INDEX DOWN 3% AS WHOLESALE GAS AND ELECTRICITY PRICES FALL AND GLOBAL OIL PRICES STABILISE
After two months of rising prices, the price of a barrel of oil finally stabilised in March at the relatively high monthly average price of $125 per barrel, as the markets focused less on the threat and potential impact of a military engagement between the West and Iran.
1. Bord Gáis Energy Index
MARCH 2012
G29839 BG Energy Index March 2012 Rev5 JJ.indd 1 11/04/2012 10:45
2. Bord Gáis Energy Index
MARCH 2012
INDEX DOWN 3% AS WHOLESALE GAS AND ELECTRICITY
PRICES FALL AND GLOBAL OIL PRICES STABILISE
Bord Gáis Energy Index (Dec 31st 2009 = 100) OVERALL SUMMARY:
12 Month Rolling
The Bord Gáis Energy Index fell 3% in March
Energy
Average
Index Graph
Data 31 October 2009 87.80
31 January 2009 92.10 Bord Gáis Energy Index
30 November 2009 87.15
12 Month Rolling Average as a return to milder weather following the
180
28 February 2009 87.77
severe conditions experienced in Continental
31 December 2009 88.29
31 March 2009 76.86
31 January 2010 88.92
30 April 2009 77.63
31 May 2009
30 June 2009
84.37
90.81
28 February 2010
31 March 2010
90.20
92.51
Europe in February put downward pressure
31 July 2009
31 August 2009
88.62
88.35
30 April 2010 95.31 on wholesale gas and electricity prices.
30 September 2009 85.76 31 May 2010 97.49
31 October 2009 92.39 30 June 2010 99.22
Falls in the average UK Day-ahead gas and
140
30 November 2009 94.82
Irish wholesale electricity were recorded
31 July 2010 101.09
31 December 2009 100.00
31 January 2010 99.62 31 August 2010 102.82
28 February 2010 103.17 30 September 2010 104.97
in March despite the dramatic news of
Points
31 March 2010 104.57
31 October 2010 106.66
an uncontrolled gas leak at Total’s Elgin
30 April 2010 111.22
31 May 2010 110.49 30 November 2010 108.89
30 June 2010 111.64
platform in the North Sea towards the end
31 December 2010 111.88
31 July 2010 111.05
31 January 2011 114.76
31 August 2010 109.16
of the month.
100
30 September 2010 111.50 28 February 2011 117.91
31 October 2010 112.64 31 March 2011 121.41
30 November 2010 121.67
30 April 2011 124.45
31 December 2010 135.86
31 January 2011 134.21 31 May 2011 126.97
28 February 2011 140.96 30 June 2011 128.88
31 March 2011 146.51
31 July 2011 131.18
30 April 2011 147.76
31 May 2011 140.73 31 August 2011 133.64
60
30 June 2011 134.54 30 September 2011 135.59
31 July 2011 138.57
31 October 2011 137.54
31 August 2011 138.69
30 September 2011 134.89 31 November 2011 139.53
31 October 2011 136.14
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
31 December 2011 140.15
31 November 2011 143.88
31 January 2012 141.01
31 December 2011 143.22
31 January 2012 144.43 31 February 2012 142.38
31 February 2012 156.81
1 Mth -3% 3 Mth 7% 12 Mth 4%
After two months of rising prices, the price of a barrel of oil finally stabilised in March at the relatively high monthly average
price of $125 per barrel, as the markets focused less on the threat and potential impact of a military engagement between the
West and Iran. During the month, the narrative subtly moved from one of imminent war and supply disruption, to the West’s
ability to withstand a supply shock as attempts were made to reassure the markets that the world had adequate oil supplies
to withstand the loss of Iranian crude. Concern continues to be voiced about the potential impact higher oil prices are having
on consumer spending and inflation. A series of mixed economic releases and question marks about the strength of China’s
economy also weighed on oil markets as traders consider the viability of the price of a barrel of Brent crude.
Oil Index OIL
Oil Graph
After two months of rising prices, oil prices
180
Data
31 January 2009
28 February 2009
65.78
67.03 stabilised in March and traded consistently
around $125 a barrel. With fewer reports
31 March 2009 68.43
30 April 2009 70.72
31 May 2009 85.34
30 June 2009
31 July 2009
90.70
92.57
and statements to stoke fears that a military
engagement between the West and Iran was
31 August 2009 89.31
30 September 2009 86.74
140
31 October 2009 93.84
30 November 2009
31 December 2009
96.36
100.00
imminent, oil prices remained calm during
31 January 2010 94.62
the month.
