BIG FREEZE SENDS ENERGY INDEX TO 27 MONTH HIGH - Wholesale energy prices rose to a 27 month high in December thanks to demand from China and very cold weather in Europe. The index is designed to track movements in the wholesale energy market and how the prices affect Ireland. It is made up of the four key energy commodities of oil, gas, coal and electricity.
Michael Kelleher, energy trading analyst with Bord Gáis Energy, says there are many causes for the steep rise in the index last month. He says that oil prices rose as developing countries - such as China - soaked up more supplies as their economies continued to grow strongly. The US - the biggest consumer of oil - also saw its economy rebounding. He says that oil prices should ease with OPEC saying it is happy to see average prices of about $90 a barrel over a period of time.
Coal prices rose due to supply factors. Mr Kelleher says that recent flooding in Australia and Indonesia meant that China - which usually sources its coal supplies there - had to turn to Europe for its supplies. This drove up prices. It could take several months for the Australian mines to get back to full production, so prices could stay high, Mr Kelleher said.
Gas prices rose due to seasonal factors, the energy analyst said. With Ireland and the UK gripped by the coldest weather in 100 years last month, Mr Kelleher said that as the winter weather eases the nervousness about supplies will settle down and so the prices should also ease.
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MORNING BRIEFS - Aer Lingus has given an insight into the level of disruption caused by ice on the runways last month. The airline said it carried 8% fewer passengers than had booked with the airline because of flight cancellations and disruption to operations. The overall number of booked passengers was 572,000, which means just under 46,000 people with bookings were unable to fly. The 572,000 figure for booked passengers in December is 25.3% because of a reduction in services.
***Much attention will be focused on the bond markets again this week after the interest rate demanded by lenders to buy Spanish and Portuguese debt rose to record levels on Friday on renewed market tensions over the countries ability to balance their books. The equivalent rate on Portuguese 10-year debt rose to 7.193% from 6.957%, the highest level since Portugal joined the euro zone.
*** There was much speculation on Portugal over the weekend. Yesterday, the Portuguese newspaper Publico editorialised that it felt a bailout for the country was inevitable. 'Only a miracle will save us from the IMF,' a Publico editorial read. There are reports, a bit like the scenario here in November, that EU officials were in talks with Lisbon. Yesterday, a Portuguese government spokesman denied a German magazine report that Lisbon was under pressure from Berlin and Paris to seek a bailout from the European Union and International Monetary Fund.
*** On the currency markets, the euro is worth $1.29 - a four month low - and 83 pence sterling.
