Just like the market, if you took a random walk into any energy consultancy or brokerage last year, your efforts in gauging the market for future energy prices would have yielded pretty much the same result, regardless of who you asked. Assuming this question was “What’s the outlook for the UK energy prices on the year ahead” the answer would have indiscriminately been the same… “Higher”.
The consultancy industry has changed in recent years, while some facets of the market remain the same; some newcomers have differentiated themselves from the traditional procurement agents with sophisticated and well calculated risk management strategies.
When looking at the wholesale energy market, whether your interest lies with gas, electricity or any other commodity, the emphasis of buying-right still remains on getting the right price. This is a very familiar approach which many energy managers can relate to; yet may not fully appreciate. In our effort to effectively manage client risk and operate trading strategies, LG Energy Group (LGE) recognises the complexity of the market and its dynamic nature.
Forecasting market trends and price direction isn’t the only concern that needs to be identified when it comes to trading. Beyond the initial step of being in the right trend, traders must also be right in their timing, duration of trade and most importantly traders must operate within the end users risk management strategy.
Approaching every market environment with the necessary balance of expertise and experience – with appropriate contingencies– has consistently enabled LGE to effectively manage risk and realise cost reduction for end users.
“…his biggest winnings were made on the bull side, so that it is plain he did not play prejudices but conditions” E. Lefevre, Reminiscence of a stock operator, John Wiley & Sons, 1923, p. 97.
Many proceeded to enter the winter 2013/14 energy market, with a pre-conceived view that prices would push higher due to the expectation of a cold winter. However, equipping yourself with a well-structured trading strategy and appropriate contingencies would have yielded a more fruitful position in the market. Experienced risk managers should always look at the market conditions and prepare for those “What if?” scenarios.
So far the market plunge to the downside has caught many off guard, with last minute participants trying to get into the action, following the colossal 15% and 13% plunge on the year (front season gas and power contracts, respectively).
By now, many energy buyers have been begun to examine their buying strategies and the expertise at their disposal in what is still a very complex market environment.
To learn more about how LGE positioned it clients over the winter period contact it on 01253 767 222 or find it at www.lge-group.com