Energy buyers should wait as long as they can before locking away their fixed price contracts or take advantage of daily spot prices, according to a monthly price risk prediction from BuyEnergyOnline, the online energy market for businesses buying electricity and gas.
Globe watch: need-to-know background
Confusion reigned in Europe last week due to an unexpected agreement by Eurozone leaders on a plan to centralise funding of the banking debt crisis in return for banking union, while across the Atlantic in the US, the world growth engine struggles with economic growth, confidence, employment growth, retail sales, property prices and debt levels. China growth is also slowing.
Bulls are pinning their hopes on another round of monetary stimulus by central banks. Although the head of US Federal Reserve Bernanke “dashed hopes” last week with his moderate US monetary stimulus, hopes are high for more “aggression” next time round. BuyEnergyOnline noted that in the past monetary stimulus has been a “bullish driver of energy and financial markets”.
In Asia, Japan is firing up two of its nuclear reactors as a first step towards their aim of bringing many more online, while in the Middle East, Saudi increased its oil supplies and stated they want oil prices below $100/barrel to support the weak global economy.
What happened with energy prices?
These global developments and uncertainties resulted in volatile energy prices during June, said Derek Myers, the head of BuyEnergyOnline: “UK energy prices continued their downward trend during June until Friday’s Eurozone plan resulted in prices bouncing back into positive territory on the last day of the trading month.”
Mr Myers added: “The net result for June was a 0.4% gain for gas prices to 2.10p/kWh and a 1.6% rise in electricity prices to 5.26p/kWh.”
Despite the bounce at the end of June, BuyEnergyOnline advise that energy prices are likely to resume their downward trend .
Mr Myers said: “We believe UK energy prices will continue trending lower over the next several months as the Eurozone crisis drags on, global economic growth continues to decelerate and Japan turns their nuclear generators back on. Aggressive monetary policy actions by central banks is the main upside risk driver which may support prices.”
Note that these views and recommendations are offered for your consideration, but may be wrong as the market is highly uncertain. The energy markets hold additional risks which are unknown until they arise.