The last fortnight has seen big swings in both Short-term and Annual prices across power and gas. A Sudden Stratospheric Warming event above the North Pole put in place a “Beast from the East” weather pattern bringing snow and cold weather (a 30-year low temperature for the UK). This caused short-term energy prices to surge, feeding into Annual sentiment. However, a rapid reversal followed as the “Beast” was replaced by mild, windy weather meaning demand fell, renewable generation rose and risk associated with gas storage levels diminished. There has been some bullishness derived from the US cold snap (the unusual snow in Texas has had an effect on oil and gas production), but generally Short-term bearishness seems to be more prominent.

Overall, there are key conflicting influences on power and gas. We have seen 12-month highs for oil for various reasons, including the port-covid stimulus package in the US. In Europe, carbon has breached €40 (although the EU may introduce caps to stem speculative buying). However, the (weather-driven) risk of the Short-term market seems to now have less influence on Annuals, so hopefully we will see less volatility in the coming months.

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