Energy prices move to record lows on collapse in demand

Bord Gáis Energy index falls 6% as a result of Covid-19 restrictions

Wind energy met 25%  of energy demand in April, down from 44%  in March. Photograph: iStock

Wind energy met 25% of energy demand in April, down from 44% in March. Photograph: iStock

 

Wholesale prices for energy plunged to their lowest on record last month as demand for oil collapsed, according to the latest Bord Gáis Energy index.

The index, which tracks wholesale energy market prices, fell 6 per cent in April following another tumultuous month in energy markets as Covid-19-related restrictions wiped out demand. The index stood at 44 by the end of the month, a record low.

Oil prices, which are heavily weighted on this index, clawed back some ground in April, gaining 11 per cent in the month after a 50 per cent decline in March. But oil was the exception with the prices of gas, electricity and coal falling.

Gas prices dropped by 39 per cent, electricity prices fell by 19 per cent, and coal experienced a similar drop, declining 19 per cent on the back of increased competition from gas and renewables.

The fall in gas prices was prompted by a glut in the market combined with weak demand and improving weather.

Bord Gáis said demand was “unlikely to pick up in the near future as the effects of the current crisis on the global economy are likely to persist”.

The drop in electricity prices was also attributed to a fall in demand.

Wind output met 25 per cent of demand in April, down from 44 per cent in March.