Whilst Short-term markets have been significantly affected by the recent cold spell, Annuals have been much more benign. Annual power and gas have of course experienced some bullish pressure from current prices, but having risen in the early part of December, have resumed levels similar to a month ago.

The cold weather has been the first market test of the season, and by and large the UK and continental Europe have come through it relatively unscathed. The prolonged cold conditions obviously increased gas heating demand and withdrawals from European storage increased. The weather was also very still, so gas-fired generation had to take up the slack. However, with the arrival of the much milder, windier weather, so prices have fallen back. Gas storage is still significantly in excess of average levels thanks to the EU’s prudence in the face of Russia weaponising energy, and the modelling of gas demand for later in the season indicates there will not be a shortfall. There will of course be other drivers in the coming weeks and months that may spike things, but overall markets do feel more comfortable having experienced the cold weather without adverse effects. It should be noted however that prices now softening is relative, and we should remember that Summer 2023 gas is still 260% higher than it was 1^st January and equivalent power still circa 200% up in the year as well.

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