In the last fortnight we have seen an upturn on Annual prices, whilst there has been much greater volatility on short-term. The general bearish mood following the August peaks has partially reversed as we finally come to the end of mild weather across Europe and energy demand starts to tick up. Whilst cold, dark conditions naturally lead to more energy demand, the pattern has not lead to major spikes, although the lack of wind this week has really pushed Day-Ahead gas and power. The effect of the change in meteorological conditions has been tempered by the prolonged autumn: as we enter December, there has barely been a frost so heating demand for gas has been well below average. Elsewhere, drivers remain the same as before, so Russian gas flows are a concern, as are further delays in French nuclear plant coming back online. On the other hand, the effects of the pending recession are now being felt as we start to see businesses fail – this inevitably leads to demand destruction and ultimately lower prices.

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