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Oil prices are on the up reaching their highest levels since 2014
Oil prices are bucking the trend by rising month-on-month. On Monday, Brent Crude Oil hit $76.17 per barrel – the highest level in over three years.
Key factors influencing this upwards trend include:
- US President, Donald Trump, announcing the US will pull out of a nuclear deal with Iran and re-impose sanctions.
- A series of planned Norwegian outages scheduled for May.
- Low European gas storage levels.
- 15 French nuclear outages, set to return on a staggered basis from May into August.
- Dutch Government ceasing all production at the Groningen field by 2030.
- China planning to switch from coal to gas on heating and generation.
- Long-term underinvestment in coal,
- Brexit remaining a bearish threat to GBP
What does this mean to the UK utilities market?
Oil price increases will have a knock on effect on the UK gas market. We are already witnessing this. We also expect electricity prices to rise in line with gas prices due to their direct correlation.
What can you do?
Where the market is at the moment, if you keep everything the same it is unlikely you will see any savings against previous utilities contracts. This is something to consider when looking at budgets.
An energy efficiency drive to bring down usage is something to consider in order to mitigate this risk.
The procurement team will continue to track the market and keep you updated on any trends.