Wednesday 14 December 2016

Oil prices up and volatile – Y Report

Oil prices have been volatile over the last few weeks due to changes in supply and demand fundamentals looking forward.

At the end of November, OPEC announced production cuts, which saw prices rise by as much as $10 (£7.87) to 18-month highs. This could continue, according to Inenco’s Y Report.

The French nuclear situation looks 'more optimistic' as EDF has announced three reactors will be back online sooner than expected. This could see French supply margins increase, lowering export demand from the UK.

Temperatures in November have been erratic, hitting record highs and lows. December has been mild but temperatures are expected to dip towards the end of the month.

[youtube url="https://www.youtube.com/watch?v=B0AZwq71D00" width="575" height="323"]
Energy Trader Dorian Lucas said: "For customers looking to place a fixed price contract, this recent downturn in prices we've seen over the last few weeks is very much an opportunity for you to enter the market and fix a fixed price contract. In terms of contract duration, at least 12 months - if you want to look fixed further than that, the main thing you need to think about is your attitude to risk."

With regards to flexible contracts, he added: "We've seen prices dip over the last few weeks, which represents a buying opportunity and as we've said, they've found support at a trend-line. Over the short term, we're expecting prices to increase so at the minute it's a case of increasing the hedge if you've got volume exposure you want to cover."

He said those already sitting on relatively high hedges should wait and see until Q1, where there potentially might be some more downside.