07 31 March 2011 152.09 30 April 2011 156.15 oil volumes as OPEC’s output of oil in April hit 31 May 2011 30 June 2011 31 July 2011 149.41 142.55 149.27 60 levels not seen since September 2008. 31 August 2011 146.57 30 September 2011 140.51 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 31 October 201131 November 2011 144.47 151.05 In addition to oil market easing, improving31 December 2011 31 January 2012 152.25 155.87 relations between the West and Iran following *Index adjusted for currency movements.31 February 2012 169.16 Data Source: ICE ‘constructive’ talks on the Persian State’s disputed nuclear programme put additional downward pressure on oil prices, along with 1 Mth  -2% 3 Mth  6% 12 Mth  6% a view from Israel’s military chief who stated that Iran will not decide to produce a nuclear bomb. Disappointing economic releases from China, renewed fiscal solvency concerns about Spain and an unwillingness by the Federal Reserve in the US to provide additional stimulus to boost US growth, all weighed on oil in April.
  • 3. Bord Gáis Energy Index April 2012 Natural Gas Index NATURAL GAS In euro terms, the average monthly Day-ahead 250 Natural Gas Graph UK gas price in April was 6% higher than its Data 31 January 2009 195.04 28 February 2009 31 March 2009 156.23 99.24 March equivalent. A weaker euro versus the 30 April 2009 92.78 British Pound (in April the euro weakened by 200 31 May 2009 87.00 30 June 2009 87.56 31 July 2009 31 August 2009 76.34 69.43 approximately 2% versus the British Pound),30 September 2009 31 October 2009 61.72 77.55 amplified the increase in the monthly average Day-ahead price.30 November 2009 83.21 Points31 December 2009 100.00 150 31 January 2010 125.88 28 February 2010 114.44 31 March 2010 30 April 2010 101.67 106.04 Despite moving into the gas market’s summer on 1 April and the official end of the winter 31 May 2010 130.73 30 June 2010 145.29 31 July 2010 157.48 31 August 2010 145.96 period, Day-ahead gas prices were well 10030 September 2010 132.67 supported in the month and traded consistently 31 October 2010 148.5730 November 2010 167.1131 December 2010 204.87 31 January 2011 28 February 2011 188.31 179.74 around the 60p a therm level. The UK system 31 March 2011 30 April 2011 194.03 181.39 found itself consistently short in the month as 50 supply constraints materialised sporadically 31 May 2011 184.99 30 June 2011 183.36 31 July 2011 179.36 31 August 201130 September 2011 172.82 180.07 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 in some of the main sources of gas supply to the UK. These supply constraints and storage 31 October 2011 180.1631 November 2011 191.5331 December 2011 189.94 31 January 2012 31 February 2012 184.35 221.68 *Index adjusted for currency movements. withdrawals supported prices. Data Source: Spectron Group On the demand side, cool temperatures supported domestic demand for gas to heat 1 Mth  6% 3 Mth  13% 12 Mth  15% homes throughout the UK. Coal Index Coal European coal prices hit a 19 month low in Coal Graph 260 April due to little or no demand for coal in the Atlantic basin. Following restocking by Data 31 January 2009 102.58 28 February 2009 31 March 2009 93.02 82.80 major drawers of imported coal (UK, Germany 30 April 2009 78.58 for instance) in 2011 and then a relatively 205 31 May 2009 76.19 mild winter in Q4 2011 which extended into 30 June 2009 76.68 31 July 2009 81.48 January, Europe is heavily stocked currently. In 31 August 2009 84.15 30 September 2009 83.00 31 October 2009 86.26 addition, with slower industrial activity across Points 30 November 2009 88.54 31 December 2009 100.00 150 major euro zone economies, there has been a 31 January 2010 105.77 28 February 2010 95.28 reduction in coal burn in the region and these 31 March 2010 95.51 30 April 2010 108.11 31 May 2010 125.06 30 June 2010 31 July 2010 132.03 121.85 heavy stock levels have not been eroded. 31 August 2010 123.28 30 September 2010 31 October 2010 121.29 121.83 95 Supplies to Europe also remain healthy with ample supplies of coal reportedly available 30 November 2010 150.34 31 December 2010 159.48 from Colombia and the US. Columbian coal 31 January 2011 148.31 28 February 2011 149.34 31 March 2011 153.91 exports are expected to increase this year as 40 30 April 2011 148.29 31 May 2011 145.75 30 June 2011 31 July 2011 144.90 147.62 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 producers continue to improve output from mines and the abundance of shale gas in the 31 August 2011 149.65 30 September 2011 156.20 31 October 2011 145.04 31 November 2011 31 December 2011 142.82 145.65 US means that it is willing to export coal to find *Index adjusted for currency movements. 