Energy markets have been adversely affected by prolonged below-average temperatures across Europe. This has led to increased demand, but also a delay to gas storage replenishment, with gas storages levels significantly below 2020 and the 5-year average. Short-term prices have also been boosted by the stillness of weather conditions, with low wind generation output adding to the general upward sentiment as gas burn increases. The increased purchase of carbon allowances continues, with prices driven to fresh highs, whilst other key energy indicators - oil and coal – have also shown gains.The overall bullishness of markets is at odds with demand expectation for the coming months, with both power and gas demand expected to be lower due to the continued effect of COVID-19.

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