How long will the Energy Markets be stable for?

By April 1, 2016Energy Consultant

Following the start of 2016 the UK gas and electricity wholesale markets have risen. However, compared with the fall in prices throughout last year we are continuing to see the lowest energy prices in 10 years. The main driver for this has been oil prices rising from $28/ barrel in January to $39/ barrel this month.  A variety of sources are stating that while this will continue it will be at a steady rise over a longer period of time. The main oil countries are looking at longer term price structures.

Our customers are continuing to see savings compared with previous contracts that enable a substantial period of budget security.

In addition long term drivers of the UK energy market are as follows:

  • Global Liquefied Natural Gas supplies are expected to keep gas markets down.
  • Oil prices are expected to keep steady due to oil producing countries are keeping the market share.
  • Warm weather forecast for this year (2016)

Such as LNG (liquefied natural gas) supplies and warm weather forecasts are enabling supply flow to remain at a steady level with no ‘spikes’ anticipated. The energy markets can always be volatile and change within a short time frame.

Over the past year, every time the market has looked to stop reducing further, most advisers have advised ‘it is a good time to buy’. Even now, unless there is some major new progress, the sensible strategy is not to rush a decision but capture some of the forward year price availability and potential savings.  Fixing energy costs at today’s prices for future energy cost certainty.

The Chinese economy is an evolving picture and we will most likely see recovery but on their own timescales. China is a large economy and even now, most Western analysts still underestimate China’s impact on the world energy markets. While it is not the only aspect it does need to be looked at on a regular basis.

Finally, as a result of the seasonally weather temperatures extending through February and March this year, we did not see any significant downward move occur. Accordingly, the outlook for April is similar in that continued seasonal conditions will be required to provide any upward momentum in prices. In which case, last year’s relative price movement (we are obviously at lower levels) may be as good a prediction as any.

Need to speak to an Energy Adviser, call 0114 2295951.