The Bord Gáis energy index rose by 12% in December to stand at 137 due to increased global demand for oil, coal and natural gas due to the unusually cold weather and the global economic recovery.
The index is designed to track movements in the wholesale energy market and is made up of the four key energy commodities of oil, gas, coal and electricity.
Oil prices saw the largest monthly increase in crude oil prices since May 2009 last month and closed $8.83 higher at $94.75. Bord Gáis said that expectations of continued strong Chinese demand supported the higher prices. US demand for oil was also higher, averaging about 20 million barrels a day for December - the strongest demand of 2010.
Natural gas prices broke above the 60 pence per therm level at the start of the month for the first time since February 2009. Long range storage stocks fell to almost 30% below the five year average.
The price of coal jumped from $114 to $124 per tonne in December due to the cold snap. Flooding in Australia and Indonesia also hit the export capacity of these countries, which resulted in European and Asian buyers competing for coal.
Electricity prices rose by $14 per megawatt to 71 per megawatt due to higher costs for gas and coal and unusually high prices during the week starting December 20. Bord Gáis says this was due to plant availability issues which drove the need to run expensive peak plants.
'Oil prices surged higher on increased emerging market demand in the fourth quarter as well as a recoveryy in US demand, as evidenced by large draws on crude oil stocks,' commented Michael Kelleher, energy trading analyst at Bord Gáis.
He said that UK natural gas prices were up 23% as the coldest December in over 100 years gripped the UK and Ireland, which lifted demand to new highs and depleted storage levels below seasonal averages.
He also said that oil demand is expected to remain strong in 2011 and could post record levels in developing economies.
