In a world of conflicting energy expert opinions, we can’t see any other example where the Risk- Reward balance is not materially challenged from an 85% price drop and where holding out for more without sound logic, is surely seen as just unnecessary gambling.
Unless forward planning and budget certainty wasn’t needed, then when it is possible to forward secure for the next year or two an all in gas price at just 5p and when oil is again at $67, then at what point do you draw a line in the sand?
Looking at the key indicators to make an informed decision based on sound logic and using historical precedent is surely a more prudent way to ensure that any decision making is based on information that includes the risks ahead.
Known Risks before winter: air-con demand in Europe, power station shutdowns, hurricane risk to Oil, gas and oil storage replenishment concerns. UK energy prices could easily rise higher as could crude oil which has again touched $67.
Other Risks: Goldman Sach’s have warned the risk of gas prices trebling this winter, the ENI boss saying this winter will be “more difficult, the IEA saying we were only spared a horrific crisis out of “sheer luck”, the market implosion from the US debt ceiling issue which has failed to materialise will make markets bullish and as confirmed with the S&P Vix to just 15.
So for those who do see this as a sweet spot to forward hedge the next 12 and 24-mth periods, but are not being offered 4.9p for gas etc then we suggest they urgently reach out to us before we close out our volumes for new business.