Bord Gáis Energy Index                 JUNE 2012
Bord Gáis Energy Indexjune 2012          INDEX FALLS 1% ON A YEAR ON YEAR BASIS WITH ONGOING                           OIL...
Bord Gáis Energy Index                         june 2012                          Natural Gas Index                       ...
Bord Gáis Energy Indexjune 2012 FX Rates                                                                                  ...
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June 2012 Energy Index - Bord Gáis Energy

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The Bord Gáis Energy Index remains relatively unchanged over the last 12 months but fell 7% in June. The major factor influencing the decline in the Index is the fall in the price of Brent crude oil which continues to recede from the record highs seen in March, although the price of oil has rebounded somewhat in the last week.

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June 2012 Energy Index - Bord Gáis Energy

  1. 1. Bord Gáis Energy Index JUNE 2012
  2. 2. Bord Gáis Energy Indexjune 2012 INDEX FALLS 1% ON A YEAR ON YEAR BASIS WITH ONGOING OIL PRICE VOLATILITYBord 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 88.29 31 January 2010 28 February 2010 88.92 90.20 OVERALL SUMMARY: 31 March 2010 92.51 30 April 2010 95.31 The Bord Gáis Energy Index remains relatively unchanged over the last 12 months but fell 31 May 2010 97.49 30 June 2010 99.22 140 31 July 2010 31 August 2010 101.09 102.82 7% in June. The major factor influencing the decline in the Index is the fall in the Points 30 September 2010 104.97 price of Brent crude oil which continues to 31 October 2010 106.66 30 November 2010 108.89 31 December 2010 111.88 recede from the record highs seen in March, 100 31 January 2011 114.76 28 February 2011 117.91 although the price of oil has rebounded 31 March 2011 30 April 2011 121.41 124.45 somewhat in the last week. 31 May 2011 126.97 30 June 2011 128.88 31 July 2011 131.18 60 31 August 2011 30 September 2011 133.64 135.59 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  -13% 12 Mth  -1%Because of the ongoing European sovereign debt crisis over the last 12 months, the euro has fallen 13% versus the US Dollarand 11% versus the British Pound. So despite falls in oil, coal and Day-ahead UK gas prices over a 12 month period in US Dollarand British Pound terms, commodity price falls in euro terms have not fully materialised for euro zone buyers.Volatility in the price of oil continued in June and it became evident again that oil’s ability to trade on its own fundamentalshas been overshadowed by the ongoing European financial crisis. However, given the possibility that Europe can now moveto find a solution to the crisis by ‘Europeanising’ national debt, oil market fundamentals such as the sanctions on Iran andthe potential loss of 1 million barrels of oil, and a myriad of other uncertainties, may once again take centre stage in themonths to come.Oil Index OIL The price of a barrel of oil fell 6% in euro 180 terms in June and recorded its third month of consecutive decline as the Brent crude oil price continues to recede from its high of $128 in March. Back in March, geo-political tensions dominated the markets and oil 140 prices escalated. From April onward, a series Points of negotiations between the West and Iran over its disputed nuclear programme helped to appease the markets. 100 The potential negative economic fallout from the ongoing European sovereign debt issue created a bout of risk aversion which 60 rattled the oil markets in June and drove 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 prices to an 18 month low at one point. Given *Index adjusted for currency movements. that China has a greater impact on global oil Data Source: ICE demand growth than a slowdown in Europe, the slowing Chinese economy, as evidenced in its declining industrial production,1 Mth  -6% 3 Mth  -16% 12 Mth  0% retail sales and manufacturing numbers, continued to weigh on prices in June. Despite recent price falls due to a bout of market risk aversion, the average price of a barrel of Brent crude oil in 2012 is currently over $113, $2 higher than the record set in 2011, and prices remain “very high in historical terms” according to the International Energy Agency.
