May 10, 2010 6:02 pm
As much as 10% was added to annual values in just two days, as energy markets across UK and Europe were catapulted higher in unison by a renewed buying scramble.
The new increase came on the back of talks on the global economic recovery and increasing industrial demand. The later, in Europe, prompted an outburst of forward buying across gas and power markets by financial institutions and speculators, triggering frenzied buying from other market players in the face of limited selling interest – All of this despite a relatively healthy supply/demand balance.
Oil prices have had relatively small impact on wholesale prices as North Sea crude remained broadly stable – around $86/barrel – and US oil prices have in fact fallen, coming under pressure from stocks reaching a 20-year high and a stronger dollar.
These latest increases have continued into May and even with temperatures well above SNT, day ahead gas prices are touching 40 p/therm. Although prices are not at the lows of last month it is still prudent to consider looking at any contract renewals this year right away.
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