12
Meanwhile, the gap between Brent and lower
priced West Texas Intermediate (WTI) crude
oils has narrowed from its range of $10 to
$20 per barrel in recent years to less than $10
per barrel. Various new projects are diverting
supplies away from Cushing, Oklahoma, where
the price of WTI is set, with WTI rising towards
Brent and the difference narrowing to as little
as $3 per barrel in July 2013.
Notwithstanding the above, several significant
trends are becoming established in oil markets:
• In OECD countries demand is falling, while
it continues to rise in non-OECD countries.
• As a result of shale oil and oil sands,
production in North America is rising,
reversing a previous, long term decline.
• Middle Eastern oil is increasingly serving
the Asia-Pacific region, with less going to
the Atlantic basin.
Gas Markets
The consequences of Japan’s Fukushima
disaster, following an earthquake in March
2011, continue to be felt in Europe’s gas
markets. Demand for liquefied natural gas
(LNG) remains high in Japan as a result of
most of its nuclear power stations being
closed (although its current government has
indicated that it wishes to re-open a number of
them). This led to a reduction of LNG cargoes
arriving in western Europe during the winter
of 2012-13, when it was not only cooler than
in the previous winter, but was characterised
by a particularly cold ending, with demand
for gas at mid-winter rates throughout March
and into early April. This raised gas prices at
Britain’s National Balancing Point (NBP) and
other trading hubs in the EU, such as the
Netherlands, Belgium and Germany.
ECONOMIC REPORT 2013
Figure 3: Wholesale Gas Price at the NBP in Great Britain, January 2008 to July 2013
-
20
40
60
80
100
120
Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13
Pence per Therm
Source: Heren Energy
Day Ahead Price
2012 Fwd Price
2013 Fwd Price
0
2014 Fwd Price
