Average Irish wholesale gas prices have almost halved over the last 12 months, according to the latest Wholesale Energy Market Report published by Vayu Energy.
The report shows there has been a 45 per cent drop in gas prices between April 2015 and the same month this year, while there has been a 6 per cent fall in the last month.
Vayu Energy, which supplies gas to 20 per cent of Ireland’s industrial and commercial market, said the collapse in prices was due to “an abundant supply of gas in Europe, suppressed demand and a significant strengthening in the value of the euro”.
The average day-ahead price for gas – the contract for gas delivery for tomorrow – is 1.21 c/kWh (cents per kilowatt hour) so far in April. This compares with an average price of 2.22 c/kWh in April 2015.
Irish wholesale gas prices have almost halved in euro terms (down 49 per cent) compared with the average monthly price recorded for April over the previous three years (2013-2015).
The report said this has had a “significant impact” on the energy costs of many Irish businesses purchasing gas on the wholesale market, particularly for users in the industrial and commercial segment.
Senior energy analyst Gillian Lawler said European gas markets were experiencing "a glut" in low-priced gas with prices having fallen to lows not seen in six years.
“The drop in prices is a result of increased supplies from Russia and Norway combined with strong imports of liquefied natural gas (LNG) from the Middle East,” she said.
“For the most part prices have been trading sideways recently. However this week there has been an increase on spot and future gas contracts, as a 22 per cent increase on Brent crude since the start of the month makes itself felt.
“The rise close to $46/bbl recently was driven by news that non-OPEC oil production could experience its biggest output fall in 25 years this year.”
Ms Lawlor said changes in the weather and the strengthening in the value of the euro against sterling ahead of the British referendum on EU membership would drive prices lower.
‘’With weather becoming more of a factor from the end of April onwards, and a gradual increase in LNG deliveries expected during Q2, prices are expected to fall from where they are now,” she said.
“Strengthening in the value of the euro against sterling on the approach of the brexit referendum has also been a significant factor affecting Irish wholesale gas prices, given that the majority of natural gas consumed in Ireland is currently sourced from the UK wholesale gas market.”
Separately, the average wholesale price of electricity in the Irish market so far during April is 3.56 c/kWh – a decrease of 35 per cent compared with April 2015 (5.52 c/kWh) and down 3 per cent compared with last month.
