September 2011 Energy Index - Bord Gáis Energy

460 views

Published on

GAS AND COAL PRICES INCREASE BUT A DROP IN OIL PRICES PUSH

ENERGY INDEX DOWN 3%

- INDEX 21% HIGHER THAN SEPTEMBER 2010 -

The Bord Gáis Energy Index (BGEI) recorded an increase in the price of both gas and coal for the month
of September, however, the overall Index fell 3% to 135 in September 2011, as fears of a second global
recession saw the price of brent crude oil tumble $12 per barrel over the course of the month.
However, the fall in oil prices was significantly offset in Europe by a 7% depreciation of the Euro versus
the US Dollar, which resulted in a net 4% decline in oil prices in Euro terms. Despite the drop, the index
is still 21% higher than it was in September 2010 when it stood at 111.

Commenting on the Bord Gáis Energy Index for September, Michael Kelleher, Energy Trading Analyst
at Bord Gáis Energy, said:

“The threat of a global economic slowdown due to the Greek debt crisis, concerns around a number of
European banking institutions and weak economic data recorded in the US, sparked the steady fall of oil
prices in September. The Index will continue to be influenced by macro-economic issues and concerns of
a second global recession in three years.

Futures markets indicate the possibility of a further fall in oil prices over the coming months, which have
averaged €111.50 in 2011 to date. Natural gas prices are likely to continue to rise during the cold winter
as these prices are linked to oil prices from the preceding three to nine months. Cold weather may push
up the cost of electricity due to increased demand.”

The following are the key trends recorded for the month of September:
Oil: The oil element of the Index was down 4% to 141. Oil fell steadily as fears of a second global
economic slowdown escalated. Oil prices fell further following reports predicting Libyan oil production
of 500,000 barrels per day by the end of October. The fall in oil prices was offset in Europe by a 7%
depreciation of the Euro versus the US Dollar.

Natural Gas: The natural gas element of the Index was up 4% to 180. The first half of the month saw
prices continue to rise as high as 60p/therm as a result of the traditional September maintenance of
fields, pipelines, Qatari LNG facilities and various other parts of the natural gas infrastructure.
Unseasonably warm temperatures in the latter half of the month resulting in weaker demand caused a
decline in natural gas prices to 46p/therm.

Coal: The coal element of the Index was up 4% to 156. The market saw sporadic European demand for
the commodity due to relatively high stock levels across the continent which was primarily being met by
Colombian, Russian and US cargoes. Coal has now traded in a narrow $122 to $126 range for five
straight months.

Electricity: The electricity element of the Index was down 1% to 118. Electricity prices fell in September
despite the increase in fuel prices, which were offset by an increase in wind output on the Irish

