1) The Bord Gáis Energy Index fell 1% in August as modest increases in the Brent crude oil price were offset by falls in the wholesale prices of gas, coal, and electricity.
2) Commodity prices have fallen significantly from their highs in recent years due to oversupply issues in almost all raw materials markets driven by slowing demand from China.
3) The US administration took steps toward ending its ban on crude oil exports, which could benefit US oil producers and allies while hurting countries like Russia, Venezuela, and Iran if the ban is fully lifted. However, many political and economic issues still need to be addressed.
The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier.
Earnings are down for companies that made record profits in recent years, leading them to decommission more than two-thirds of their rigs and sharply cut investment in exploration and production. Scores of companies have gone bankrupt and an estimated 250,000 oil workers have lost their jobs.
The cause is the plunging price of a barrel of oil, which has fallen more than 70 percent since June 2014.
Prices recovered a few times last year, but a barrel of oil has already sunk this year to its lowest level since 2004. Executives think it will be years before oil returns to $90 or $100 a barrel, a price that was pretty much the norm over the last decade.
Brent crude, the main international benchmark, was trading at around $29.64 ( 21st February 2016) a barrel on Saturday.
United States production has surged in recent years as the shale boom took off. That has helped create a glut of oil as major producers like Saudi Arabia continue to pump at high levels.
The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier.
Earnings are down for companies that made record profits in recent years, leading them to decommission more than two-thirds of their rigs and sharply cut investment in exploration and production. Scores of companies have gone bankrupt and an estimated 250,000 oil workers have lost their jobs.
The cause is the plunging price of a barrel of oil, which has fallen more than 70 percent since June 2014.
Prices recovered a few times last year, but a barrel of oil has already sunk this year to its lowest level since 2004. Executives think it will be years before oil returns to $90 or $100 a barrel, a price that was pretty much the norm over the last decade.
Brent crude, the main international benchmark, was trading at around $29.64 ( 21st February 2016) a barrel on Saturday.
United States production has surged in recent years as the shale boom took off. That has helped create a glut of oil as major producers like Saudi Arabia continue to pump at high levels.
What the drop in oil prices means for the economy and office marketsJLL
Oil prices are below $65 per barrel for the first time since 2009, and energy producers across the globe are starting to panic. Lower prices will likely extend into 2015—bad news for energy companies and the downstream industries that support them, but good news for the U.S. economy and consumers.
We expect demand for real estate in the energy markets to weaken. Landlords and developers will feel pressure to secure and retain occupancy. But, the benefit of sustained low oil prices will fuel (pun intended) retail, residential, industrial and office demand across the United States overall.
Learn more about the energy industry, and our services for companies in the field, at http://bit.ly/1qSz2Li
EY Price Point: global oil and gas market outlook, Q2 | April 2022EY
The theme for this quarter is rearrangement. The loss, or potential loss, of Russian oil and gas supplies is forcing producers, refiners and traders to rethink the flow of crude oil and refined products from the wellhead to the gas pump in light of sanctions, potential sanctions and the risk of reputational damage. Countries, companies and consumers will all be searching for ways to adapt, and the outcome of the race to bring alternatives to market could alter the global energy landscape for years to come.
It is likely crude oil and LNG prices will remain elevated for some time. The process of diverting Russian oil through countries unwilling to sanction it will take time and there is little indication OPEC members are willing (or able) to increase production to make up for the loss of Russian crude. Spare capacity sat at 3.7 mbpd at the end of 2021, just above where it was in January 2020. Currently, sanctioned Venezuelan and Iranian production (about 3 mbpd below their peak) could fill the gap, but political and commercial obstacles remain. At today’s prices, US shale production is attractive, but the fastest the industry has been able to grow is between 1mbpd and 2mbpd per year. The LNG infrastructure was already stretched before the war in Ukraine and there is little prosect of finding new supplies soon.
As the largest buyer of Russian energy, Europe will be the epicenter. There is a deeply embedded bias there in favor for renewable energy, and the current crisis is certain to result in an all-out effort to accelerate the build-out of wind and solar power. The capacity to add new green energy is limited though by the project pipeline and supply chains for solar panels and wind turbines, and it is likely that much of the shortfall will be made up with the new LNG infrastructure.
