Natural Gas Prices - Page 16

The NBP price continued its upswing, which began in July. In early October, it stood at €22/MWh ($8.1/MBtu), up from €20.9/MWh ($7.7/MBtu) in September (+20% compared to August). The price for the upcoming winter months is expected to be €25-26/MWh ($9.2-9.6/MBtu), slightly lower than anticipated a month ago. But the market is relatively nervous, as evidenced by the sudden spike of 4.6% on October 1 followed by a drop on the same order of magnitude two days later. These fluctuations reflect uncertainty about demand (due to the temperature) and the tensions surrounding the negotiations between Russia and Ukraine (the Russian proposal: 5 Gm3 over the winter at $385/1000 m3, i.e. $10.2/MBtu). The spike on October 1 thus coincides with the announcement that Russian gas deliveries to Slovakia will be halved.

The provisional NBP price for September was €20.6/MWh ($7.9/MBtu), up nearly 18% in one month, but down 23% compared to the situation one year ago (€26.6/MWh). This change in the NBP is due to several factors. The change is primarily related to the significant downward correction in prices in June and July (€16/17/MWh) which usually results in reverse financial movements when there is excess. This was the case when the price fell slightly below the coal equilibrium price. The second increase factor is related to the

Since the beginning of the year, Brent has varied between $98/B (September) and $115/B (at the beginning of June), which is fairly close to the extremes seen in 2013. The anticipated average for 2014, which has fluctuated between $105 and $110/B, is currently situated at $105/B, slightly down on 2013 ($108.60/B). Movements the price of Brent remain highly uncertain in the light of possible influencing factors: whether or not there is an increase in exports from Libya; whether or not negotiations with Iran on nuclear power are successful (deadline postponed to 24 November); whether or not the insurgents in Iraq affect production and exports in the south of the country; whether or not the tension in Ukraine escalates; the dollar exchange rate (increasing against the Euro since May, a factor depressing the oil price); the global economic climate (increased growth expected in 2015) and the outlook for the stock exchanges. The field of factors affecting the price of Brent is therefore obviously very wide. In any case, the increase in US production due to shale oil is playing a moderating role and partly explains the slight decline experienced since 2012.