Gasoline costs will stay excessive throughout winter, specialists say

Monday January 10, 2022 3:34 p.m.

UK fuel costs are unlikely to return to pre-pandemic ranges “anytime quickly” in accordance with Ole Hansen, head of commodities technique at Saxo Financial institution.

Hansen mentioned Metropolis AM {that a} dependence on “unreliable energy provides” corresponding to renewables like wind and photo voltaic, mixed with issues about Russian geopolitics and low fuel shares throughout Europe would proceed to be components earlier than subsequent winter.

He mentioned: “Waiting for subsequent winter, the UK pure fuel futures worth is barely buying and selling round 10% beneath the present stage, a worth that displays a market the place there may be little normalization. more likely to occur anytime quickly. “

Gasoline costs have fallen to £ 2.15 per therm – after report costs of £ 4.53 per therm as Christmas approaches.

Prices have fallen in current weeks amid a milder-than-expected local weather and elevated provides of liquefied pure fuel from US tankers, inflating UK and EU inventories.

Hansen believes this has “enormously diminished” the potential of an influence outage throughout Europe this winter, regardless of energy cuts in Kosovo final month, and earlier fears of a critical power disaster after the postponement certification of the controversial Nord Stream 2 fuel pipeline.

Nevertheless, he thought-about the possibly colder climate to be a critical problem for the broader power market, with decrease temperatures having a traditionally important affect on fuel costs.

Hansen defined: “Now we have already seen how the top of January and February resulted in beneath regular temperatures, and mixed with the chance of a battle with Russia chopping provides additional, the market isn’t but able to decrease. strongly the costs. “

Henri Patricot, EMEA Fairness Analysis Analyst, Oil Exploration at UBS Asset Administration additionally expects costs to be closely influenced by climate circumstances within the coming weeks, anticipating that wholesale prices “will stay very excessive within the close to time period. “.

He mentioned: “We anticipate wholesale fuel costs to stay very excessive within the brief time period. The worth growth within the subsequent few weeks will largely depend upon the climate (temperatures in Europe) and fuel flows from Russia, which have been nicely beneath our expectations thus far this yr.

As Washington has elevated fuel provides to Europe, the power professional famous that storage ranges stay “nicely beneath common”.

The problem remained very open, as typical climate circumstances initially of the yr might see Europe popping out of winter inside the 5-year vary when it comes to storage utilization, however a “chilly winter would convey again the ‘use solely 11% “.

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