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May 2012 Energy Index - Bord Gáis Energy
May 2012 Energy Index - Bord Gáis Energy
May 2012 Energy Index - Bord Gáis Energy
May 2012 Energy Index - Bord Gáis Energy
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May 2012 Energy Index - Bord Gáis Energy

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The Bord Gáis Energy Index fell by 7% in May with falling oil, gas and wholesale Irish Electricity Prices.

The Bord Gáis Energy Index fell by 7% in May with falling oil, gas and wholesale Irish Electricity Prices.

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  • 1. Bord Gáis Energy Index MAY 2012
  • 2. Bord Gáis Energy IndexMAY 2012 DROP IN OIL PRICES PUSHES ENERGY INDEX LOWER IN MAYBord Gáis Energy Index (Dec 31st 2009 = 100) 12 Month Rolling Average 31 October 2009 87.80 Bord Gáis Energy Index 30 November 2009 87.15 12 Month Rolling Average 180 31 December 2009 31 January 2010 88.29 88.92 OVERALL SUMMARY: 28 February 2010 90.20 31 March 2010 92.51 30 April 2010 31 May 2010 95.31 97.49 The Bord Gáis Energy Index fell 7% in May 30 June 2010 99.22 with falling oil, gas and wholesale Irish 140 31 July 2010 31 August 2010 101.09 102.82 electricity prices.Points 30 September 2010 104.97 31 October 2010 30 November 2010 106.66 108.89 As the markets nervously assess the future of 31 December 2010 111.88 the European Union and the uncertain global 31 January 2011 114.76 100 28 February 2011 117.91 economic and political repercussions of the current regional crisis, money managers 31 March 2011 121.41 30 April 2011 124.45 31 May 2011 30 June 2011 126.97 128.88 have begun channelling funds away from 31 July 2011 131.18 commodities whose strength is determined 60 31 August 2011 133.64 30 September 2011 135.59 in part by a positive global economic outlook. 31 October 2011 137.54 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 November 2011 139.53 31 December 2011 140.15 31 January 2012 141.01 31 February 2012 142.381 Mth  -7% 3 Mth  -10% 12 Mth  1%Oil, in US Dollar terms, fell 15% in May, the largest monthly price fall in 2 years, as the markets suffered major stress under thepolitical and economic uncertainties in Europe, speculation that growth in the US could slow and on further evidence of theevolving Chinese slowdown. These stresses and concerns eroded market estimates of future oil demand in May and pricessubsequently fell. Tellingly, money managers and other large funds appeared to have lost their confidence in the globalrecovery story as they have reportedly reduced their bullish US oil bets to a 20 month low. Although talks between Iran andthe UN P5+1 in Baghdad during the month failed to make any progress, tensions over the disputed Iranian nuclear programmedid ease in May. However, a UN report reminded the world that the issue has not gone away given that Iran is reportedly stillactively enriching uranium and engaged with its nuclear programme.Oil Index OIL The price of a barrel of oil fell steadily during 180 May from $119.47 to $101.87 (nearly $18) under the combined weight of political uncertainty in Europe, global economic weakness, increased oil supplies from OPEC and easing concerns over Iran’s nuclear programme. 140 Despite some positive economic releases fromPoints Germany and the US, the global economic picture that strongly emerged during May is 100 one of weakness following releases indicating that globally, retail sales are falling, business activity is slowing, jobs are not being created in the amounts expected and manufacturing is 60 contracting. Because of the fragile economic 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 situation, and high prices, demand for oil in *Index adjusted for currency movements. the US, Europe and China is soft. At the same Data Source: ICE time, oil supplies remain healthy, particularly from OPEC countries, who have collectively increased output for seven months running1 Mth  -9% 3 Mth  -11% 12 Mth  2% and who are producing 3 million barrels a day more now than a year earlier. This increased supply and soft demand helped to push Brent crude prices lower. Talks between Iran and the UN P5+1 group in Baghdad on May 23rd helped to continue to ease tensions despite not reaching any agreement. However, a report from the UN reminded the world that this issue remains unresolved following its claim that Iran has doubled its stock of enriched uranium and that the UN cannot give assurances that Iran is not concealing nuclear activity at sites which their inspectors have not been allowed access to.
