Tensions between Ukraine and Russia are dominating the imagination of energy traders, suggests the new weekly Y report from Inenco.
Explaining why Ukraine is affecting the market, Head of Energy Stuart Lea said: “Russia is a significant exporter of gas to Europe, Europe in turn exports gas to the UK. There’s been threats of a reduction in flows from Russia to Europe and therefore the UK.”
If this was to happen, he said, “It’s simple supply-demand economics, less gas available, prices would push up.”
For the moment with peace talks positive, the market is fairly quiet, the energy consultant said, or prices could even slip down.
What does this mean for businesses coming to the end of their energy contract?
Lea said: “If you’re on a fixed price contract that needs renewing in 2014, considering we’re at near all-time contract lows, there’s more upside potential than downsides and you need to be in the market.
“What’s the point in waiting, there’s too much risk. Look to place your business.”
With a flex contract, it’s a buying opportunity “for the same reasons”, he suggested, although if you buy and prices do start to fall “you have the ability to sell back”.