Oil prices fall 8% in euro terms last month, Bord Gáis energy index finds

OIL prices fell by 8% last month in euro terms, according to the newly launched Bord Gáis energy index.

The measure of global price movements of oil, gas, coal and electricity is the first of its kind in the Irish market.

The fall in oil prices is due to continued unease over the sovereign credit problems in Europe and uncertainty around changes to financial regulations in the US, according to the index.

This news comes as Ireland plans to step up supervision of oil and gas operations in Irish waters, according to Conor Lenihan, Minister of State for Natural Resources.

The country plans more frequent onboard audits and inspections for “routine or critical events”, the minister said.

The new energy index is specific to Ireland and will be released monthly.

Energy trading analyst at Bord Gáis Energy, Michael Kelleher said: “Oil prices fell from $87 per barrel to $74 per barrel during May, a 15% drop in prices. When converted to euro the drop in prices was 8%. The continued unease over the sovereign credit problems in Europe and uncertainty surrounding changes to financial regulations, especially in the US saw prices drop below $70 per barrel on May 25. Prices recovered somewhat by months end but remained well below the high of the month.

“Looking back at the previous two years of data the index is a long way off its high of 177 back in June 2008 when oil reached record highs.”

Mr Kelleher said looking ahead the market believes that oil will continue to rise in the coming months and in turn the Bord Gáis energy index will rise as a result. “This upward trend reflects the confidence of the markets that the world economy may be emerging from the current recession,” he said.

The energy division of Bord Gáis is based in Cork. The index will be issued on the second Monday of every month.