Markets spike to an all-time high

Tuesday 11th January 2022

The movements in gas and power markets have been extraordinary over the last few weeks. Multiple indices spiked to all-time highs in the run up to Christmas, with grave concerns over gas storage and French nuclear station safety issues to the fore. However, a sudden correction came on 23rd December with renewed hopes of Russian gas flows and distinctly milder weather. In the limited trading between Christmas and New Year, the bearish momentum continued. However, from early January, so prices have recovered as bullish drivers weigh heavily on considerations. At present, all markets are easily, albeit slowly, and there is certainly less volatility now.

Gas storage levels across Europe remain perilously low for this time of year, with the colder months still to come. Gas generation is up due to the French nuclear stations being compromised. The return of Russia gas to Western Europe is by no means a foregone conclusion, particularly with the backdrop of NATO-Russia fallout and a potential invasion of Ukraine – analysts’ attention is firmly fixed on the US-Russia talks in Geneva. The immediate worries are somewhat tempered by good supplies of LNG coming in and short-term milder forecasts. There has been volatility in the wider energy complex in oil, carbon and particularly coal.