  • 3. Bord Gáis Energy Index MAY 2012 Natural Gas Index NATURAL GAS Natural Gas Graph In euro terms, the average monthly Day-ahead 250 UK gas price in May was 3% lower than its April Data 31 January 2009 195.04 28 February 2009 31 March 2009 156.23 99.24 equivalent. 30 April 2009 92.78 31 May 2009 30 June 2009 87.00 87.56 UK gas prices were supported at the start of 200 May and traded at about 61p a therm due to 31 July 2009 76.34 31 August 2009 69.4330 September 2009 61.72 31 October 200930 November 2009 77.55 83.21 the erosion of high stock levels during April, processing plant outages which reduced gas31 December 2009 100.00 31 January 2010 125.88 Points 28 February 2010 114.44 supplies from Norway to the UK, and a cold start 150 31 March 2010 101.67 30 April 2010 106.04 to the month. 31 May 2010 130.73 30 June 2010 145.29 31 July 2010 157.48 31 August 2010 145.9630 September 2010 31 October 2010 132.67 148.57 However, prices started to decline mid month30 November 2010 167.11 as healthy supplies of gas were dispatched from31 December 2010 31 January 2011 28 February 2011 204.87 188.31 179.74 100 the LNG terminals and Norwegian gas flows 31 March 2011 194.03 30 April 2011 31 May 2011 181.39 184.99 resumed after scheduled maintenance. Warmer weather and falling demand also weighed on 30 June 2011 183.36 31 July 2011 179.36 50 31 August 2011 172.8230 September 2011 31 October 2011 180.07 180.16 wholesale Day-ahead gas prices.31 November 2011 191.53 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 Despite fears that seaborne gas supplies to the31 December 2011 189.94 31 January 2012 184.35 *Index adjusted for currency movements. UK would dry up, it is estimated that May will 31 February 2012 221.68 Data Source: Spectron Group record the highest level of LNG imports since last October. Despite this rise, the volume of 1 Mth  -3% 3 Mth  -8% 12 Mth  10% LNG gas delivered in May 2012 is estimated to be 30% lower than in May 2011. The UK is currently benefiting from the seasonal decline in gas demand in Japan and South Korea. Coal Index Coal Coal Graph 260 In US Dollar terms, European coal prices continued to fall in May. However, because of the Data weakening euro, in euro terms, the front month 31 January 2009 102.58 28 February 2009 93.02 31 March 2009 82.80 30 April 2009 78.58 coal price increased 4% month on month. 205 31 May 2009 76.19 30 June 2009 76.68 31 July 2009 31 August 2009 81.48 84.15 Coal is finding some support from the power 30 September 2009 31 October 2009 83.00 86.26 generation sector as healthy European dark power spreads means that it is economical to Points 30 November 2009 88.54 31 December 2009 100.00 150 burn coal across Europe to produce cheaper 31 January 2010 105.77 28 February 2010 95.28 31 March 2010 95.51 30 April 2010 31 May 2010 108.11 125.06 electricity. However, warmer weather, increased 30 June 2010 31 July 2010 132.03 121.85 renewable generation capacity (which is displacing thermal generation such as coal) 31 August 2010 123.28 95 30 September 2010 121.29 and weakening economic activity have been 31 October 2010 121.83 30 November 2010 150.34 31 December 2010 159.48 31 January 2011 28 February 2011 148.31 149.34 moderating factors. 31 March 2011 153.91 30 April 2011 148.29 The Atlantic basin continues to be well supplied 40 31 May 2011 145.75 30 June 2011 31 July 2011 144.90 147.62 by healthy Columbian and US imports. Incremental supplies from South Africa and 31 August 2011 149.65 30 September 2011 156.20 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 Russia are also pushing down European 31 October 2011 145.04 31 November 2011 142.82 31 December 2011 145.65 *Index adjusted for currency movements. 31 January 2012 31 January 2012 134.66 125.54 Data Source: ICE benchmark prices. With abundant shale gas displacing coal in the US, coal demand to fuel electricity generation is set to tumble to levels 1 Mth  4% 3 Mth  -2% 12 Mth  -16% not seen since 1984 and the displaced US coal is finding its way to the European markets. Electricity Index ELECTRICITY Irish wholesale electricity prices were 5% 180 lower in May compared to April. As the majority of power produced on the island of Ireland is generated by burning gas, a 3% fall in the average monthly wholesale Day-ahead UK gas price in euro terms put downward 140 pressure on the cost to produce electricity in Ireland in May. Points In addition to falling wholesale gas prices, relatively cheap coal (in USD terms, the 100 monthly coal futures price has fallen 30% since September 2011) and carbon prices put additional pressure on Irish wholesale electricity prices as coal plants on the island of Ireland produced relatively cheap power in 60 good quantities. 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 Data Source: SEMO Finally, wholesale prices are under a little pressure with the arrival of summer and peak power demand is starting to erode slowly with warmer weather and extended periods 1 Mth  -5% 3 Mth  -8% 12 Mth  -2% of daylight.