Points
28 February 2010 104.90
31 March 2010 112.38
30 April 2010 121.16
31 May 2010
30 June 2010
111.65
112.54
In previous months, oil prices had been
31 July 2010 110.19
pushed higher on fears that the world would
100
31 August 2010 108.17
have insufficient oil to meet its daily demand.
30 September 2010 111.13
31 October 2010 109.88
30 November 2010 121.18
31 December 2010
31 January 2011
130.36
135.62 These concerns had a weaker influence
on prices in March as markets digested
28 February 2011 149.07
31 March 2011 152.09
30 April 2011 156.15
31 May 2011 149.41
claims that Saudi Arabia could increase oil
60
30 June 2011 142.55
production immediately if required and
31 July 2011 149.27
31 August 2011 146.57
30 September 2011 140.51
31 October 2011
31 November 2011
144.47
151.05
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 rumours that strategic reserves of oil were
31 December 2011
31 January 2012
152.25
155.87
to be released onto the world market. This
*Index adjusted for currency movements.
31 February 2012 169.16
Data Source: ICE general confidence in future oil supplies
was reflected in the decision by the US to
allow oil-related sanctions to go ahead on
1 Mth 0% 3 Mth 11% 12 Mth 11%
the belief that there is sufficient oil to fill the
petroleum gap left by Iran.
The markets also seem to have paused to
consider the potentially negative impact of
rising oil prices on future economic growth
and the underlying strength of China’s
economy following some negative economic
releases and forecasts.
G29839 BG Energy Index March 2012 Rev5 JJ.indd 2 11/04/2012 10:45
3. Bord Gáis Energy Index
MARCH 2012
Natural Gas Index NATURAL GAS
In February, following the severe weather
250
Natural
experienced in Europe and concerns over
Gas Graph
Data
31 January 2009
28 February 2009
195.04
156.23 Russian gas supplies, the average Day-ahead
gas price rose 20%. These dramatic increases
31 March 2009 99.24
30 April 2009 92.78
proved temporary in nature and were reversed
31 May 2009 87.00
200
30 June 2009 87.56
31 July 2009 76.34
31 August 2009
30 September 2009
69.43
61.72
somewhat in March as the average March
31 October 2009
30 November 2009
77.55
83.21 Day-ahead price fell 11% when compared to
February.
Points
31 December 2009 100.00
31 January 2010 125.88
150
28 February 2010 114.44
A combination of weakening demand due to
31 March 2010 101.67
30 April 2010 106.04
31 May 2010 130.73
30 June 2010
31 July 2010
145.29
157.48
more seasonably mild weather (thus reducing
31 August 2010
30 September 2010
145.96
132.67 the need to burn gas to heat homes), healthy
100 supplies of gas from LNG terminals and imports
31 October 2010 148.57
30 November 2010 167.11
from Norway, and relatively high stock levels, all
31 December 2010 204.87
31 January 2011 188.31
28 February 2011 179.74
31 March 2011
30 April 2011
194.03
181.39
conspired to put downward pressure on prices.
31 May 2011 184.99
Despite the dramatic news of an uncontrolled
50
30 June 2011 183.36
31 July 2011 179.36
31 August 2011
30 September 2011
172.82
180.07
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
gas leak at Total’s Elgin platform in the North
Sea toward the end of the month, prices failed
31 October 2011 180.16
31 November 2011 191.53
31 December 2011 189.94
31 January 2012
31 February 2012
184.35
221.68
*Index adjusted for currency movements. to react. Total are considering various options
Data Source: Spectron Group
to tackle the leak which could include taking
six months to drill a relief well. A prolonged loss
of gas throughout the summer should not be
1 Mth -11% 3 Mth 4% 12 Mth 2% a problem as supplies overall are sufficient to
meet the reduced summer demand.
Coal Index COAL
European coal prices recovered slightly at the
Coal Graph
Data 260 end of March following months of subdued
31 January 2009
28 February 2009
102.58
93.02
activity and falling European prices.
