Energy and Utility Management Consultants

Steady Decline Continues, But Slows. Brent Crude Oil Rises

November 2011


This week has seen a continued fall in the wholesale prices of both electricity and natural gas, but another sharp climb in the Brent crude oil markets following its recent trend of rather erratic spikes and falls to a 2-month high of just over $114 per barrel. Typically the prices of natural gas and electricity track the prices of Brent crude rather faithfully, so a slight upward correction in the other markets can be expected but is not likely to be a prolonged climb. It is however hoped that disappointing upcoming US economic data is likely to push oil prices down across the globe, impacting favourably on all energy markets. Events in the Eurozone continue with discontent in Greece, Spain and most recently in Italy resulting in uncertainties in the European markets, prompting predictions of a recession. Even rumours of a UK recession are common at present, which is a major fear for the country and some 'experts' are suggesting that there is a "strong chance" of an imminent collapse of the economy! While this is not something that anybody wants, the 2008 recession saw a fall in the price of energy to the tune of some 36% from the official 'start' to the official 'end' of the recession. The sky-high prices of 2008 can be in no small way blamed for the state of the economy at that time. Prices currently stand some 40% lower than at that peak, so although it may be a contributing factor if we do fall further into the red, other issues such as the Eurozone crisis are likely to be a more influential driver. Positively though, in terms of supply capacity, as we approach the winter months (one that is predicted to be milder, and yet colder, than recent years - depending on who you ask!) recent statistics show that the Rough Storage is about 90% full, LNG storage is scheduled to reach 29 million cubic metres (mcm) by next week and a massive increase in the flows from UK-Belgium interconnector will see what is expected to be plentiful storage to cover the winter and beyond. However unlikely it is, we hope that the Eurozone is able to pull through and not go into recession, and that Europe as a whole recovers to flourish business-wise. We will of course keep you updated on the impacts of the Euro crisis on your Business Energy costs through our highly experienced Utility Consultants and Energy Procurement team, and by our regular news updates, which you can have delivered directly to your inbox by following this link.





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