EY Price Point: global oil and gas market outlook, Q2, April 2020EY
The first quarter of this year has seen some extraordinary events. As if chronic oversupply, prices stuck below sustainable levels, the looming energy transition, and investor pressure to decarbonize weren’t enough, our industry now faces a dramatic, but hopefully temporary, downturn in demand as a result of the ongoing COVID-19 outbreak.
Oil is the major
source of energy from most of the developed as well as developing countries around the world.
Therefore a change in the supply of oil will significantly affect operations in most parts of the
world. There are a number of factors that affect the demand and supply of oil in the world.
- See more at: http://www.customwritingservice.org/blog/factors-affecting-demand-and-supply-of-oil
EY Price Point: global oil and gas market outlookEY
We enter 2021 on a note of cautious optimism for global health, the world economy, and the oil and gas markets. The first weeks of December brought approval in the US and the UK of the first of several COVID-19 vaccines. The speed with which vaccine development occurred is unprecedented, but certainly welcome. In the weeks following the early November announcement of 90+% effectiveness by the manufacturer of the first approved vaccine, the price of WTI crude oil increased by US$10/bbl to US$48/bbl, the highest level since early March. Sustainability hasn’t returned yet, and whatever time it takes to get the world to normal, it will take even longer for normalization within the oil and gas markets. Inventories remain at historically high levels and, optimistically, it will take until April before inventory returns to levels observed in the preceding five years. That’s an estimate, and there has obviously been some difficulty properly calibrating the expectations of how balance will return and how long it will take. In late November, OPEC met to adjust its output plans because of the anemic rebound in demand. In mid-December, the IEA lowered its demand forecast for 2021 due mostly to continued sluggishness in aviation fuel demand.
A mild winter has interrupted a recovery in North American natural gas prices after a run-up motivated by curtailed capital expenditures, upstream activity and production. After an initial meltdown, with cargo cancellations and dramatic price reversal, LNG markets have made a remarkable comeback, and the spread between Asia and Henry Hub has reached a level we haven’t seen in almost three years. It may be the case that interruption in FIDs has brought us to the cusp of a balance that can support reliable returns.
EY Price Point: global oil and gas market outlook (Q4, October 2020)EY
Oil and gas prices have recovered steadily from their lows and are relatively stable, but that stability is supported by the combination of purposeful withholding of production by oil-producing countries and economic stress on upstream independents. Oil prices closed the quarter roughly where they started it, while refining spreads were down slightly. LNG spreads were substantially higher at the end of Q3 than they were at the beginning of the quarter but are still roughly half of what is generally thought of as sustainable.
Going forward, the market will be looking closely at how the economy and demand respond to new developments with respect to a potential COVID-19 vaccine and the US election.
Oil prices falling and Their Impact on World and Indian EconomyRishabh Hurkat
The presentations is focused on Reason Behind the Fall in Global Crude Oil Prices.
It also inculcates various Charts and Data which are Up-to-date.
The Basic Reason is to understand the Effect on Global and Indian Economy.
Impact of Oil Prices on the Economic Growth of PakistanMuhammad Sharjeel
We gathered data from different resources and then finalize our presentation. The intention to upload this file is to help those guys who need some guidelines for preparing presentation. :)
Please find attached our complimentary copy of our Oil Buyer's Guide 2013 Review. This is just a sample of incredible content our subscribers receive each day. Visit bloombergbriefs.com for more information.
What the drop in oil prices means for the economy and office marketsJLL
Oil prices are below $65 per barrel for the first time since 2009, and energy producers across the globe are starting to panic. Lower prices will likely extend into 2015—bad news for energy companies and the downstream industries that support them, but good news for the U.S. economy and consumers.
We expect demand for real estate in the energy markets to weaken. Landlords and developers will feel pressure to secure and retain occupancy. But, the benefit of sustained low oil prices will fuel (pun intended) retail, residential, industrial and office demand across the United States overall.
Learn more about the energy industry, and our services for companies in the field, at http://bit.ly/1qSz2Li
EY Price Point: global oil and gas market outlook, Q2 | April 2022EY
The theme for this quarter is rearrangement. The loss, or potential loss, of Russian oil and gas supplies is forcing producers, refiners and traders to rethink the flow of crude oil and refined products from the wellhead to the gas pump in light of sanctions, potential sanctions and the risk of reputational damage. Countries, companies and consumers will all be searching for ways to adapt, and the outcome of the race to bring alternatives to market could alter the global energy landscape for years to come.