  3. 3. Bord Gáis Energy Index june 2012 Natural Gas Index NATURAL GAS Natural Over the course of the month, the UK Day-ahead gas price was relatively stable and traded in a very Gas Graph Data 250 tight range between 54 - 57p per therm. In euro 31 January 2009 195.04 28 February 2009 156.23 terms, the average monthly Day-ahead UK gas 31 March 2009 99.24 30 April 2009 92.78 31 May 2009 87.00 30 June 2009 31 July 2009 87.56 76.34 price in June was 5% lower than its May equivalent. 31 August 2009 69.43 200 A fall in the monthly average Day-ahead price was30 September 2009 61.72 31 October 2009 77.5530 November 2009 83.2131 December 2009 31 January 2010 100.00 125.88 recorded despite a number of unplanned outages 28 February 2010 31 March 2010 114.44 101.67 and a strike by 700 platform workers in the North Points 106.04 Sea over pension contributions. According to 30 April 2010 150 31 May 2010 130.73 30 June 2010 145.29 31 July 2010 31 August 2010 157.48 145.96 Platts, the strike action reduced Norway’s oil production by 15% and its gas output by 7%30 September 2010 132.67 31 October 2010 148.5730 November 2010 167.1131 December 2010 204.87 following the closure of 6 fields. Norway is the 100 31 January 2011 188.31 world’s eighth largest oil exporter, and Norwegian 28 February 2011 179.74 31 March 2011 194.03 30 April 2011 181.39 31 May 2011 30 June 2011 184.99 183.36 gas exports cover close to 20% of European gas consumption with most exports going to Germany, 31 July 2011 179.36 31 August 2011 172.8230 September 2011 180.07 31 October 201131 November 201131 December 2011 180.16 191.53 189.94 50 the UK, Belgium and France. However, because of reduced gas demand during the summer season, 31 January 2012 184.35 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11currency movements. *Index adjusted for Jan-12 Apr-12 markets failed to react in June. 31 February 2012 221.68 Data Source: Spectron Group Over the month, in euro terms, the forward winter 1 Mth  -5% 3 Mth  -2% 12 Mth  6% and summer gas contracts were little changed, despite falling oil prices. In euro terms, these forward seasonal contracts closed the month higher than where they were at the start of the year. Coal Index Coal European coal prices continued to decline in June, having now fallen nearly 20% in euro terms over 260 the last 12 months. Following the explosion of shale drilling in the US, US utilities are now burning more gas and are relying less on coal to produce electricity. This 205 decline is pushing US producers to increasingly look to Europe as an export market. This surplus continues to push European coal prices lower, and Points 150 as a consequence, Europe is now burning relatively cheap coal to produce electricity at the fastest pace since 2006. Global coal prices remain depressed as Chinese 95 demand for coal, the fuel for three-quarters of the nation’s power plants, has faltered as the economic slowdown slows electricity demand. Healthy 40 *Index adjusted for currency movements. hydro generation also weighed on prices. As a 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 Source: ICE Data Apr-12 consequence, China’s coal stockpiles have risen to the highest level since the global financial crisis of 2008. A weakening oil price is also weighing on European coal prices. 1 Mth  -4% 3 Mth  -8% 12 Mth  -19% Electricity Index ELECTRICITY Irish wholesale electricity prices were 8% lower in June compared to May. As the majority of power 180 produced on the island of Ireland is generated by burning gas, a 5% fall in the average monthly wholesale Day-ahead UK gas price in euro terms put downward pressure on the cost to produce electricity in June. 140 Furthermore, a carbon revenue levy  (imposed Points on generators by the Commission for Energy Regulation and disbursed in line with Government policy) that was included in the price of wholesale 100 electricity, and was estimated to have increased the price by between 3% and 6%, has now been removed by the Government.  Furthermore, a gradual erosion in power demand 60 with greater daylight and a reduced need for 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 home heating meant that the electricity system Data Source: SEMO needed fewer generators to produce electricity and this added further pressure on Irish wholesale electricity prices. 1 Mth  -8% 3 Mth  -9% 12 Mth  -3%
