Wholesale gas prices remain 30% lower than the
same time last year as a result of continued low demand, high storage levels and
plentiful supply, according to the latest Wholesale Market Report by Irish
energy supplier Vayu - - prices traded at 4 year lows during early June.
Temperatures throughout the UK are expected to remain at seasonal normal levels
throughout July so demand in general is set to remain at or below seasonal
norms, despite a small resurgence in electricity generation demand. Gas in
storage in the UK market, which is the major source of gas supply into Ireland,
is currently at 83% fullness, compared to 50% at the same time last year. With
storage stocks so full, there are few options for where any excess gas in the UK
Day-ahead prices – the contract for gas delivery for tomorrow – finished
trading on Friday (27th June) at 39.25p, down almost 41% since the beginning of
the year and just over 37% lower than at the same point in 2013. This weakness
has also fed into the lower pricing of gas for the July-2014 contract and other
contracts due to expire over the next three months.
Joanne Daly, senior energy analyst at Vayu
says: “Storage stocks are so much higher currently and demand has been
depressed which means we’ve seen a significant drop in gas prices year on year.
While prices spiked briefly in mid-June on supply tightness and concerns over
Russian gas supply, the market appears reluctant to move lower in anticipating
the next event, but no upward pressure on prices is realistic. A key focus for
traders now is whether or not supply will be curtailed in Q3 to meet the growing
issue of tighter storage availability”.
“For gas contracts further out than one month, we’re also seeing prices being
dragged down by the prospect of suppressed summer demand due to reduced
requirements for storage injections. This is positive news for many Irish
businesses looking to take advantage of lower wholesale prices”.
The average wholesale electricity price so far in June is 5c/kWh – down 5% from
the average during May and down 13% compared to this time last year. This is
mainly due to the ongoing low price of gas, which is the main fuel used to
generate electricity in Ireland.
Vayu is an independent supplier of electricity,
natural gas and renewables and operates in Ireland, the UK and the Netherlands.
The company has been in operation since 2003 and since its beginnings as a
business natural gas supplier has steadily grown and now supplies 22% of
Ireland’s largest natural gas business users. Vayu’s customer now includes
companies such as Tesco, Bulmers, FMC, IBM, and DHL among its growing client
In 2007, Vayu launched its electricity supply business and have seen our market
share double each year. International commodity group Glencore Xstrata is the
largest shareholder in the business.