31 January 2012 31 January 2012 134.66 125.54 Data Source: ICE value in the global market. With both India and China apparently 1 Mth  -7% 3 Mth  -12% 12 Mth  -21% refraining from any large coal purchases, prices globally remain depressed. Electricity Index ELECTRICITY Irish wholesale electricity prices were 3% Electricity Graph Data 180 higher in April compared to March. The 31 January 2009 127.36 28 February 2009 31 March 2009 117.38 89.56 dominant influence on Irish wholesale 30 April 2009 31 May 2009 88.58 82.33 electricity prices is the cost of gas in the UK and during April, the average Day-ahead UK 30 June 2009 91.74 31 July 2009 83.00 140 31 August 2009 89.26 30 September 2009 31 October 2009 87.28 91.82 gas price increased 6% in euro terms. As gas 30 November 2009 93.65 is used to power the majority of electricity Points 31 December 2009 100.00 31 January 2010 28 February 2010 105.32 98.50 generating plants in Ireland, the wholesale electricity price is highly correlated to 31 March 2010 90.42 30 April 2010 93.24 31 May 2010 105.19 movements in UK gas prices. 100 30 June 2010 104.88 31 July 2010 106.05 31 August 2010 105.66 30 September 2010 31 October 2010 109.05 112.69 In addition to rising gas prices, the intermittent nature of wind also nudged wholesale prices 30 November 2010 115.75 31 December 2010 136.21 31 January 2011 123.78 28 February 2011 31 March 2011 120.12 129.24 higher. During the month, as a result of the 30 April 2011 127.27 high wind speeds and large volumes of wind 31 May 2011 30 June 2011 31 July 2011 118.10 112.46 112.53 60 power being produced, there were periods Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 when traditional fossil fuel generators were 31 August 2011 118.86 30 September 2011 117.61 31 October 2011 114.14 31 November 2011 31 December 2011 123.77 119.63 turned off, as they were not required to 31 January 2012 31 February 2012 117.47 125.14 Data Source: SEMO produce electricity to meet the country’s demand. As wind speeds eased, the thermal generators were called on once again to 1 Mth  3% 3 Mth  4% 12 Mth  -3% produce and the costs to re-commence the production of electricity had to be recouped in the wholesale price, which in turn put upward pressure on wholesale prices.
  • 4. Bord Gáis Energy IndexApril 2012 FX Rates FX RATES 31 January 2009 EUR/USD 1.283 31 January 2009 EUR/GBP 0.887 During April, the euro weakened against 1.60 28 February 2009 31 March 2009 1.272 1.323 28 February 2009 31 March 2009 0.886 0.925 both the US Dollar and the British Pound, 30 April 2009 1.321 30 April 2009 31 May 2009 0.894 0.874 despite the fact that the UK has suffered it’s first double-dip recession since the 31 May 2009 1.412 30 June 2009 0.853 1.40 30 June 2009 1.405 31 July 2009 0.853 31 July 2009 31 August 2009 1.424 1.434 31 August 2009 30 September 2009 0.881 0.914 1970’s. A weaker euro means that any30 September 2009 31 October 2009 1.464 1.474 31 October 2009 30 November 2009 0.896 0.913 falls in non-euro priced commodities are 1.2030 November 200931 December 2009 1.498 1.433 31 December 2009 31 January 2010 0.888 0.867 not fully realised and any increases are 31 January 2010 1.389 28 February 2010 31 March 2010 0.893 0.891 magnified as European buyers have to pay more. 28 February 2010 1.360 1.00 30 April 2010 0.868 31 March 2010 1.353 31 May 2010 0.846 30 April 2010 1.327 The euro’s weakness reflects fresh 30 June 2010 0.819 31 May 2010 1.230 31 July 2010 0.831 30 June 2010 1.226 solvency concerns about Spain, weaker 31 August 2010 0.827 0.80 31 July 2010 1.305 30 September 2010 0.866 1.269 than expected economic indicators and 31 August 2010 31 October 2010 0.86930 September 2010 1.362 30 November 2010 0.837 political uncertainty associated with 31 October 2010 1.392 31 December 2010 0.85730 November 2010 1.304 31 January 2011 0.854 0.60 elections in France and Greece. The31 December 2010 1.337 28 February 2011 0.849 31 January 2011 1.370 31 March 2011 0.883 28 February 2011 31 March 2011 Jan-09 1.379 1.419 Apr-09 Jul-09 2011 30 April