Energy index falls from record highTuesday 10 April 2012 10.42
The Bord Gáis Energy Index fell by 3% in March due to a return to milder weather across Europe after the cold snap in February.
The index tracks movements in the wholesale energy market and is made up of the four key energy commodities of oil, gas, coal and electricity.
It stood at 152 last month after hitting a new high of 157 in February.
Bord Gáis said the oil element of the index was unchanged in March due to easing demand concerns.
It said that in previous months, oil prices had been pushed higher on fears that the world would not have enough oil to meet its daily demand. These concerns had a weaker influence on prices last month after claims that Saudi Arabia could increase oil production immediately if required.
Rumours that strategic reserves of oil were to released on to the world market also eased demand fears.
Today's index shows that its natural gas element fell by 11% due to weakening demand as a result of the more seasonally mild weather, healthy supplies of gas from LNG terminals and imports from Norway.
The coal element of the index inched 1% higher with prices recovering slightly at the end of the month after months of subdued activity and falling prices in Europe.
Bord Gáis said the electricity element of the index fell by 8% due to lower gas and carbon prices. It pointed out that as a majority of electricity used in Ireland is produced by burning gas, internationally traded gas prices heavily influence Irish wholesale electricity prices.
"After two months of rising prices, the global price of a barrel of oil finally stabilised in March, albeit at the relatively high monthly average of $125 per barrel, as the markets focused less on the potential impact on prices as a result of the tensions between the West and Iran,'' commented John Heffernan, power trader at Bord Gáis Energy.
He said that the ''narrative subtly moved to reassure the markets that the world had sufficient reserves to withstand the loss of Iranian crude supplies.
He said that a continued risk premium in the price of a barrel of oil will mean that authorities will be worried about the impact higher energy costs ae having in inflation, especially given the fragile state of the global economy.
''Economic releases from the world's two top economies will be watched closely for evidence of continued growth in the US and the possibility of a soft landing in China,' he added.