Energy prices predicted to stay elevated despite Met forecasts for mild winter         

Capital Economics said it expects coal and natural gas prices to stay at elevated levels through the end of year and start to edge down in the following three months.

Forecasts for a warmer-than-normal winter will likely do little to lower elevated energy bills in the coming months, a leading international economics consultancy has said. 

Capital Economics said it still expected wholesale prices to stay elevated through December and only start to fall as in previous years in the late winter.   

The new outlook comes despite the European Centre for Medium-Range Weather Forecasts predicting a milder-than-normal winter for the northern hemisphere, including in the big power and heating-hungry northern Europe and North America.    

Irish household bills, as in much of the rest of of Europe, have raced upwards in recent weeks to reflect the huge hikes in wholesale gas prices in Europe and an upsurge since the start of the year in the price of crude oil, as the global economy recovers from the Covid crisis.  

Gas prices are closely watched because the fuel is used to generate electricity at power plants that is not already met by wind and hydro across the continent during the winter. 

Met forecasts for a milder winter in Europe and North America would appear to offer hope that wholesale and retail household prices for energy will ease back from their elevated levels. 

"Overall, the latest weather forecasts have not changed our energy price outlook," said Edward Gardner, commodities economist at Capital Economics. "We still expect energy prices to remain high for the remainder of the year before starting to edge down in the first quarter," he said. 

Capital Economics said it expects coal and natural gas prices to stay at elevated levels through the end of year and start to edge down in the following three months. Annual Irish inflation climbed to 5.1% last month as household energy bills soared.

The ECB has said that inflation across the eurozone will be transitory and will not trigger a rise in its official interest rates.   

Meanwhile, demand in the big energy users in Europe rose on Wednesday. French day-ahead power rose to the highest since 2012, with colder weather boosting demand and lower nuclear output expected to limit supplies. Minimum temperatures are set to be below freezing in the east of France on Thursday.  

The wholesale price of gas in Europe remained at an elevated level, trading at just below €92 per megawatt hour on Wednesday. The contract had reached a record high of over €116 per megawatt hour in early October. 

Global crude oil prices -- which have shot up this year -- steadied on Wednesday as traders questioned the effectiveness of a US-led release of oil from strategic reserves. 

The global benchmark for Brent crude was little changed at $82.16 a barrel. The US said it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool prices. 

Attention has now switched to how the Organisation of the Petroleum Exporting Countries (Opec), Russia and their allies, together known as Opec+, will react. Jeffrey Halley, senior market analyst at Oanda, said the move to tap storage was "a one-shot wonder and markets responded appropriately".