31 March 2009 82.80
30 April 2009 78.58
Despite a late rally in prices toward the end
205
31 May 2009 76.19
30 June 2009
31 July 2009
76.68
81.48 of the month (which resulted in a $2 increase
in the price of coal in the last week of March),
31 August 2009 84.15
30 September 2009 83.00
31 October 2009 86.26
30 November 2009 88.54
a bearish tone prevailed throughout the
Points
31 December 2009 100.00
European/Atlantic market due to ample
150
31 January 2010 105.77
28 February 2010 95.28
supplies, high stockpiles, low demand for
31 March 2010 95.51
30 April 2010 108.11
31 May 2010 125.06
30 June 2010
31 July 2010
132.03
121.85 electricity and the beginning of spring and
warmer weather.
31 August 2010 123.28
95
30 September 2010 121.29
31 October 2010 121.83
With Europe lacking an appetite for coal,
30 November 2010 150.34
31 December 2010 159.48
31 January 2011 148.31
28 February 2011
31 March 2011
149.34
153.91 supplies from the US and Colombia are
now increasingly finding their way to the
30 April 2011 148.29
40
31 May 2011 145.75
Asian-Pacific region. As this region too is
30 June 2011 144.90
31 July 2011 147.62
31 August 2011 149.65
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
30 September 2011
31 October 2011
156.20
145.04 well supplied, regional prices of coal around
the world continue to be soft. Given that
31 November 2011 142.82
31 December 2011 145.65
31 January 2012 134.66 *Index adjusted for currency movements.
31 January 2012 125.54 Data Source: ICE the world’s number one consumer of coal
revised its GDP target to 7.5% (from 9-10%
in the previous five years), the market will
1 Mth 1% 3 Mth -13% 12 Mth -18%
be assessing any potential reduced Chinese
demand will have on coal prices in the
months ahead.
Electricity Index
Electricity
Graph Data
180
ELECTRICITY
31 January 2009
28 February 2009
127.36
117.38 Irish wholesale electricity prices were 8%
lower in March compared to February.
31 March 2009 89.56
30 April 2009 88.58
31 May 2009 82.33
30 June 2009 91.74
31 July 2009 83.00
A combination of lower gas (with the
140
31 August 2009 89.26
average monthly Day-ahead price falling
30 September 2009 87.28
31 October 2009 91.82
30 November 2009 93.65
11% in euro terms) and carbon (with the
Points
31 December 2009 100.00
31 January 2010 105.32
average monthly price down approx 7% in
28 February 2010 98.50
31 March 2010 90.42
30 April 2010 93.24
31 May 2010
30 June 2010
105.19
104.88 the month) prices, put downward pressure
100 on wholesale electricity prices.
31 July 2010 106.05
31 August 2010 105.66
30 September 2010 109.05
31 October 2010 112.69
As the majority of electricity used in Ireland
30 November 2010 115.75
31 December 2010 136.21
31 January 2011 123.78
28 February 2011
31 March 2011
120.12
129.24
is produced by burning gas, internationally
traded gas prices heavily influence Irish
30 April 2011 127.27
31 May 2011 118.10
30 June 2011
31 July 2011
31 August 2011
112.46
112.53
118.86
60 wholesale electricity prices.
30 September 2011 117.61 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
31 October 2011 114.14
31 November 2011 123.77
31 December 2011 119.63
31 January 2012 117.47 Data Source: SEMO
31 February 2012 125.14
1 Mth -8% 3 Mth -3% 12 Mth -10%
G29839 BG Energy Index March 2012 Rev5 JJ.indd 3 11/04/2012 10:45
4. Bord Gáis Energy Index
MARCH 2012
FX Rates FX RATES
31 January 2009
EUR/USD
1.283 31 January 2009
EUR/GBP
0.887 Despite the euro hitting a 16 month low
1.60
28 February 2009
31 March 2009
1.272
1.323
28 February 2009
31 March 2009
0.886
0.925 of 1.27 versus the US Dollar on the 16th of
30 April 2009 1.321
30 April 2009
31 May 2009
0.894
0.874
January, the currency rebounded to close
at 1.33 versus the US Dollar at the end of
31 May 2009 1.412
30 June 2009 0.853
1.40
30 June 2009 1.405
31 July 2009 0.853
31 July 2009
31 August 2009
1.424
1.434
31 August 2009
30 September 2009
0.881
0.914
February. These gains were maintained in
30 September 2009
31 October 2009
1.464
1.474
31 October 2009
30 November 2009
0.896
0.913
March and the exchange rate finished the
1.20
30 November 2009
31 December 2009
1.498
1.433
31 December 2009
31 January 2010
0.888
0.867
month at 1.33.
