Energy Market Brief April 2010:

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 - 2010 Catalyst Commercial Services Limited. - All Rights Reserved.

Short -Term Risk Drivers

Oil has rebounded significantly in the last month and this event has shown how much gas has decoupled from this, as commercial gas prices have actually come off even further over the last 4-weeks.  The key driver for this has been further imports of LNG gas, the proposed resolution of Norwegian offshore issues, and a move to milder weather conditions as we move into spring.  These events have also had a positive effect on electricity prices, with short term prices easing slightly.  The long term outlook for UK electricity prices is positive for 2011 at the moment, with curve prices relatively steady for each month.  One of the new key drivers at the moment is US Henry hub prices which have declined recently due to over supply issues from additional gas supplies.  Because of this, commercial gas has been the dominant fuel over the last month again in regards to electricity generation with over 55% of UK electricity was being produced by gas fired power stations.

Long-Term Risk Drivers

The need for suppliers to reduce long term carbon levels will begin to impact on prices at some point in the future, but the main long term drivers at the moment remain with supply and demand factors, that will further influence long term availability and any pricing structures.  The advent of the new carbon reduction scheme for half hour meters will begin to challenge the price of carbon trading credits which will further influence market prices.

Views and Recommendations

We expect short term business gas prices to remain stable and may possibly reduce further with further strong supply chains entering the UK market.  And with current UK electricity prices also at an attractive range the outlook for securing your energy contracts is looking very good.  We would recommend keeping a close eye on gas prices as opportunities to secure long term contracts could present them self’s should the market drop any further.  It is how ever an ideal opportunity to secure long term electricity contracts, but as always precede with caution as long term volatility and unexpected price increases could commence without warning.  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 and independent suppliers.  Our procurement solutions make it simple, so contact a member of our team to discuss your requirements.

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