October 2011 Energy Index - Bord Gáis Energy

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BORD GÁIS ENERGY INDEX INCREASES 1% DUE TO GAINS IN THE PRICE OF OIL
- INDEX 21% HIGHER THAN OCTOBER 2010 -

The continued volatility in the commodity markets was reflected in a 1% increase in the Bord Gáis Energy Index (BGEI) for October. While the index recorded a 3% increase in the price of oil for the month, the gains in oil prices were offset by falls in both coal and electricity prices. The lingering threat of a second global recession was the major influence on the movements in October’s index. The index, which now stands at 136, is 21% higher than it was in October 2010.

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October 2011 Energy Index - Bord Gáis Energy

  1. 1. Bord Gáis Energy Index OCTOBER 2011
  2. 2. Bord Gáis Energy IndexOCTOBER 2011 BORD GÁIS ENERGY INDEX INCREASES 1% DUE TO GAINS IN THE PRICE OF OIL - INDEX 21% HIGHER THAN OCTOBER 2010 –Bord Gáis Energy Index (Dec 31st 2009 = 100) OVERALL SUMMARY: The Bord Gáis Energy Index rose 1% as Bord Gáis Energy Index 12 Month Rolling Average 180 gains in oil prices were offset by falls in coal and electricity prices. Gains by the Euro versus the US Dollar also helped offset the effect of rising oil 140 prices.Points Commodity markets continued to be very volatile as Europe struggled to 100 get to grips with peripheral country debt levels and the threat that it could precipitate a second global recession in three years. 60 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-111 Mth 1% 3 Mth -2% 12 Mth 21%Macroeconomic issues such as the Greek debt crisis and the outlook for the global economy were themain drivers of commodity prices and FX rates in October.Oil prices remain very susceptible to the outlook for the global economy.The Euro staged a strong comeback versus the US Dollar from the lows seen at the beginning of October.Oil Index OIL Oil prices rose from lows of $99 at the 180 beginning of October to trade $115 by the middle of the month on pledges by France and Germany to come up with a plan to resolve the euro zone 140 debt crisis. Stronger-than-expectedPoints U.S. retail sales also supported higher prices. 100 However oil prices slipped at months end as futures broker MF Global filed for bankruptcy and the Greek 60 government announced a surprise Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 referendum on its debt bailout, *Index adjusted for currency movements. Data Source: ICE reviving concerns about the outlook for the Eurozone.1 Mth 3% 3 Mth -3% 12 Mth 31% Brent crude oil closed the month at $109.56
  3. 3. Bord Gáis Energy IndexOCTOBER 2011Natural Gas Index NATURAL GAS 250 The new gas year started with unusually warm weather both in UK 200 and the Continent resulting in lower demand and the lowest gas prices of 2011. However prices increased Points 150 gradually throughout the second week of the month as demand from the Continent picked up and 100 erratic Norwegian flows created uncertainty in the market. 50 NBP prompt prices traded sideways Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 *Index adjusted for currency movements. Data Source: Spectron Group around the 60p per therm level in the second half of October mainly because of lower BBL imports and1 Mth 0% 3 Mth 0% 12 Mth 21% LNG flows related to the ongoing Qatari maintenance.Coal Index COAL 260 European coal fell $5/mt to an eight-month low in the first week of 205 October due to lower equity markets and a weakening Euro.Points Negative macroeconomic news 150 caused greater losses in coal prices for next year than for the 95 remainder of 2011 due to 2012 growth expectations being adjusted down which, in theory, is bearish for future 40 coal demand. Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Prices remained below $120 for *Index adjusted for currency movements. Data Source: ICE the remainder on the month as1 Mth -7% 3 Mth -2% 12 Mth 19% confidence that a solution to the Greek debt crisis could be found fluctuated.Electricity Index ELECTRICITY 180 Wholesale electricity spot prices fell by 3% in October. Wind levels remained high on 140 average in October and when Points combined with increased availability of lower cost generation plant during 100 the month the net effect was a fall in wholesale prices. 60 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Data Source: SEMO1 Mth -3% 3 Mth 1% 12 Mth 1%
  4. 4. Bord Gáis Energy IndexOCTOBER 2011FX Rates EURUSD EURGBP FX RATES 1.60 The Euro traded down to a nine month low versus the US Dollar of 1.40 1.31 in the first week of October as Moody’s downgraded Italy’s debt to 1.20 A2 and fears that EU leaders would not get to grips with the debt crisis. However, as progress was made 1.00 towards a resolution to the Greek crisis the currency recovered to 0.80 finish the month at 1.39. The Euro also recovered from multi 0.60 month lows seen versus sterling to Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 finish the month at 0.86.1 Mth 4% 3 Mth -3% 12 Mth 0% EURUSD1 Mth 1% 3 Mth -1% 12 Mth 0% EURGBPMARKET OUTLOOK:The market expects oil prices to fall in 2012 from current levels with an increasing possibility that economicgrowth could falter next year if the current Euro crisis is not comprehensively resolved. Lower economicgrowth would mean that demand for oil in 2012 will be lower than it is currently and futures prices aresoftening as a result.Gas prices remain higher over the coming winter months due to the seasonal nature of the market and thehigh oil prices earlier in the year used in the calculation of gas prices on the continent.RE-WEIGHTING OF BORD GÁIS ENERGY INDEX:Following the SEAI’s 2009 review of energy consumption inIreland, 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 oilconsumption in the form of gasoline and diesel. This reflects theeconomic downturn experienced at the time. The share of natural Gasgas and electricity increased by 0.63% and 0.57% respectively. 13.52%An increase in the use of renewables and peat, at the expense ofcoal in electricity generation was also observed. As a result theBord Gáis Energy Index has been reweighted to reflect the latest Electricity Coalconsumption 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 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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