Weekly Energy Report – Week Ended 02 December 2016
In general, prices have come off across the board during the week and this continued into the following week. This is despite the agreement being finally reached to cap oil production which has seen oil prices rise significantly.
As of today, prices have fallen even more dramatically on the back of the strengthening pound. This is a somewhat perverse reaction to fundamentals as oil prices are regularly cited as the driver for energy price movements.
Gas and Electricity
At the start of the week, speculation that the OPEC meeting would not be successful helped supress prices. Prices across both fuels have reduced a little, though less so in the longer term where the impact of the oil news might be pushing prices up a little.
In the short-term warmer winter weather forecasts and a strengthening pound helped to keep prices down. Also, confidence that the Rough storage facility would have sufficient reserves for winter, helped keep prices down.
Given the muted response of the energy prices to the oil increases, it is very difficult to make any form of prediction. Market traders seem to be making the prices rather than fundamentals and are happy to speculate on what might happen with oil prices but not responding to actual movements.
At the moment and in the longer term, it seems likely that if oil prices continue to rise, which surely they must do as the caps take effect (and otherwise what is the point of the cap) then this will eventually impact on energy prices.
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