Electricity movements have closely mirrored gas in the last fortnight where there has been a divergence of long and short-term markets. Whilst Annuals and Seasons headed towards long-term peaks on the back of strong fundamentals – coal carbon and oil – so the short-term price eased on news that the cracks in the Forties gas and oil pipeline are being fixed ahead of schedule. The stormy weather has brought firm wind generation, and there has also been a return online of two nuclear reactors at Dungeness. A fire at the Drax power station caused some concern as this knocked out 660MW of production, but the issue is now due to be rectified by 11^th January.

The oil market again seems to be a long term influence on gas and thus power, particularly in the wake of political unrest in Iran, the world’s 5^th largest producer. Oil is nearing 3-year highs at present, today topping $68. With further problems in Iran, this may go higher, but at $68, it seems likely to test the Shale Band (the upper limit at which increased shale production becomes viable in North America), so oil and other markets could thus ease back as more oil enters the market.

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