It is likely crude oil and LNG prices will remain elevated for some time. The process of diverting Russian oil through countries unwilling to sanction it will take time and there is little indication OPEC members are willing (or able) to increase production to make up for the loss of Russian crude. Spare capacity sat at 3.7 mbpd at the end of 2021, just above where it was in January 2020. Currently, sanctioned Venezuelan and Iranian production (about 3 mbpd below their peak) could fill the gap, but political and commercial obstacles remain. At today’s prices, US shale production is attractive, but the fastest the industry has been able to grow is between 1mbpd and 2mbpd per year. The LNG infrastructure was already stretched before the war in Ukraine and there is little prosect of finding new supplies soon.
As the largest buyer of Russian energy, Europe will be the epicenter. There is a deeply embedded bias there in favor for renewable energy, and the current crisis is certain to result in an all-out effort to accelerate the build-out of wind and solar power. The capacity to add new green energy is limited though by the project pipeline and supply chains for solar panels and wind turbines, and it is likely that much of the shortfall will be made up with the new LNG infrastructure.
EY Price Point: global oil and gas market outlook, Q2, April 2020EY
The first quarter of this year has seen some extraordinary events. As if chronic oversupply, prices stuck below sustainable levels, the looming energy transition, and investor pressure to decarbonize weren’t enough, our industry now faces a dramatic, but hopefully temporary, downturn in demand as a result of the ongoing COVID-19 outbreak.
Oil is the major
source of energy from most of the developed as well as developing countries around the world.
Therefore a change in the supply of oil will significantly affect operations in most parts of the
world. There are a number of factors that affect the demand and supply of oil in the world.
- See more at: http://www.customwritingservice.org/blog/factors-affecting-demand-and-supply-of-oil
EY Price Point: global oil and gas market outlookEY
We enter 2021 on a note of cautious optimism for global health, the world economy, and the oil and gas markets. The first weeks of December brought approval in the US and the UK of the first of several COVID-19 vaccines. The speed with which vaccine development occurred is unprecedented, but certainly welcome. In the weeks following the early November announcement of 90+% effectiveness by the manufacturer of the first approved vaccine, the price of WTI crude oil increased by US$10/bbl to US$48/bbl, the highest level since early March. Sustainability hasn’t returned yet, and whatever time it takes to get the world to normal, it will take even longer for normalization within the oil and gas markets. Inventories remain at historically high levels and, optimistically, it will take until April before inventory returns to levels observed in the preceding five years. That’s an estimate, and there has obviously been some difficulty properly calibrating the expectations of how balance will return and how long it will take. In late November, OPEC met to adjust its output plans because of the anemic rebound in demand. In mid-December, the IEA lowered its demand forecast for 2021 due mostly to continued sluggishness in aviation fuel demand.
A mild winter has interrupted a recovery in North American natural gas prices after a run-up motivated by curtailed capital expenditures, upstream activity and production. After an initial meltdown, with cargo cancellations and dramatic price reversal, LNG markets have made a remarkable comeback, and the spread between Asia and Henry Hub has reached a level we haven’t seen in almost three years. It may be the case that interruption in FIDs has brought us to the cusp of a balance that can support reliable returns.
EY Price Point: global oil and gas market outlook (Q4, October 2020)EY
Oil and gas prices have recovered steadily from their lows and are relatively stable, but that stability is supported by the combination of purposeful withholding of production by oil-producing countries and economic stress on upstream independents. Oil prices closed the quarter roughly where they started it, while refining spreads were down slightly. LNG spreads were substantially higher at the end of Q3 than they were at the beginning of the quarter but are still roughly half of what is generally thought of as sustainable.
Going forward, the market will be looking closely at how the economy and demand respond to new developments with respect to a potential COVID-19 vaccine and the US election.
Oil prices falling and Their Impact on World and Indian EconomyRishabh Hurkat
The presentations is focused on Reason Behind the Fall in Global Crude Oil Prices.
It also inculcates various Charts and Data which are Up-to-date.
The Basic Reason is to understand the Effect on Global and Indian Economy.
Impact of Oil Prices on the Economic Growth of PakistanMuhammad Sharjeel
We gathered data from different resources and then finalize our presentation. The intention to upload this file is to help those guys who need some guidelines for preparing presentation. :)
Please find attached our complimentary copy of our Oil Buyer's Guide 2013 Review. This is just a sample of incredible content our subscribers receive each day. Visit bloombergbriefs.com for more information.
