Wholesale gas prices have plummeted over the last 12 months with average prices so far in April down 40 per cent compared with April 2015 and down four per cent compared with last month, according to the latest Wholesale Energy Market Report published by Vayu Energy.
The company which recently announced its expansion into the province, states that the collapse in prices is due to an abundant supply of gas in Europe and suppressed demand.
The average day-ahead price for gas – the contract for gas delivery for tomorrow – is 28.35p/th (pence per therm) so far in April. This compares with an average price of 47.00p/th in April 2015.
Wholesale gas prices have now fallen 49% compared with the average monthly price recorded for April over the previous three years (2013-2015). This has had a significant impact on the energy costs of many businesses in Northern Ireland purchasing gas on the wholesale market, particularly for users in the industrial and commercial segment.
Gillian Lawler, Senior Energy Analyst at Vayu says that European gas markets are experiencing a glut in low-priced gas with prices having fallen to lows not seen in ten years. The drop in prices is a result of increased supplies from Russia and Norway combined with strong imports of LNG (liquefied natural gas) from the Middle East.
“For the most part prices have been trading sideways recently, however this week there has been an increase on spot and future gas contracts, as a 22 per cent increase on Brent crude since the start of the month makes itself felt,” she said.
“The rise close to $46/bbl recently was driven by news that non-OPEC oil production could experience its biggest output fall in 25 years this year