Energy prices in the first half of February have been affected by competing drivers. We have seen bearishness in the short-term, driven by far more consistent wind driving turbines. The windy weather has also been mild, with temperatures significantly above seasonal norms, thus reducing heating (gas) demand and taking further pressure off depleted gas stocks.

Contrary to this, we have seen further issues with the French nuclear fleet meaning the UK has been exporting power to France. Gas storage levels remain perilously low, in spite of the respite the mild winds bring. The predominant bullish driver of course remains the situation in Ukraine, and whether Russia will invade. Over the last weekend, gas and power prices surged as the media commentary suggested an almost inevitable invasion, with the severe impact this could bring to the energy sector (stopped Russian gas flows, or sanctions on gas; a surge in crude oil prices due to Russian sanctions by the West). However, with the apparent withdrawal of Russian troops on Tuesday, so markets have shown a dramatic downturn, and the surge has reversed. What happens next is crucial – NATO remain cautious an invasion may still happen, but if it does not, then it seems likely there will be some compromise shown to Russia – if this includes the commissioning of the Nord Stream 2 pipeline, then we may well see a step-change in the energy crisis.

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