Data Driven Management - Visioning Slides CARE CML IndrajitIndrajit Chaudhuri
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The Saturday Economist Oil Market Update 2015John Ashcroft
What is pushing oil prices lower? What’s the difference between Brent Crude or West Texas Intermediate? Will prices stay low and what are the prospects for oil demand growth? Who are the winners and losers? What is the impact of lower oil prices on the economy? Are lower oil prices good for growth? What does the falling price mean for the consumer? US Oils rigs go up as the oil prices rise, so is the real challenge, Sheiks versus Shale or a Western squeeze on Russian resources?
Check out our oil market update to understand just what is happening in the oil Market
declining crude oil pricing:causes and global impactSatyam Mishra
this presentation gives some insight into the causes of declining crude oil pricing and how that is going to affect various oil producing and non oil producing countries across the globe.
The OPEC Reference Basket averaged $42.68/b in July, representing the first decline in five months. Lower-than-expected demand, high refined product stocks, and rising crude supply were the factors behind the $3.16 drop. ICE Brent ended down $3.39 at $46.53/b, while Nymex WTI fell $4.05 to $44.80/b. Speculators cut long positions further this month in all markets. The ICE Brent-WTI spread widened to $1.75/b in Brent’s favour during July.
Mercer Capital's Value Focus: Energy Industry | Q1 2020 | Region Focus: Eagle...Mercer Capital
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes macroeconomic trends, industry trends, and guideline public company metrics.
How long will oil prices stay low? The speculation game continues. Here are the key indicators that will continue to impact the market in the coming months.
New base energy news issue 915 dated 25 august 2016Khaled Al Awadi
Greetings,
Attached FYI (NewBase 25 August 2016 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In today’s issue you will find news about:-
• LNG IN THE NEW OIL PRICE ERA, By Morten Frisch
• Saudi Arabia Holds China Market Share Lead on Record Oil Output
• China Oil Giants Unmoved by Bull Rally After Worst-Ever Earnings
• Norway's Oil Investments To Fall Again In 2017
• Kenya: Work Begins on 2D Seismic Survey in Wajir Kenya
• Kenya: First Kenyan Oil Due by March 2017; Exports to Follow
• Oil prices fall as market focus returns to global supply overhang
• As Japan and South Korea import less LNG, other Asian countries begin to import more
we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-
khdmohd@hotmail.com or khdmohd@hawkenergy.net
Best Regards.
Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 2010
EY Price Point: Global oil and gas market outlook Q4 2018EY
A range of upside forces have shifted market sentiment and some parties are talking of $90, or even $100/bbl oil in the short to medium term. Our insights on the outlook for the global oil price in Q4 2018.
Commodity Market News 30 september report by swastika investmart stock brokin...Swastika Investmart
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Mercer Capital's Value Focus: Energy Industry | Q2 2019 | Region: Permian BasinMercer Capital
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The Bord Gáis Energy Index for September 2014 saw significant increases in the wholesale prices of Natural Gas (21%) and Electricity (17%). This was mostly offset by a fall in Brent Crude Oil as the Bord Gáis Energy Index rises by 3%.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
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Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
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𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
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2. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Bord Gáis Energy Index (Dec 31st 2009 = 100)
The August 15 Bord Gáis Energy Index fell by 1% month-on-month. A modest month-on-month increase in the Brent
crude oil price (at one point a 27% surge in Brent crude prices was recorded) was offset by the falling wholesale price
of gas (-12% month-on-month), coal (-8% month-on-month) and electricity (-2% month-on-month).
Up until recently, the world had been experiencing a new era in commodity markets, spurred by insatiable demand from
China. However the gears have now gone into reverse with many commodity prices having fallen below their levels of
a decade ago. The real curse for producers is over-supply in almost all raw materials. According to the Economist, “so
far this year, almost all major commodities—energy, industrial metals and agriculture—have fallen in a 10-20% range”.
In August 2015 the Index stood at 97, which is a new record low for the Index having been set at 100 on 31 December
2009.