Oct-09 31 May 2011 Jan-10 0.888 0.874 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 stress Europe is under is reflected in the 30 April 2011 1.483 30 June 2011 31 July 2011 0.903 0.875 weakening currency but also in falling European equities and rising 10 Year yields 31 May 2011 1.437 31 August 2011 0.885 30 June 2011 1.451 30 September 2011 0.860 31 July 2011 31 August 2011 1.438 1.441 31 October 2011 31 November 2011 0.8615 0.8562 on Italian, Spanish and to a lesser extent,30 September 20111 Mth  31 October 2011 1.345 -1% 1.395 3 Mth  31 December 2011 31 January 2012 1% 0.8334 0.8302 12 Mth  -11% EURUSD French bonds.31 November 2011 1.3446 31 February 2012 0.837231 December 2011 1.2961 Europe’s economic weakness contrasts1 Mth  -2% 31 January 2012 31 January 2012 1.3084 1.3325 3 Mth  -2% 12 Mth  -8% EURGBP with the US where it is expected that the recovery will continue and the economy will grow by 2.5% this year.Market Outlook:Oil prices will stay high as long as geopolitical uncertainties remain. However, it would appear that the latest round ofsanctions against Iran is having an effect given reports that Iran’s storage facilities of crude oil on land and sea are full, whichsuggests that Iranian exports and crucial oil revenue are falling. This pressure may produce some progress at the secondround of talks between Iran and the so-called P5+1 group scheduled for 23 May. Any progress over Iran’s disputed nuclearprogramme may push oil prices lower. The market will continue to observe developments in global oil supply, demand andinventory changes to check for further evidence of market loosening.The reignition of fiscal solvency concerns in Europe as well as political uncertainties and economic weakness could alsoweigh on oil prices but euro buyers may not feel these gains fully, should the currency weaken amid European market stress.Despite coal’s tremendous global consumption growth of 70% between 2000 and 2010, coal for power generation in Europe,its principal market, has been in a state of decline in the two decades since 1990. In the short-term, ample European stocksand the advent of Europe’s summer will continue to weigh on coal prices. As well as developments in the price of oil, weatherand supplies of gas to the UK from around the globe and from domestic fields will continue to influence wholesale gas prices.re-weighting of bord gáis energy index:Following the SEAI’s 2009 review of energy consumption in Ireland,released in Q4 2010, there was a 9.3% drop in overall energy Oil 64.93%consumption. The most notable drop of 1.39% was in oil consumptionin the form of gasoline and diesel. This reflects the economicdownturn experienced at the time. The share of natural gas and Gaselectricity increased by 0.63% and 0.57% respectively. An increase in 13.52%the use of renewables and peat, at the expense of coal in electricitygeneration was also observed. As a result the Bord Gáis EnergyIndex has been reweighted to reflect the latest consumption data. Electricity CoalThis has had a minimal effect on the overall shape of the Index, but 18.40% 3.16%may indicate future trends.For more information please contact: Fleishman-Hillard — Aidan McLaughlin — 085 749 0484 Bord Gáis Energy — Christine Heffernan — 087 050 5555Disclaimer:The contents of this report are provided solely as an information guide. The report is presented to you “as is” and may or maynot be correct, current, accurate or complete. While every effort is made in preparing material for publication no responsibilityis accepted by or on behalf of Bord Gáis Eireann, the SEMO, ICE Futures Europe, the Sustainable Energy Authority of Irelandor Spectron Group Limited (together, the “Parties”) for any errors, omissions or misleading statements within this report. Norepresentation or warranty, express or implied, is made or liability accepted by any of the Parties or any of their respectivedirectors, employees or agents in relation to the accuracy or completeness of the information contained in this report. Each of theParties and their respective directors, employees or agents does not and will not accept any liability in relation to the informationcontained in this report. Bord Gáis Eireann reserves the right at any time to revise, amend, alter or delete the information providedin this report.

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