Energy and Utility Management Consultants

Prices Climb, but Slow

March 2012


Reports on supply issues are abound this week, but with lower demand and the news that Shell's Ormen Lange field is going offline (resulting in some 24mcm of exports normally destined for Europe staying in the UK system) the immediate future should see adequate supply. Forward prices are being supported by current and long-term LNG delivery concerns; several Qatari LNG facilities have been scheduled for maintenance over the coming months, and with some closures coinciding with planned maintenance of the UK-Netherlands interconnecting gas pipeline, further stress could be put on markets. Brent Crude Oil wholesale prices have begun to climb after a recent lull, and have continued at a year-long high; largely driven by Middle-Eastern political issues. Electricity wholesale prices, despite reaching a 5-month high, remain well below the trend line and are some 15% lower than at the same time last year, and natural gas wholesale prices remain above the trend line, but have seen a relative plateau over the last month. The unseasonably warm weather and lowered demand should hopefully see downward movement in natural gas and electricity prices over the coming weeks.





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