Economic unrest in the Eurozone has caused volatility in oil prices, according to a report published by npower.

Magali Hodgson, of npower’s Optimisation Desk, comments: “Last week, the political to-ing and fro-ing of the Greek debt crisis caused upheaval in oil prices. News that a bailout package had been agreed for Greece caused Brent oil prices to gain US$2/barrel in one session. However, George Papandreou’s announcement that he would hold a referendum added to the uncertainty. The referendum was quickly called off which then led to oil gaining in value towards the end of the week.

The balance of winter lost some ground due to warmer than predicted weather, Hodgson adds. "This resulted in Dec 11 power losing £3.35 and Q1’12 losing £3.50 over the fortnight. The clocks going back mean we are seeing the winter demand profile with coal generation being the preferred fuel over gas. Nuclear generation also increased to run at an average of 20% of the stack.

“Looking forward, Brent oil prices will continue to be volatile as the Eurozone crisis continues. The real test to UK energy prices will be if and when the weather deteriorates. We saw last winter how prices reacted to below average seasonal temperatures, so bullishness may come to the prompt sooner than expected if we see a cold snap over the coming weeks.”

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