THE WORLDWIDE OIL glut should continue this year but falling prices may have bottomed out on the expectation that supplies will start to thin out next year.
The cost of the commodity hit six-year lows last month thanks to the production war between US shale oil producers and rival energy-rich nations in the Middle East and elsewhere.
The price of Brent crude fell below $50 per barrel, but it has since rebounded over 20% to above $60 a barrel.
The latest Bord Gáis Energy Index report said it looked like the cost of the commodity was going up again on news that suggested competition had peaked.
It noted 90 US oil rigs had recently been taken offline – the most made idle at once since the mid-1980s – after an earlier decision from the OPEC consortium, made up of big oil producers in the Middle East, Africa and South America, not to cut production despite a slump in demand.
This is what Bord Gáis Energy’s oil index looked like in January:
Oil peaking
The report noted US oil production had nearly reached the same heights as its peak in 1970 thanks to the country’s fracking boom.
The average petrol price in Ireland now stands at 129.9c per litre, up slightly from last months rate of 127.9c but still down about a quarter on the rates from early 2013, according to figures from Pumps.ie.
Bord Gáis Energy’s overall energy index, which measures a composite of oil, electricity, gas and coal prices, also went down to be 5% lower for the month.
Electricity also down
Wholesale electricity prices fell slightly, although they are up on the costs of mid-2014. The report said wind turbines met a “sizeable” 22% of the island’s energy demand, which brought down prices as more-expensive gas-, coal- and oil-fuelled plants were taken offline.
Bord Gáis Energy gas and power trader John Heffernan said there were still “serious concerns” about the state of the global economy despite steadying oil prices.
Several nations’ central banks have recently cut interest rates in an attempt to fend off deflation and kick-start spending, while the US and UK have shelved expected rate rises.
The combined impact of these factors will continue to be closely monitored by both consumers and producers seeking a sustainable price for energy,” Heffernan said.
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