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Saturday, 14 December

Energy Prices – Don’t Panic

The Ukrainian crisis has led to uncertainty over energy supplies but must not be taken out of context warns energy broker

 

The bad news for European countries that have become more reliant on Russian imports of gas is that the volatility of Russo-Ukrainian relations, inevitably has led to speculation on forward prices. Currently, a third of natural gas of the European Union comes from Russia, going through a pipeline in Ukraine which has been threatened with the complete shutdown of supplies by Gazprom.  

Although there have been disputes between Russia and Ukraine before that led to disruption of supplies, this is easily the worst situation between the two countries that can lead to a major impact for EU countries. However, the EU states that it has put in place additional gas supplies and reverse-flow technology to cope with any further deterioration.

Backing up the need to take a more measured approach, energyTEAM, a specialist energy broker, has urged a note of caution. “There will always be something that will make energy prices spike,” stated Brian Rickerby (pictured), Joint MD, energyTEAM said. “The question is how much of the price increase is down to market fundamentals and how much is market sentiment. Russia supplies around 15% of the gas used in Western Europe. This supply is via a pipeline that runs across the Ukraine; therefore there is understandably a question mark on the security of this supply in light of the current conflict.”

Mr Rickerby believes the overriding market fundamental is that stocks are high and demand is low. “Therefore, prices are going to be subdued.”

 

Picture: Brian Rickerby, Joint MD, energyTEAM – overriding market fundamental is that stocks are high and demand is low.

Article written by Mike Gannon

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