Oil prices are continuing to rise in the wake of the ongoing situation in Libya, according to the latest updates on the energy market released by npower.

“The energy market is still establishing the true impact of recent news from Japan and the Middle East. Oil prices rose by US$2/barrel from 14 March 2011, on the back of uncertainty around the situation in Libya following NATO intervention," says Magali Hodgson, an analyst from npower.

“Coal prices have also risen over the past two weeks, gaining US$5/tonne. Not only did the disaster in Japan have a bullish impact, but the announcement that Germany was shutting down all of its seven nuclear reactors built before 1980 due to safety concerns has also contributed to this rise in prices. The German shutdown will create a shortfall in generation which can partly be picked up by its large wind and solar generation capabilities but coal generation will also need to play a big part.

“In terms of UK prices, the market is still trying to assess the impact that the Japanese disaster will have on LNG flow. The UK gas market is very volatile and is torn between the conflicting messages of comfortable fundamentals in the prompt and the uncertainty of supply/demand balance on the curve as we begin to enter the summer maintenance period.

The ongoing uncertainty rising from unrest in North Africa and the Middle East is going to continue to drive oil prices higher, says the firm, while the situation in Japan is likely to strongly influence Europe’s debate on the future of nuclear generation. "No one can forget about the commodity price highs of 2008 and at the moment the market is showing potential upsides to continue until situations across the world reach a modicum of stability,” Hodgson concludes.

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