  • 4. Bord Gáis Energy IndexMAY 2012 FX Rates FX RATES 31 January 2009 EUR/USD 1.283 31 January 2009 EUR/GBP 0.887 During May, the euro continued to weaken 1.60 28 February 2009 31 March 2009 1.272 1.323 28 February 2009 31 March 2009 0.886 0.925 versus the US Dollar and British Pound 30 April 2009 1.321 30 April 2009 31 May 2009 0.894 0.874 as political uncertainty in Greece and the vulnerability of the European financial 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 system weighed heavily on the currency.30 September 2009 1.464 31 October 2009 0.896 31 October 2009 1.474 30 November 2009 0.913 The euro performed badly versus the 1.2030 November 200931 December 2009 1.498 1.433 31 December 2009 31 January 2010 28 February 2010 0.888 0.867 0.893 British Pound despite weaknesses in the UK as evidenced by poor retail sales 31 January 2010 1.389 31 March 2010 0.891 28 February 2010 1.360 and industrial production numbers, less 30 April 2010 0.868 1.00 31 March 2010 1.353 31 May 2010 0.846 30 April 2010 1.327 optimistic growth forecasts and revisions 30 June 2010 0.819 31 May 2010 1.230 31 July 2010 0.831 30 June 2010 1.226 to the depth of the current UK recession. 31 August 2010 0.827 31 July 2010 1.305 30 September 2010 0.866 0.80 31 August 201030 September 2010 1.269 1.362 31 October 2010 30 November 2010 0.869 0.837 Versus the British Pound, the euro has weakened to levels not seen since Sept 31 October 2010 1.392 31 December 2010 0.85730 November 2010 1.304 31 January 2011 0.854 28 February 2011 0.849 2008. 0.6031 December 2010 1.337 31 January 2011 1.370 31 March 2011 0.883 28 February 2011 1.379 30 April 2011 0.888 31 March 2011 Jan-09 Apr-09 Jul-092011Oct-09 0.874 1.419 31 May 30 June 2011 Jan-10 Apr-10 Jul-10 0.903 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 During the month, the US Dollar strengthened against nearly all of its most- 30 April 2011 1.483 31 July 2011 0.875 31 May 2011 1.437 31 August 2011 0.885 30 June 2011 31 July 2011 1.451 1.438 30 September 2011 31 October 2011 0.860 0.8615 traded peers as market stress increased 31 August 201130 September 2011 1.441 1.345 31 November 2011 0.8562 the appeal of safe haven investments1 Mth  -7% 3 Mth  -7% 12 Mth  -14% EURUSD 31 December 2011 0.8334 31 October 201131 November 2011 1.395 1.3446 31 January 2012 31 February 2012 0.8302 0.8372 such as the US Dollar, and US and German31 December 2011 1.2961 government bonds. This came at the1 Mth  -2% 31 January 2012 31 January 2012 1.3084 1.3325 3 Mth  -4% 12 Mth  -8% EURGBP expense of commodities, global equities and so-called peripheral European bonds. A stronger US Dollar tends to reduce the appeal of oil and puts additional pressure on the commodity.Market Outlook:With oil production from OPEC countries at elevated levels not seen since October 2008 and demand destruction in Europeand the US, and with muted oil demand growth in China, it is estimated that the oil market is currently oversupplied byaround 500,000 barrels a day. As a result, OECD oil stocks are now rising and some of the nervousness which drove priceto record highs in March is receding.However, geopolitical risks are still a cause of concern and the markets will pay close attention to the scheduled talksbetween Iran and the UN P5+1 in Moscow on the 18th and 19th of June to see if progress can be made on Iran’s disputednuclear programme. The precise impact on physical oil supplies once the expected European embargo on Iranian crudetakes effect on 1 July is also very much unknown and has the potential to keep oil prices high. The spate of unplannedstoppages currently afflicting non-OPEC supply is also a concern as are the recent events in Argentina where the governmentexpropriated a Spanish oil and gas company’s assets. The Japanese nuclear moratorium and the summer crude burn inexporting countries add another layer of uncertainty as does the ongoing economic situation in Europe and whether Chinaexperiences a hard or soft landing.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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