Business

Vayu report wholesale gas prices down a third

Wholesale gas prices are 33 per cent down on last year

WHOLESALE gas prices over the first half of this year are a third down on the same period in 2015.

Vayu Energy, in its latest Wholesale Energy Market Report said the drop was due to strong liquified natural gas (LNG) supply and pipeline flows from the North Sea, low demand and overall bearish fundamentals.

It said the average day-ahead price for gas – the contract for gas delivery for tomorrow – was 34.26p/therm (pence per therm) in June, compared to 30.6p last month, an increase of 11 per cent.

The report also looked at wholesale electricity prices and found them to be 25 per cent lower in the first six months in 2016 compared to same period last year at £29.52 per MWh.

It said that with gas prices and other fossil fuel markets likely to remain volatile in the short-term, this could create some volatility for electricity prices as well.

Meanwhile, Vayu found wind energy supplied more than 16 per cent of total electricity demand in the north during the first six months and 21 per cent of total electricity demand across Ireland.

Vayu senior energy analyst Joanne Daly said June was a volatile month, "due to a number of factors; unplanned North Sea outages, the Rough storage facility being taken offline and Brexit".

"Volatility tied to these events is likely to continue over the coming weeks," she added.

“Storage levels in particular are likely to be a key driver of costs over the coming months.

“Storage fullness is currently at 42.5 per cent, almost 2 per cent above last years levels. However, these levels are likely to stagnate due to the recent announcement that the Rough storage facility, which accounts for 70 per cent of the UK's total storage capacity, will be unavailable for injections until at least August 3."

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