Summary
1 Mth
3 Mth
12 Mth
Bord Gáis Energy Index 12 Month Rolling Average
50
100
150
200
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
-24%
-12%
-1%
(Continued overleaf)
3. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Bord Gáis Energy Index (continued)
HOT TOPIC
In August the US administration made tentative steps toward ending America’s ban on crude oil exports. Following
this decision, in an article dated August 22 titled Nafta naphtha, the Economist Magazine examined the history behind
the ban, the reasons why this protectionist ban needs to be lifted and explored the potential obstacles to its total
demise as well as the economic and political benefits. The following is an extract from the article:
In 1975, just after the first oil shock, America banned crude-oil exports in order to stabilise domestic prices. Because
of this, the country’s oil refineries are still configured to deal with the heavy, sulphur-laden crude oil it used to import.
The shale revolution has provided the US with oil that is lighter and less sulphuric than traditional imports. And there
are not many refineries in America that can deal with it efficiently.
An obvious solution would be to export this light tight oil for refining elsewhere but the ban means it cannot be
exported. As a result of the glut of crude oil building up in the US “the price of domestically produced US oil is kept at
a hefty discount to the world price—currently over US$6 per barrel. That has become particularly painful since OPEC’s
excess production has sent global benchmark prices tumbling.
American oilmen are fuming that their potential export markets are being sacrificed to the interests of America’s
refining industry. In addition others would benefit too from its wholesale demise if the world markets were to receive
US light tight oil. Supporters of the ban say it keeps American petrol prices low.
The consensus among economists is that prices of refined products such as petrol are set in the world market. With
American crude bringing that price down, the cost of fuel may even fall a bit for Americans. On August 14 the US
made a decision to allow American firms to swap some oil with Mexico, so easing the historic and politically sensitive
restraint. Mexico’s national oil company, Pemex, has long wanted to send its heavy crude to America and import
lighter American oil to turn into petrol. The Commerce Department will allow about 100,000 barrels a day of light
crude and condensates to flow into Mexico, in exchange for a similar amount of heavier Mexican crude heading to
American refineries. It is not the first breach of the ban.
The definition of what constitutes crude oil owes more to art (and bureaucratic fiat) than science. America has already
allowed the export of some kinds of ultralight crude. Canada has long enjoyed a privilege similar to the one now
granted to Mexico. Opposition to the ban is also growing among lawmakers. The Economist argues that its scrapping
would delight America’s allies: the ban undermines America’s moral authority on trade. Better yet, it would also hurt
unfriendly petrostates such as Russia, Venezuela and Iran. Despite obvious benefits to lifting the ban, the details will
still be tricky. America’s cosseted crude-oil refiners would be willing to see an end to artificially cheap raw materials
in exchange for other concessions.
A wholesale solution to this elderly quirk in the world oil market may still be some time off. But by lowering trade
barriers for Mexican oil, the Obama administration will at least improve the functioning of the world oil market—and
highlight the potential benefits of more dramatic reforms.
4. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Oil Index
Month-on-month the Brent crude oil price rose by US$1.94 from US$52.21 on July 31 to close at US$54.15 on August
31. However, intra-month prices hit a closing low of US$42.69 on August 24, levels not seen since the height of the
financial crisis back in February 2009. On this day the Chinese stock exchange crashed on what was called ‘Black
Monday’. The Shanghai composite index lost 8.5% that day, the worst fall since 2007. The dramatic weakness seen in
the oil price during most of the month was highly correlated to concerns about the strength of China’s economy given
that China is the world’s biggest importer of crude oil. Of course, the Chinese stock market is not directly responsible
for oil’s fall during the month but it has reinforced concerns about whether China’s economic growth is going to slow
very abruptly, and has undermined expectations about future oil sales - driving down the price now.
Oil prices did recover toward the end of the month as a result of a three-day rally in which prices rose faster than
at any time since Iraq invaded Kuwait in 1990. Among the flimsy arguments used to justify the 27% surge (as prices
rallied from US$42.69 to US$54.15): an OPEC platitude that it was “ready to talk” with other producers; an empty
comment by non-OPEC Russia about possible co-operation; and a slight downward revision of American oil output.
However, for some analysts the bottom line was that hedge funds had been betting on further price falls, and chickened
out at the merest whisper of upward price pressures. Speculation and other external influences aside, the reality is
that OPEC stalwarts Saudi Arabia, Iraq and Iran are still pumping hard, and show no sign of stopping despite weak
demand. As a result, global crude oil and product stocks are now at their highest levels since the Great Recession of
2008–09. IHS expects crude stocks entering refinery maintenance season to be as much as 100 MMbbl above the
September 2014 level. So far, US production growth has slowed to a halt, but it has yet to turn strongly downward.
