Despite negative market reaction to Cyprus's bailout and weak economic numbers from Europe and China, Brent crude oil prices in euro terms rose by 1%.
As a result, the Bord Gáis Energy Index now stands at 166, an increase of 8% on March 2012.
Commenting on the Bord Gáis Energy Index for March, John Heffernan, power trader at Bord Gáis Energy, said: "March was a turbulent month in the UK gas market as cold weather, high demand, eroding stocks and mechanical faults combined to push wholesale UK gas prices to record levels. High prompt gas prices in the UK fed through to Irish wholesale electricity prices as gas plants in Ireland purchase UK gas at the prevailing market price. The production cost of a gas powered plant tends to determine Irish wholesale electricity prices. However, Irish domestic customers are protected from short term wholesale price fluctuations as the gas used today, for example by, Bord Gáis Energy customers has been bought over the last number of months thereby limiting the exposure to short term spikes in wholesale prices. In addition, Irish buyers of UK gas have benefited from a weakening sterling versus the euro. Since the start of the year, sterling has lost over 4% of its value versus the euro.
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"Oil prices in US Dollar terms eased back in March as investor confidence in Europe was impacted. Cyprus' bailout raised new concerns and highlighted the ongoing economic situation in Europe. An improving supply picture and a moderate outlook for oil-demand growth this year also contributed to falling prices in US Dollar terms. The revival in US oil production has, according to industry experts, proven much stronger than expected and has provided a boost to the global supply. However, multiple threats and warnings from North Korea have heightened tension in the Korean peninsula and could support an increase in Brent crude prices.
"Euro zone buyers of non-euro denominated commodities, such as oil and gas, will continue to see their buying power influenced by exchange rate movements. In March, this buying power was weakened as the market negatively assessed the consequences of Cyprus' bailout on bond and deposit holders in weak banks in at risk countries in the euro zone."
(CD/H)
