Wholesale energy prices fell in August, but declining costs were tempered by fluctuating exchange rates.
The Bord Gáis Energy Index, which tracks the monthly price movements of oil, gas, coal and electricity, fell 2 per cent to 108 last month, the first time the index has dropped from the 110-112 range since April.
The euro rallied at the beginning of August, but gains it made were eroded and it ended the month at $1.26 and 82 pence
Over the month, the price of oil fell from $78 to $74 per barrel, while the price of natural gas fell by 7 per cent in euro terms. This was driven by reduced storage injections in the United Kingdom.
Electricity prices fell by 2 per cent during August, and demand levels were similar to June and July, although signs of growth in evening demand were evident.
Rising power prices in Germany caused prices in the coal market to rise initially, reaching a high of $93 a tonne early in the month, but this was offset by high stockpile levels in Europe and falling demand from China. At the end of the month, coal closed at $91 a tonne.
“Global macro economic data continues to be the biggest driver of the movements in the Bord Gáis Energy Index as a result of its effects on both currency and commodity prices. There has been a strong correlation between currency, commodity and equity markets recently,” said Bord Gáis Energy analyst Michael Kelleher.
“The futures markets continue to price in a moderate rise in commodity prices in the coming months. However, the pace of economic recovery in developed economies in Europe and the Americas coupled with a confirmation of the rate of growth in developing economies could have a major impact on energy prices in the coming months particularly oil and coal.”
