Any views and recommendations are offered for your consideration, but may be wrong as the market is highly uncertain, with additional risks which are unknown until they arise. Statements in this press release regarding Catalyst’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. © 2001 - 2008 Catalyst Commercial Services Limited. - All Rights Reserved.

Short -Term Risk Drivers

Despite some very unseasonably mild weather, freezing conditions have seen surging demand for gas; way beyond seasonal normal demand levels. With many areas of Europe seeing plummeting temperatures, storage has borne the burden of supplying this demand. Both gas and electricity prices continue to be driven higher by rising oil and coal prices and following expectations of lower oil prices from the slowing global economy, oil prices unexpectedly bounced to reach new highs above $102 in February. Most commentators believe that the US economy is entering a slow down, which could result in recession, despite measures to prime the economy with interest rate cuts and tax reductions. This could feed through to slower growth in China and other countries and lower demand for oil and LNG.

Long-Term Risk Drivers

Economic fundamentals continue to suggest that market price risk is on the upside. World energy demand forecasts are increasing, despite forecasts that predicted a levelling off. This is been driven by continued economic growth of China, India and other developing countries and western consumers are still increasing demand, despite continued higher prices. Oil prices where above $100 barrel mark this month again, mainly driven by world demand.

Views and Recommendations

The market remains extremely volatile at the moment, with surging oil prices and high gas storage current in use. There is also a strong risk of UK suppliers ramping the wholesale market price ahead of the next October round. However for gas being delivered after the winter period prices seem to be on the downside with a potential US recession and any additional gas supplies, could work to weaken the price. With strong predictions in excess gas supply for 2008/2009 winter with Ormen Lange reserves from Norway and LNG from Milford Haven in Wales. We recommend tracking the market for the next few weeks, for the prospect of meaningful price reductions. However, towards the end of May it could be time to lock away prices to avoid the upcoming October round risks. Our independent approach enables clients to manage their exposure to energy price risk, whilst at the same time benefiting from a first class service from a range of major suppliers. Our procurement solutions make it simple, so contact a member of our team to discuss your requirements.

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