Morning business news - October 7Monday 07 October 2013 10.54
BORD GÁIS SAYS DROP IN OIL PRICES LEADS ENERGY INDEX LOWER - The Bord Gáis Energy Index - which tracks wholesale commodity prices - was down 3% in September. That was the first month-on-month drop since June and came despite increases in the price of gas, electricity and coal. John Heffernan, a power trader with Bord Gáis Energy, says the overall reduction was down to a 7% fall in oil prices, which over-rode the increases in other commodities.
"We saw dramatic progress on Syria and Iran which squeezed some of the rich premium out of the market. That put downward pressure on oil," John Heffernan explains. He says that 2.7 million barrels a day were missing from the market in August which came back in September from Libya and Sudan. The weaker dollar and the government shutdown also introduced negative sentiment to the market," he adds.
Mr Heffernan says oil is trading at around the $110 a barrel mark, but could drop to $100 a barrel as a number of factors come into play together, including the shale oil revolution in the US and the anticipated reduction in stimulus there. The effect of that tapering on emerging market economies could also put downward pressure on demand.
Gas prices were up 4% in September, on top of the highest monthly average rise in gas price in decades in August. "Gas prices were very high over the summer. In the month, we saw a bout of cold weather which put increased pressure on price," John Heffernan says. "There were also problems with supply from Norway due to maintenance issues there. Plus, only five cargos of liquified natural gas, or LNG, came in September. That compares to nearly 30 cargoes in a better month," the power traders states.
MORNING BRIEFS - European shares are pointing lower as the strains from the US federal government shutdown dampen sentiment. The crisis is now entering its second week and is in danger of merging with a row over the US debt ceiling. House speaker John Boehne said over the weekend that he would not pass a bill to increase the debt ceiling without addressing longer-term spending and budget challenges.
*** ISME - the small and medium enterprises association - says the average waiting times for businesses to get paid is improving with an average of 63 days in the third quarter compared to 66 days in the April to June quarter. That is the shortest waiting period since the spring of 2008. However, the association is pointing to what it says is a failure of the prompt payments legislation. It says four fifths of SMEs do not charge interest on late payments as they are afraid that larger businesses will stop dealing with them.
*** There was a more than 30% annual increase in the number of jobs created in the last six months according to employers group Ibec. Of the 8,259 new jobs created in the past six months, more than 2,000 were announced in September. Private sector employment was up nearly 2% over the past year, the report states. Ibec today repeated its call on the Government not to increase taxes in the Budget as it will have the opposite effect to that intended by driving down revenue receipts.