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

September 2011 Energy Index - Bord Gáis Energy

  1. 1. Bord Gáis Energy Index SEPTEMBER 2011G28968 BGE Energy Index Sep 2011 LK.indd 1 10/10/2011 10:48
  2. 2. Bord Gáis Energy Index SEPTEMBER 2011 GAS AND COAL PRICES INCREASE BUT A DROP IN OIL PRICES PUSH ENERGY INDEX DOWN 3% - INDEX 21% HIGHER THAN SEPTEMBER 2010 Bord Gáis Energy Index (Dec 31st 2009 = 100) OVERALL SUMMARY: The Bord Gáis energy index fell 3% to Bord Gáis Energy Index 12 Month Rolling Average 180 135 in September finishing the month below its 12 month rolling average for the first time in 2 years. 140 Fears of a second global recession in three years saw oil tumble $12 per Points barrel over the month. 100 However, the fall in prices was significantly offset in Europe by a 7% depreciation of the Euro versus the 60 US Dollar. This resulted in a net 4% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 decline in oil prices in Euro terms. 1 Mth -3% 3 Mth 0% 12 Mth 21% Similarly a 1% increase in UK gas prices translated to a 4% increase in Euro terms due to a weakening of the Euro currency versus Sterling. The Greek debt crisis, concerns around a number of European banking institutions and weak economic data out of the US all contributed to fears of another global recession. Oil Index OIL Oil prices fell steadily during 180 September as fears of a second global recession continued. The EU authorities’ failure to take 140 decisive action to deal with the Points sovereign debt crisis in Greece and weak economic data out of the US 100 pointed towards a second global slowdown in three years. Oil production in Libya restarted after 60 falling to almost zero in February Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 *Index adjusted for currency movements. when rebels began their assault Data Source: ICE on the Gaddafi regime. Reports predicting production of 500k barrels 1 Mth -4% 3 Mth -1% 12 Mth 26% per day by the end of October further depressed oil prices as the threat of a fall in demand loomed.G28968 BGE Energy Index Sep 2011 LK.indd 2 10/10/2011 10:48
  3. 3. Bord Gáis Energy Index SEPTEMBER 2011 Natural Gas Index NATURAL GAS 250 The traditional September maintenance of fields, pipelines, 200 LNG infrastructure and various other parts of the natural gas Points infrastructure in advance of the 150 winter peak demand pushed prices higher in front half of the month. This was followed by unseasonably 100 warm temperatures at the end of the month pushing prices lower on 50 weak demand. Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 *Index adjusted for currency movements. Data Source: Spectron Group The commodity traded as high as 60 p/therm and as low as 46 p/ 1 Mth 4% 3 Mth -2% 12 Mth 18% therm during the month eventually averaging 54 p/therm. Coal Index COAL 260 Coal prices remained relatively stable in September. The commodity 205 has now traded in a narrow $122 to $126 range for five straight months. Points 150 September saw sporadic European demand for the commodity due to relatively high stock levels across the 95 continent which was primarily being met by Colombian, Russian and US 40 cargoes. Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 *Index adjusted for currency movements. Data Source: ICE 1 Mth 4% 3 Mth 8% 12 Mth 29% Electricity Index ELECTRICITY 180 Electricity prices fell slightly in September. This was despite the increase in fuel prices which were 140 offset by an increase in wind output on the Irish grid this month. Points This reduced the need for more expensive thermal plant to meet 100 demand. 60 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Data Source: SEMO 1 Mth -1% 3 Mth 5% 12 Mth 8%G28968 BGE Energy Index Sep 2011 LK.indd 3 10/10/2011 10:48
  4. 4. Bord Gáis Energy Index SEPTEMBER 2011 FX Rates EURUSD EURGBP FX RATES 1.60 The Euro closed September at $1.34, its lowest level versus the US Dollar 1.40 since January. This off set some of the fall in oil prices and all of the fall 1.20 in coal prices for Irish consumers. The Euro finished the month at its 1.00 lowest level versus Sterling since March making natural gas relatively 0.80 more expensive for Irish consumers. 0.60 The Bord Gáis Energy Index would Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 have fallen 7% in September, but due to the fluctuations in the Euro versus 1 Mth -7% 3 Mth -7% 12 Mth -1% EURUSD both the US Dollar and Sterling, the index fell only 3%. 1 Mth -3% 3 Mth -5% 12 Mth -1% EURGBP MARKET OUTLOOK: Oil futures markets indicate the possibility of a fall in oil prices over the coming months. Oil prices have averaged $111.50 in 2011 to date. Natural gas prices in continental Europe for the coming winter are linked to oil prices from the preceding 3 to 9 months. This opens the possibility of a rise in gas prices should another cold winter outturn or a problem arise with the natural gas infrastructure in the UK. As the cold, dark winter months approach, more inefficient thermal plant may be required to meet the higher electricity demand levels, this may lead to an increase in prices over the coming months. The Bord Gáis Energy Index will also be influenced by macro economic issues and the possibility of the world economy slipping into another recession. 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 Oil 64.93% energy consumption. The most notable drop of 1.39% was in oil consumption in the form of gasoline and diesel. This reflects the economic downturn experienced at the time. The share of natural Gas gas and electricity increased by 0.63% and 0.57% respectively. 13.52% An increase in the use of renewables and peat, at the expense of coal in electricity generation was also observed. As a result the Bord Gáis Energy Index has been reweighted to reflect the latest Electricity Coal consumption data. This has had a minimal effect on the overall 18.40% 3.16% shape of the Index, but may indicate future trends. For more information please contact: Fleishman-Hillard - Aidan McLaughlin - 085 749 0484 Bord Gáis Energy - Christine Heffernan - 087 050 5555 Disclaimer: The contents of this report are provided solely as an information guide. The report is presented to you “as is” and may or may not be correct, current, accurate or complete. While every effort is made in preparing material for publication no responsibility is accepted by or on behalf of Bord Gáis Eireann, the SEMO, ICE Futures Europe, the Sustainable Energy Authority of Ireland or Spectron Group Limited (together, the “Parties”) for any errors, omissions or misleading statements within this report. No representation or warranty, express or implied, is made or liability accepted by any of the Parties or any of their respective directors, employees or agents in relation to the accuracy or completeness of the information contained in this report. Each of the Parties and their respective directors, employees or agents does not and will not accept any liability in relation to the information contained in this report. Bord Gáis Eireann reserves the right at any time to revise, amend, alter or delete the information provided in this report.G28968 BGE Energy Index Sep 2011 LK.indd 4 10/10/2011 10:48

×