Energy and Utility Management Consultants

Prices Remain High, but Stable

March 2011


The last week has actually brought about some stability in the wholesale market prices of natural gas, electricity and Brent crude oil. Despite the thoroughly justified fears of massive leaps in the markets off the back of the earthquake and tsunami to hit Japan on the 11h March, some normality has been restored following the initial spike in the few days after the tragedy. Although Brent crude oil prices have blipped upwards again, both natural gas and electricity prices fell overnight - a trend that we hope will continue, although a return to prices akin to those of October/November 2010 is unlikely in the short-term.

The events of the last week are a good example of how intrinsically linked the energy markets are across the globe. As Japan had to shut down the Fukushima Dai-ichi nuclear power plant following extensive damage, Germany was prompted to take seven of its own reactors offline for unscheduled and lengthy safety reviews. So although the loss to the Japanese grid had no direct effect on the UK markets, the German shut-down did and added to the climbs in prices across Europe seen recently. Fortunately, the impact was lessened as Liquefied Natural Gas (LNG) deliveries from countries around the world were diverted to Japan to 'replace' the lost energy as they switched from Nuclear generation - which is another example of the versatility and importance of LNG.

As well as the problems in Japan, Libya - one of the world's major oil producers - is seeing extended political unrest, and now UN intervention by way of military action and a no-fly zone being imposed. One can't help but wonder how long this issue will last, and the effects it will have on global events and, more immediately, the energy markets.

Owing to all of the above and more; if there is an option to delay any tendering this is definitely worth considering, and short-term contracts are certainly a good choice at this time. Our Utility Consultants, of course, are in touch with our clients to advise best steps for forward contracts and will be testing the markets over the coming weeks and months in order to ensure all contracts secured are done so on the best possible rates. To ensure you're getting the best advice for all your business energy management and utility mangement needs, get in touch now by calling us on 01454 281607 or emailing us on [email protected]





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