  4. 4. Bord Gáis Energy Indexjune 2012 FX Rates FX RATES Having weakened over the last 3 months, EUR/USD EUR/GBP 31 January 2009 1.283 31 January 2009 0.887 28 February 2009 1.272 28 February 2009 0.886 the euro recorded a 2% gain versus the US 1.60 31 March 2009 0.925 31 March 2009 1.323 30 April 2009 1.321 30 April 2009 31 May 2009 0.894 0.874 Dollar in June. The euro stabilised versus the 31 May 2009 1.412 30 June 2009 1.405 30 June 2009 31 July 2009 0.853 0.853 British Pound in June but has lost 11% in value 1.40 over a 12 month period due to the European 31 July 2009 1.424 31 August 2009 0.881 31 August 2009 1.434 30 September 2009 0.91430 September 2009 31 October 2009 1.464 1.474 31 October 2009 30 November 2009 0.896 0.913 sovereign debt crisis.30 November 2009 1.498 31 December 2009 0.888 The euro’s strength in the month can be 1.2031 December 2009 1.433 31 January 2010 0.867 28 February 2010 0.893 attributed to euro zone leaders agreeing to 31 January 2010 1.389 31 March 2010 0.891 28 February 2010 1.360 30 April 2010 0.868 31 March 2010 1.353 31 May 2010 0.846 instruct the euro zone finance ministers to 1.00 30 April 2010 1.327 0.819 implement a new plan that would involve 30 June 2010 31 May 2010 1.230 31 July 2010 0.831 30 June 2010 1.226 the possibility of ‘Europeanising’ national 31 August 2010 0.827 31 July 2010 1.305 30 September 2010 0.866 31 August 2010 1.269 debt for the first time. The market responded 31 October 2010 0.869 0.8030 September 2010 1.362 30 November 2010 0.837 positively to this new departure which aims 31 October 2010 1.392 31 December 2010 0.85730 November 2010 1.304 31 January 2011 0.85431 December 2010 31 January 2011 1.337 1.370 28 February 2011 31 March 2011 0.849 0.883 to ‘break the vicious circle between banks 0.60 28 February 2011 31 March 2011 1.379 1.419 30 April 2011 31 May 2011 0.888 0.874 and sovereigns’ which has plagued European 30 April 2011 Jan-09 Apr-09 Jul-09 Oct-09 0.903 1.483 30 June 2011Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 31 July 2011 0.875 growth and fuelled economic uncertainty. 1.437 The growing prospect that the ECB would 31 May 2011 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 cut its benchmark interest rate in July to an1 Mth 30 September 2011 31 October 2011 1.345 2% 1.395 3 Mth  -5% 31 December 2011 31 January 2012 0.8334 0.8302 12 Mth  -13% EURUSD all time low also supported sentiment toward31 November 2011 1.3446 31 February 2012 0.8372 the region and its currency in June.31 December 2011 1.29611 Mth  31 January 2012 31 January 2012 0% 1.3084 1.3325 3 Mth  -3% 12 Mth  -11% EURGBP The US Dollar’s weakness can be attributed to growing concern about the $650billion fiscal tightening expected in the US in 2013 and the growing likelihood of a third round of quantitative easing by the Federal Reserve Bank.Market Outlook:According to the International Energy Agency, when it comes to oil prices “there is no room for complacency...because you neverknow what prices are going to do”. This view is supported by the dramatic and sudden oil price rise to $128 in March and recentfalls. Looking forward, prices have the potential to fall once again to the lows seen in June given the healthy oil supply picture andslower global growth, particularly in China.However, the outlook is far from certain given that the Chinese authorities have the means and motivation to stimulate economicgrowth, Iran’s reaction to the EU’s sanctions after 1st July is unknown and renewed geopolitical tensions once again puts the spotlighton the vulnerable Strait of Hormuz. Spare production capacity remains low by historic standards and any growth in demand in thesecond half of 2012 could put upward pressure on prices. Traders will also assess OPEC’s collective tolerance of prices below $100.Seasonal gas prices will continue to be influenced by future movements in oil and potential developments in Japan as it plansto restart nuclear power stations for the first time since last year’s Fukushima disaster. According to Bloomberg there is now“speculation that prices for liquefied natural gas have peaked after reaching a three year high” as Japanese demand could beeroded over time. However, in the short term, the strike by 700 platform workers in the North Sea has the potential to drive pricesif the dispute escalates.re-weighting of bord gáis energy index: Oil 64.93%Following the SEAI’s 2009 review of energy consumption in Ireland, released inQ4 2010, there was a 9.3% drop in overall energy consumption. The most notabledrop of 1.39% was in oil consumption in the form of gasoline and diesel. Thisreflects the economic downturn experienced at the time. The share of natural gas Gasand electricity increased by 0.63% and 0.57% respectively. An increase in the use 13.52%of renewables and peat, at the expense of coal in electricity generation was alsoobserved. As a result the Bord Gáis Energy Index has been reweighted to reflectthe latest consumption data. This has had a minimal effect on the overall shape of Electricity Coalthe Index, but may indicate future trends. 18.40% 3.16%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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