Gas and power Annuals have generally been declining through the first two weeks of the year, continuing the trend that started mid-December. However, a lot more volatility has crept in, prompted by changing weather patterns, with mild windy weather giving way to an Arctic blast across Europe.

The big change in the energy complex has been a sharp increase in oil costs. Crude indices have risen as Saudi led production cuts have been implemented. Brent crude is now in excess of $60 having dipped below $50 within-day on Christmas Eve. However, this cost increase is not reflected in near gas and power Annuals, although further out gas curves are more bullish. European carbon costs are declining, as UK trading participation remains in doubt with the Brexit uncertainty, and this acts as a bearish counterpoint to rising oil. It should also be noted that whilst rising, Brent remains well below the $80 levels seen in October.

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