Isra-Mart srl: Energy index has risen 27% since last year

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The Bord Gáis energy index was steady last month as a fall in oil and natural gas prices was offset by increases in both coal and electricity prices. The index stood at 139 in August and is now 27% higher than in August 2010 and 57% higher than in August 2009.

Michael Kelleher, the energy trading analyst at Bord Gáis, said that future markets continue to point to an increase in the energy index in the fourth quarter of this year.

He said that higher natural gas future prices are the main driver of a higher outlook.

'Concerns over increased demand for the fuel from Japan and Germany due to nuclear power generation shutdowns and the high oil prices seen to date in 2011, which are used to set the price for natural gas for the coming winter, are combining to give a bullish outlook for gas prices,' he added.

Bord Gáis said the oil element of its energy index is down 2% to 146 with oil prices falling sharply in the first half of the month as negative economic data raised fears of a double dip recession in both Europe and the US.

The natural gas element of the index is down 4% to 173 with prices seeing volatile moves during the month. The coal element of the index is up 1% to 150 as stock levels at European utilities remaining relatively high.

The electricity element of the index rose by 5% last month due to an outage on the Moyle interconnector to the UK and other generator outages. Bord Gáis pointed out that many power generation plants undergo maintenance work during the summer, which increases the cost for power to fill this gap.