The roller coaster ride that is the energy markets – hold on tight (and watch out for the jellyfish)...
• June has been a month of spectacular dips and rises, leaving us pondering over what will happen next. Oil has been the main driver on gas and power prices - early on in the month we saw falls across the board with weak oil due to poor US economic data. Gas and power prices soon started to firm once the main European bank holidays were over and continental exports resumed, resulting in tighter supply margins.
• Brent Crude oil soon began to creep back up on OPEC delaying their decision over a ramp up in production levels. It was eventually decided not to push up levels and they were left unchanged. Easing the decision was an announcement from Saudi Arabia that they are ramping up production from 8.8 million barrels to 10 million over the next month.
• The bears then regained control of the oil market and prices fell. Bullish EIA reports due to weak US manufacturing data alongside Greek sovereign debt and its threat to the Eurozone economy put downward pressure on oil prices.
• The €12 billion loan package to Greece from the Euro Zone was then delayed until strict austerity measures could be agreed, causing a dip in the Euro.
• Carbon prices took a stomach flipping dive when Reuters reported that EIA have forecasted an oversupplied market for the next three years. This had a knock on effect on power prices, forcing them into a downward trend.
• Oil reversed the earlier gains when the EIA crude oil stock report showed stronger than expected withdrawals in crude and gasoline stocks.
• The upturn in oil prices was soon reversed and prices dropped by as much as $5 a barrel as the Dollar strengthened and the IEA announced plans to release 60 million barrels of crude oil over the next month from strategic stock piles in an attempt to boost the world economy and lower prices.
• The fight between the bears and bulls continued as the bulls steamed ahead once again and took control as China expressed an interest in buying the Greek debt (it is in their interest to have a stable Euro).
• Oil continued to creep higher when the Greek austerity vote was passed on the 29th June.
In other not totally unrelated news, high volumes of jellyfish forced staff at the Torness power plant in Scotland to close the plant down for two days after swarms of jellyfish swam into the seawater filters. Now that’s not something you read about everyday!
