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Your Meter on the Market: What the Next 3 Months Have in Store

The end of 2017 proved challenging for business energy supply – and it looks as if gas and electricity pricing and supply concerns are set to continue into the next quarter.

A quagmire of a quarter 

Energy pricing throughout the Christmas period was volatile, to say the least. Here are some of the factors that led to the UK’s energy price disruption and concerns for supply.

  • Lack of storage
  • Unexpected market events
  • Wholesale natural gas prices for same-day delivery in the UK surged by nearly 30% to a four-year high after the Forties Pipeline System (which delivers almost 40% of UK North Sea gas) was forced to close for repair after a fracture was found
  • Traders scrambled to secure imports at a time when temperatures were falling below seasonal norm

Brrr… concerns of a cold snap

Britain is facing a cold snap, causing concern that the higher fuel prices may filter down into more expensive energy bills for consumers. And with the UK struggling to attract LNG tankers, along with the closure of the Rough storage site, the country has been reliant on foreign imports from Norway, the Netherlands, and Belgium to meet the winter demand.

Entering the first quarter of 2018, further concerns over the potential gas supply from Europe caused winter prices to spike after an earthquake change in output from Groningen. As a result, contracts delivering in winter 2017 and winter 2018 reached highs not seen since 2015.

OPEC’s curb in oil output

The stranglehold on the market brought about by OPEC’s production cuts is starting to take effect, with oil prices trading comfortably in the early-to-mid-£40s; and trading above £49/bbl for the first time since December 2014.

Although Iranian Oil Minister Bijan Namdar Zanganeh previously stated that “OPEC are not keen on increased Brent Crude prices above $60/bbl (£42/bbl)”, Brent Crude oil prices have remained stable over the last few weeks.

What should smart businesses do?

While current prices likely reflect sentiment caused by recent events, it is unlikely that we will see a significant reduction in forward energy prices as winter continues. It is recommended you assess the value of contracts in the market – if not to secure them, then to provide yourself with a view of your future costs so that you can budget accordingly.

The experienced team of account managers at Smarter Business are here to facilitate engagement between suppliers to achieve your business’s desired outcomes and save on your overall utility bills, despite a volatile market. With our finger on the pulse of market drivers, your account manager will assess this against your requirements and recommend an associated product or service to meet your needs.

Contact us for a free consultation today.

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