OPEC production in turn has not just remained steady since the November 2014 meeting, where the group took the
decision not to cut in the face of oversupply, but has instead increased by 1.4 MMb/d (most of these volumes are from
Saudi Arabia and Iraq, with Iran likely to add further barrels next year.)
As a result, even with demand growth of 1.4 MMb/d this year (more than double last year’s) and 1.1 MMb/d next year,
US output would have to fall to 9.0MMb/d or lower to bring global production in line with demand. To drop to this low
level, IHS estimate that WTI prices would need to average around US$45/bbl or lower for two consecutive quarters.
In August, rig count in the US increased.
50
100
150
200
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
Oil
*Index adjusted for currency movements.
Data Source: ICE
1 Mth
3 Mth
12 Mth-39%
-19%
2%
(Continued overleaf)
5. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Oil (continued)
OPEC is more than maintaining its high production and its market share, with July output estimated at 32.0MMb/d—
an increase of 0.2 MMb/d over June. Saudi Arabia’s output likely stayed at or above June’s 10.6MMb/d level given that
in July and August demand for crude in power generation is generally higher than earlier in the summer. All other
OPEC countries, including Kuwait and the United Arab Emirates, are producing essentially at capacity; and Libya
remains mired around 400,000b/d, with no sign that production will recover in any consistent way. Two significant
factors sustaining and growing OPEC production are additional barrels from Iraq, including the Kurdistan Regional
Government (KRG), and the return of Iran’s embargoed exports to world markets. On Iranian production, analysts
expect that crude oil export restrictions are lifted in March of next year and that exports climb slowly from the current
2.85 MMb/d to 3.40 MMb/d at the end of 2016. This is a much less rapid pace than some Iranian representatives have
discussed, but there is substantial uncertainty about timing and quantities in resuming the country’s embargoed
exports.
With no end in sight to the global oil glut, Middle Eastern producers fear a repeat of the 1970s and 1980s. Back then,
giddy prices drove the search for oil elsewhere. The world was soon pumping so much that prices crashed, and
stayed low for 20 years. For the Middle East that meant rising unemployment and for some countries, such as Algeria,
unrest and civil war. Since then a decade of high prices has given regional producers a US$2.5 trillion cushion. But
the past year’s halving of prices has forced them to deplete their hoard—even to borrow. For the richest that is fine:
they can forgo income while their low-cost oil recoups market share from costlier sources, such as shale. For poorer
ones like Algeria and Iraq, the squeeze will come sooner. According to data from the EIA, the global supply demand
differential stood at 2.27 MMb/d in July with supply being recorded at 96.39 MMb/d compared to a demand figure of
94.12 MMb/d.
6. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Natural Gas Index
The average day ahead price for August was 39.77 pence per therm, this is over 8% lower than the previous month
out-turn of 43.36 pence per therm. In euro terms the month-on-month drop was 12%. UK demand in August averaged
188mcm, this is 41mcm above seasonal normal demand as calculated by National Grid. This higher demand was
partly attributed to higher interconnector exports to the continent, which averaged 39mcm in August, compared to
an average of 28mcm in July. The ramp up in exports was due to a planned maintenance on the Europipe 1 pipeline
between the Dutch and German border which meant that part of the additional Norwegian gas was re-routed through
the UK back to the continent. LNG supply in August reached a three year high of 61mcm on the August 18, with average
send out of 50mcm for the second-half of the month. Injections into storage continued in August, with stocks by the
end of August standing at 80% full and the Rough storage facility moved to a single train mode, limiting injections to
11mcm/day. The facility is scheduled to go down for planned maintenance for 2 weeks in September. Forward prices
over the month tracked the softer prompt contracts, with the front season winter 15 contract opening the month at
45 pence per therm, and finishing the month over 1 pence per therm lower.
50
100
150
200
250
300
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
Natural Gas
1 Mth
3 Mth
12 Mth
-11%
-12%
*Index adjusted for currency movements.
Data Source: Spectron Group
6%
7. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Coal Index
The ICE Rotterdam Monthly Coal Futures Contract continued its remarkable slow decline in August. Having closed
July at US$58.45/mt, prices continued to ease in August to close the month at US$54.95. Similar to oil, European
coal prices have not been at these levels since February 2009. The crude oil market was the main referent for price
direction in the coal market during the month, as coal supply-demand fundamentals remained generally unchanged.