28 February 2010 0.893
Confidence in the euro was supported
31 January 2010 1.389
31 March 2010 0.891
28 February 2010 1.360
1.00 by positive comments from the Italian
30 April 2010 0.868
31 March 2010 1.353
31 May 2010 0.846
30 April 2010 1.327
Prime Minister who believes that the euro
30 June 2010 0.819
31 May 2010 1.230
31 July 2010 0.831
30 June 2010 1.226
area’s woes are ‘almost over’ and that a
31 August 2010 0.827
31 July 2010 1.305
0.80
30 September 2010 0.866
1.269
solution to Greece’s challenges is almost
31 August 2010 31 October 2010 0.869
30 September 2010 1.362 30 November 2010 0.837
accomplished. This tone contrasted sharply
31 October 2010 1.392 31 December 2010 0.857
30 November 2010 1.304 31 January 2011 0.854
0.60
31 December 2010
31 January 2011
1.337
1.370
28 February 2011
31 March 2011
0.849
0.883 with a warning from the Federal Reserve
28 February 2011
31 March 2011
Jan-09
1.379
1.419
Apr-09
30 April 2011
Jul-09
31 May 2011
Oct-09
0.888
Jan-10
0.874
Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Chairman Ben Bernanke who warned that
30 April 2011 1.483
30 June 2011
31 July 2011
0.903
0.875
‘it’s far too early to declare victory’.
31 May 2011 1.437
31 August 2011 0.885
30 June 2011
31 July 2011
1.451
1.438
30 September 2011
31 October 2011
0.860
0.8615
The cautionary tone struck in the US
31 August 2011
30 September 2011
1.441
1.345
31 November 2011 0.8562 was echoed in the UK where the Bank of
1 Mth 0% 3 Mth 3% 12 Mth -6% EURUSD
31 December 2011 0.8334
31 October 2011
31 November 2011
1.395
1.3446
31 January 2012
31 February 2012
0.8302
0.8372
England’s Governor said that while the
31 December 2011 1.2961 ECB’s long-year loans created a window of
1 Mth
31 January 2012
31 January 2012
-1%
1.3084
1.3325
3 Mth 0% 12 Mth -6% EURGBP opportunity, it remains to be seen whether
euro zone area officials will use the time to
tackle the problems.
MARKET OUTLOOK:
Oil prices, having stabilised in March, will continue to be driven by events as they unfold between the West and Iran. Iran’s
reaction to ongoing sanctions could set the tone for the markets in April. Should reported meetings occur between the
leaders that defuse the situation, we should see prices ease back. A continued risk premium in the price of a barrel of oil
will mean that institutions and politicians will be concerned about the impact higher energy costs is having on inflation,
especially given the fragile state of the global economy. Economic releases from the world’s top two economies will be
watched closely for evidence of growth in the US and a soft landing in China.
In terms of gas prices, the weather, deliveries of gas, particularly of LNG cargos to the UK, and the markets assessment of
the impact of the loss of gas due to the closure of the Elgin platform, will drive prices.
RE-WEIGHTING OF BORD GÁIS ENERGY INDEX:
Following the SEAI’s 2009 review of energy consumption in
Ireland, 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 oil
consumption in the form of gasoline and diesel. This reflects the
economic downturn experienced at the time. The share of natural Gas
gas and electricity increased by 0.63% and 0.57% respectively. An 13.52%
increase in the use of renewables and peat, at the expense of coal in
electricity generation was also observed. As a result the Bord Gáis
Energy Index has been reweighted to reflect the latest consumption Electricity Coal
data. This has had a minimal effect on the overall shape of the Index, 18.40% 3.16%
but may indicate future trends.
For more information please contact: Fleishman-Hillard — Aidan McLaughlin — 085 749 0484
Bord Gáis Energy — Christine Heffernan — 087 050 5555
Disclaimer:
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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 Eireann, 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
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contained in this report. Bord Gáis Eireann reserves the right at any time to revise, amend, alter or delete the information provided
in this report.
G29839 BG Energy Index March 2012 Rev5 JJ.indd 4 11/04/2012 10:45