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Coronavirus fuels 15pc drop in oil prices, wider dip in wholesale energy costs

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Passengers coming from China wearing masks to prevent a new coronavirus are checked by Saudi Health Ministry employees upon their arrival at King Khalid International Airport, in Riyadh, Saudi Arabia January 29, 2020. REUTERS/Ahmed Yosri

Passengers coming from China wearing masks to prevent a new coronavirus are checked by Saudi Health Ministry employees upon their arrival at King Khalid International Airport, in Riyadh, Saudi Arabia January 29, 2020. REUTERS/Ahmed Yosri

REUTERS

Passengers coming from China wearing masks to prevent a new coronavirus are checked by Saudi Health Ministry employees upon their arrival at King Khalid International Airport, in Riyadh, Saudi Arabia January 29, 2020. REUTERS/Ahmed Yosri

The coronavirus crisis has disrupted Chinese demand for oil and helped to drive down wholesale energy prices here, industry analysts say.

Reports published today by Bord Gáis Energy and business provider Naturgy say the average wholesale price of oil fell by 15pc and electricity by 7pc in January.

The two differed on the average decline of natural gas prices since December; Naturgy put it at 13pc, Bord Gáis at 11pc.

Both attributed the slump in oil prices to China’s battle to contain the spread of coronavirus.

“The outbreak of the coronavirus has taken its toll on global energy markets,” said Bord Gáis energy trader David Grainger.

“With China being the largest oil importer in the world, decreased demand could see prices track downwards as a result of economic slowdown and limited demand for oil,” Naturgy energy analyst Lauren Stewart said.

While oil in January remained 6pc more expensive than 12 months ago, average wholesale prices for electricity and natural gas have dropped by 47pc and 52pc respectively over the year.

“There is great value currently in the energy market,” Ms Stewart said. “Stocks of liquefied natural gas (LNG) are sitting at an already healthy 73pc capacity in Europe. With nine cargoes expected to dock in UK terminals in early February, there is far less uncertainty than at this point in 2019. This stands to benefit businesses in the short term.”

Naturgy and Bord Gáis said electricity demand last month increased by 2.6pc nationwide. But this was offset by a 5pc increase in output from wind farms, which contributed 42pc to Ireland’s grid network, slightly higher than in December.

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