The industry’s biggest worry remains the state of the Chinese economy and the ripple effects of its slowdown on
developed economies like Australia. China, the world’s largest buyer of coal, imported 17.49 million tonnes of the
fuel in August, down 17.7 per cent from the previous month, and down 31.3 per cent year on year, with already weak
demand affected by a currency devaluation that has made foreign coal more expensive. China has been trying to
tackle an immense supply glut that has weighed on prices. As well as urging big local producers to cut output, it has
drawn up new quality standards aimed at restricting low-grade imports. A broad government push toward more
environmentally sustainable sources of energy has also weighed heavily on producers. “Under the impact of the
[currency] devaluation, the price advantages of imported coal will gradually narrow, and we are forecasting imports
coming under further pressure in September,” said analysts with Guangfa Securities. With fewer global supplies
finding a home in China, the global coal glut remains. The weakness in global coal trade is evident in falling bulk-
freight rates. The slump in Chinese demand for commodities has created huge overcapacity. The main gauge of bulk-
freight rates, the Baltic Dry Index, sagged in August.
50
100
150
200
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
Coal
1 Mth
3 Mth
12 Mth
-8%
-9%
-16%
*Index adjusted for currency movements.
Data Source: ICE
8. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Electricity Index
Month-on-month the average wholesale price of electricity fell by 2%. Excluding supplier capacity payments, the
average wholesale price for August was E50.29 compared to E51.31 in July, a fall of just over E1/MWh on the average
monthly wholesale price.
In general, the wholesale price of electricity can be assessed by examining three components: the UK wholesale cost
of gas, the European wide price of emitting one tonne of carbon and spark. August manifested the competing effects
of these components. On one hand, the fall in the cost of power was driven by a significant drop in the wholesale cost
of prompt gas imported from the UK over the month. Day-ahead contracts during August were down 12% on July
in euro terms. The UK Day-ahead gas price has a strong influence in the wholesale price of power in Ireland as the
majority of gas is imported from the UK and gas powered plants tend to set the wholesale price of power.
At the same time, a monthly clean spark of E8.24/MWh was recorded for August which is up markedly from the low
level of E5.75/MWh observed in July. Significant outages for a number of coal plants, two in Moneypoint and one
in Kilroot, resulted in a greater reliance on gas plants during the month of August. With demand levels remaining
subdued, wind powered production also dropped from approximately 18% in July to 14% in August. All these factors
resulted in relatively expensive thermal plants making it into the merit order and tending to prop up wholesale prices.
In spite of these, the overall SMP fell due to the greater effect of the drop in the wholesale cost of gas during the
period.
50
100
150
200
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
Electricity
1 Mth
3 Mth
12 Mth
Data Source: SEMO
0%
3%
-1%
9. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Market watchers are still wondering whether the Federal Reserve will raise interest rates on September 17. The most
recent US non-farm payroll figures gave ammunition to both hawks and doves: unemployment dropped unexpectedly
to 5.1%, but wage pressures remained subdued. The Fed’s chief, Janet Yellen, regularly emphasises the importance
of job-market data to this decision. The IMF has called again for the Fed to keep rates low, pointing to subdued
inflation and threats to global growth from China’s slowdown and a rising dollar. A rate rise would have global effects,
luring capital into America in search of higher returns (which would strengthen the US dollar); emerging-market
currencies are already suffering, with the Malaysian ringgit reaching its lowest point since 1998. If American investors
seek comfort, they won’t find it in China. In early September China trimmed its GDP growth figure for 2014 and
reported a record fall in reserves. It also revealed a sharp drop in imports and exports last month. The market has
been worrying about China’s economic health as much as about Fed policy. These additional weak barometers follow
‘Black Monday’ or the day the Chinese stock exchange crashed and the Shanghai composite index lost 8.5% on the
day. Until September 17, analysts and the markets will have to continue pondering. With the timing of a US rate rise in
the balance the ECB clearly faces different challenges with the sluggishness of the euro area’s recovery continuing to
cause concerns. GDP grew by 0.4% in late 2014 and early 2015, but by only 0.3% in the second quarter—about one-
third of America’s rate. At the most recent ECB meeting, no action was taken but more support could be offered in
the future with Mario Draghi hinting that the European Central Bank stands ready to bolster its Quantitative Easing
programme.
