Energy prices remain high, boosted by various factors. The key issue remains Russian gas flows. These are still well below expectation, meaning that European gas storage is at 68%, compared to 87% this time last year. The lack of physical gas came more into focus as we hit the first real cold snap of the winter in Europe and demand rose both for heating and electricity generation (as cold weather is generally too still for wind generation). We have since seen prices come off a little as temperatures are set to rise above seasonal norms, and Storm Arwen helped provide much needed wind generation.  

Other than the geopolitical tension associated with Russia, other factors in the wider energy complex have affected prices: European carbon has hit record levels as Germany plans to introduce a price floor; the French nuclear fleet is severely hampered over the next few months due to shut downs (UK stations are also due to go off-line); oil dropped significantly with the expectation that the Omicron variant may decrease travel – this has not pulled gas significantly lower (as it used to) but has probably kept some of the gas increases in check.

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