Wholesale energy prices ease, but household costs still set to increase

Wholesale energy prices have eased, partly due to Russian president Vladimir Putin ordering Gazprom to fill its European gas storage sites next month, which should ease supply tightness. 

Wholesale energy prices have continued to ease, although the huge increases in international oil and gas prices over the past month are still likely to filter down to rising fuel and heating costs for Irish consumers over the winter.

Oil prices have risen by 115% in the last 12 months, while a 7% increase in the last month will result in higher petrol prices for Irish motorists in the coming weeks, experts warned this week.

European natural gas and power dropped after more signals from Vladimir Putin that Russia will send extra gas to the continent next month.

The Russian leader ordered Gazprom to focus on filling its European storage sites from November 8, a day after it completes the process in Russia. He said it should ease supply tightness in Europe, where high prices are squeezing industry and fuelling inflation.

It’s the latest intervention in the market from Mr Putin to talk down gas prices, even as some European officials suspect he’s been holding back supply to pressure Europe into approving a controversial new pipeline. 

Russia is also concerned that excessively high prices could destroy demand, and would like to see them fall by about 60%.

While benchmark European gas has halved from breaking record after record earlier in October, there’s still concern that prices could soar again in the event of a cold winter as supplies from Russia remain capped and competition with Asia for cargoes of liquefied natural gas is intense.

Russia’s focus on rebuilding domestic gas inventories depleted after a bitter winter, combined with low storage rates at Gazprom sites in the EU, has become a major concern for the continent’s market, which is struggling with an energy squeeze. 

Europe started the heating season with the lowest inventories in more than a decade.

Oil prices slumped to their lowest in two weeks after Iran said talks with world powers on its nuclear programme would resume by the end of November and US crude inventories rose by much more than expected.

Brent crude was 69 cents, or 0.8%, lower at $83.89 a barrel, having hit a two-week low of $82.32 earlier and fallen by 2.1% in the previous session.

- Additional reporting Reuters and Bloomberg