October 2011 Energy Index - Bord Gáis Energy

Bord Gáis Energy IndexOCTOBER 2011


BORD GÁIS ENERGY INDEX INCREASES 1% DUE TO GAINS IN THE PRICE OF OIL

- INDEX 21% HIGHER THAN OCTOBER 2010 –

OILOil prices rose from lows of $99 at the beginning of October to trade $115 by the middle of the month on pledges by France and Germany to come up with a plan to resolve the euro zone debt crisis. Stronger-than-expected U.S. retail sales also supported higher prices.

However oil prices slipped at months end as futures broker MF Global filed for bankruptcy and the Greek government announced a surprise referendum on its debt bailout, reviving concerns about the outlook for the Eurozone.

Brent crude oil closed the month at $109.56

OVERALL SUMMARY:The Bord Gáis Energy Index rose 1% as gains in oil prices were offset by falls in coal and electricity prices. Gains by the Euro versus the US Dollar also helped offset the effect of rising oil prices.

Commodity markets continued to be very volatile as Europe struggled to get to grips with peripheral country debt levels and the threat that it could precipitate a second global recession in three years.

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1 Mth� 3% 3 Mth� -3% 12 Mth� 31%

The Bord Gáis Energy Index rose 1% as gains in oil prices were offset by falls in coal and electricity prices. Gains by the Euro versus the US Dollar also helped offset the effect of rising oil prices.

Commodity markets continued to be very volatile as Europe struggled to get to grips with peripheral country debt levels and the threat that it could precipitate a second global recession in three years.

1 Mth 1% 3 Mth -2% 12 Mth 21%

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Bord Gáis Energy Index 12 Month Rolling Average

Oil prices rose from lows of $99 at the beginning of October to trade $115 by the middle of the month on pledges by France and Germany to come up with a plan to resolve the euro zone debt crisis. Stronger-than-expected U.S. retail sales also supported higher prices.

However oil prices slipped at months end as futures broker MF Global filed for bankruptcy and the Greek government announced a surprise referendum on its debt bailout, reviving concerns about the outlook for the Eurozone.

Brent crude oil closed the month at 1 Mth 3% 3 Mth -3% 12 Mth 31%

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Bord Gáis Energy Index (Dec 31st 2009 = 100)

Macroeconomic issues such as the Greek debt crisis and the outlook for the global economy were the main drivers of commodity prices and FX rates in October.

Oil prices remain very susceptible to the outlook for the global economy.The Euro staged a strong comeback versus the US Dollar from the lows seen at the beginning of October.

Oil Index

*Index adjusted for currency movements.Data Source: ICE


COALEuropean coal fell $5/mt to an eight-month low in the first week of October due to lower equity markets and a weakening Euro.

Negative macroeconomic news caused greater losses in coal prices for next year than for the remainder of 2011 due to 2012 growth expectations being adjusted down which, in theory, is bearish for future coal demand.

Prices remained below $120 for the remainder on the month as confidence that a solution to the Greek debt crisis could be found fluctuated.

ELECTRICITYWholesale electricity spot prices fell by 3% in October.

Wind levels remained high on average in October and when combined with increased availability of lower cost generation plant during the month the net effect was a fall in wholesale prices.

NATURAL GASThe new gas year started with unusually warm weather both in UK and the Continent resulting in lower demand and the lowest gas prices of 2011. However prices increased gradually throughout the second week of the month as demand from the Continent picked up and erratic Norwegian flows created uncertainty in the market.

NBP prompt prices traded sideways around the 60p per therm level in the second half of October mainly because of lower BBL imports and LNG flows related to the ongoing Qatari maintenance.

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Natural Gas Index

Coal Index

Electricity Index

*Index adjusted for currency movements.Data Source: Spectron Group

*Index adjusted for currency movements.Data Source: ICE

Data Source: SEMO


FX RATESThe Euro traded down to a nine month low versus the US Dollar of 1.31 in the first week of October as Moody’s downgraded Italy’s debt to A2 and fears that EU leaders would not get to grips with the debt crisis.However, as progress was made towards a resolution to the Greek crisis the currency recovered to finish the month at 1.39.

The Euro also recovered from multi month lows seen versus sterling to finish the month at 0.86.

MARKET OUTLOOK:The market expects oil prices to fall in 2012 from current levels with an increasing possibility that economic growth could falter next year if the current Euro crisis is not comprehensively resolved. Lower economic growth would mean that demand for oil in 2012 will be lower than it is currently and futures prices are softening as a result.

Gas prices remain higher over the coming winter months due to the seasonal nature of the market and the high oil prices earlier in the year used in the calculation of gas prices on the continent.

For more information please contact: Fleishman-Hillard - Aidan McLaughlin - 085 749 0484 Bord Gáis Energy - Christine Heffernan - 087 050 5555

RE-WEIGHTING OF BORD GÁIS ENERGY INDEX:Following the SEAI’s 2009 review of energy consumption in Ireland, released in Q4 2010, there was a 9.3% drop in overall energy consumption. The most notable drop of 1.39% was in oil consumption in the form of gasoline and diesel. This reflects the economic downturn experienced at the time. The share of natural gas and electricity increased by 0.63% and 0.57% respectively. An increase in the use of renewables and peat, at the expense of coal in electricity generation was also observed. As a result the Bord Gáis Energy Index has been reweighted to reflect the latest consumption data. This has had a minimal effect on the overall shape of the Index, but may indicate future trends.

Disclaimer:The contents of this report are provided solely as an information guide. The report is presented to you “as is” and may or may not be correct, current, accurate or complete. While every effort is made in preparing material for publication no responsibility is accepted by or on behalf of Bord Gáis Eireann, the SEMO, ICE Futures Europe, the Sustainable Energy Authority of Ireland or Spectron Group Limited (together, the “Parties”) for any errors, omissions or misleading statements within this report. No representation or warranty, express or implied, is made or liability accepted by any of the Parties or any of their respective directors, employees or agents in relation to the accuracy or completeness of the information contained in this report. Each of the Parties and their respective directors, employees or agents does not and will not accept any liability in relation to the information contained in this report. Bord Gáis Eireann reserves the right at any time to revise, amend, alter or delete the information provided in this report.

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1 Mth� 1% 3 Mth� -1% 12 Mth� 0% EURGBP

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FX Rates

Electricity 18.40%

Coal3.16%

Gas 13.52%

Oil 64.93%

Business

October 2011 Energy Index - Bord Gáis Energy