News

More market volatility last week drove commodity prices down again but the it rebounded by the weeks end. As trading houses that specialise in oil, reported some of their right results on record, doubts that an OPEC meeting would lead to any firm commitment to limiting production, weighed on the market towards the start of the week. But an unexpected fall in US oil storage volumes plus a positive outlook in Kuwait saw prices jump. Brent oil closed the week up 8.5% at $41.94.

UK energy market

Falling oil prices, a positive weather outlook and a well-supplied gas system saw gas prices weaken early on in the week. But rising oil and currency changes pushed prices up as we headed into the weekend. These effects were particularly pronounced on forward contracts. The National Grid also announced that it expected to see higher gas consumption this summer than last year with more combined-cycle gas turbine (CCGT) generation predicted to push up demand. The electricity market also came under pressure with a low wind output and unplanned outages at a number plants.

Advice to buyers

The ever-volatile energy market saw prices increase again last week, but they will continue to be attractive at these levels. As the OPEC meeting on 17 April draws closer speculation is growing. Yesterday, Goldman Sachs warned that even if member countries vote to limit production, it would not rebalance the market and could lead to falling prices. Whatever happens at the meeting, we can expect to see sharp movements on the market. Risk taking buyers are in a good position to gamble.