In the month the Bank of England kept rates at 0.5%, with only one MPC member voting for an increase to 0.75%.
Rapidly rising wages had prompted speculation that more members would vote to raise rates, but the strengthening
pound and subdued prospects for inflation kept the other eight at bay. This was the first dissenting vote of 2015 and
although the likely timing of the first rate rise is drawing closer, the overwhelming message was of a Committee in no
rush. The list of reasons invoked by the MPC for keeping rates low is a long one. This time inflation was the main focus.
The Bank of England expects it will take two years to get back to 2% - the Bank’s target. But there’s plenty of reasons
to think it could take even longer. For one the oil prices remain weak. That could change of course, but a persistent
drag on inflation has been China, whose slowdown seems likely to exert further downward pressure on prices.
0.5
1.0
1.5
2.0
Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jan-09
FX Rates
FX Rates
EURUSD
EURGBP
1 Mth
3 Mth
12 Mth
1 Mth
3 Mth
12 Mth
-15%
-8%EURUSD EURGBP
2%
2%
2%
4%
10. Bord Gáis Energy Index
Commentary
bordgaisenergy.ie August 2015
Market Outlook
According to Barclays, producers in US tight oil plays will be extremely challenged to continue to see the kind of
additional cost deflation needed to ramp up new drilling if prices remain at US$45 WTI. Therefore, an anticipated delay
to Iran’s return, Iraqi loading issues and a US oil supply response should bring Brent prices to average in the mid-US$60
range during 2016. Barclays expect Iran’s contribution to slip for several reasons because of delays to implementation
day, discussions in the US Congress concerning the imposition of additional sanctions and the verification of the IAEA’s
report in late 2015 to cast doubt on the pace and timing of sanctions relief. The second reason Barclays forecast higher
prices in 2016 is due to an expected adjustment to non-OPEC supplies. Barclays expect, at US$65 Brent prices, the
existing non-OPEC supply stack to decline 4-5% per year through 2018, implying a reduction in supply of 2-2.5 MMb/d.
Third, Barclays see growing risks to OPEC supply levels. Barclays point out that Iraq’s exports have already declined
as a result of technical transport issues in the south and sabotage on pipelines in the north. In the coming months,
Saudi Arabia is likely to reduce its wellhead output, rather than intentionally pressure markets further downward, when
refining throughput enters a seasonal downturn. Fourth, Barclays forecast that the oil market balance is expected to
tighten. In the fourth quarter, Barclays expect only a 0.2 mb/d MMb/d margin between OPEC supplies and the demand
for OPEC crude, in contrast to a 2 mb/d margin in Q1-Q3. Barclays think further upwards adjustments to demand and
downward adjustments to supply are yet to come, based on historical precedent. Despite this expectation of rising
prices in 2016, in the short-term Money Managers increased their gross short positions of roughly 53 MMb/d for WTI
and 49 MMb/d for Brent since late May. This, according to Reuters, demonstrates that hedge funds are expecting oil
markets to remain oversupplied.
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
Energy Limited, 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
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For more information please contact:
Bord Gáis Energy Pressoffice@bge.ie
or Alan Tyrrell at PSG Plus 086 850 8673
Re-weighting of Bord Gáis Energy Index
Following the SEAI’s 2011 review of energy consumption in
Ireland, there was a 6.4% drop in overall energy consumption.
Oil continues to be the dominant energy source with most of the
oil used in transport and the remainder being used for thermal
energy. For the purposes of the Bord Gáis Energy Index, the total
final energy consumption in Ireland fell 1,089 ktoe (toe: a tonne of
oil equivalent is a unit of energy, roughly equivalent to the energy
content of one tonne of crude oil) between 2009 and 2011. This
fall was made up of a 1,022 ktoe drop in oil consumption (down
13.5%), a 20 ktoe drop in natural gas (down 12.6%), a 7 ktoe drop
in electricity (down 0.3%) and a 40 ktoe drop in coal (down
10.98%). The Bord Gáis Energy Index has been re-weighted in
January 2013 to reflect the latest consumption data. The impact
has been minimal and has resulted in slight reductions in the share
of oil and gas and a slight increase in the weighting of electricity
in the overall Index.
Oil
61.96%
Gas
14.72%
Coal
3.1%Electricity
20.22%