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Strong dollar fuels lower prices for both gas and oil

By Margaret Canning

Wholesale fuel prices fell during March thanks to the strengthening dollar and other international factors, according to research by a gas supplier.

The firmus energy index fell 10% in March as increases during February were reveresed.

According to firmus, the second-biggest gas supplier in Northern Ireland, the strengthening dollar led to falling demand for oil and other commodities priced in the currency.

The cost of a barrel of Brent Crude fell by 8% in sterling terms during March, according to firmus.

And John French, the company's director of regulation and pricing, said that changes in Iran's relationship with the West were also having a knock-on effect.

"The agreement between Iran and the West over nuclear power is paving the way for the Middle Eastern state to be released from a longstanding embargo on oil exports.

"If and when sanctions are eventually lifted, Iran could be sending two million barrels a day into world markets.

"Even though that date may still be some way off, the prospect of more supply swirling into the current world glut has already hit the wholesale price of oil," he said.

Oil prices fell by around 60% between June 2014 and January 2015 - though yesterday a barrel of Brent crude was up to $60.32.

Firmus said the cost of gas was down 3p a therm on average during March, despite a major reduction in flows through the Langeled pipeline from Norway to the UK.

Warmer weather was also a factor and lowered demand for gas.

And coal is now less than half the price it was four years ago - thanks to a falling appetite in China for imports of the fuel.

Firmus said: "This falling demand for coal is paralleled in wealthier countries where gas and renewables are increasingly used for electricity generation."

Meanwhile, the wholesale cost of electricity was down 14% during March.

But prices had spiked in the middle of the month, according to firmus, as more expensive generating machinery replaced idling wind turbines.

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