Bord Gáis Energy Index falls by 6% in May
A broad-based fall in coal, gas, oil and electricity in May led to a fall in the Bord Gáis Energy Index during the month of May, though the overall figure is up year-on-year.
14 June 2017
A broad-based fall in oil, gas, coal and electricity in May led to the Bord Gáis Energy Index falling by 6% during the month. The main factors in the reduction were a 6% fall in oil prices as OPEC’s production cuts failed to have the desired effect, and a 6% fall in electricity costs. However, the Index remains 6% higher when compared to year-on-year levels.
Specifically during the month, the price of oil fell by 6% as the extension of the OPEC production cuts failed to live up to market expectations. Wholesale gas prices were 4% lower, as the supply picture to Europe remains strong and as summer temperatures warm up, which decreases demand. Electricity prices were lower by 6%, in line with lower gas prices, while coal was down by 2%. A stronger euro over the month versus both sterling and the dollar also has a significant impact on all prices.
Commenting on the latest Index, Darragh Crowley, Energy Trader with Bord Gáis Energy, said:
“The Bord Gáis Energy Index fell again in May as prices across the energy sector dropped again this month.
“OPEC’s November 2016 agreement has so far failed to halt the slide in oil prices,” says Darragh Crowley, energy trader with Bord Gáis Energy, “but the extension to this agreement announced at its end of May meeting could potentially see a reversal in prices later in the year. This will depend to a large degree on whether the US continues to increase its production.
“Elsewhere, a reversal in the downward trend is possible as European energy markets are feeling the impact of the escalating row in the Middle East,” Crowley adds. “The July UK gas futures contract, a source of wholesale gas for Ireland, experienced its highest jump since January as a result, highlighting again how a volatile middle eastern geopolitical climate can have a direct impact on Irish energy prices.
“Overall, the Index remains 6% up on this time last year,” he adds.
To learn more, see the full Energy Index at https://www.bordgaisenergy.ie/energyindex/.