Wednesday 15^th saw a significant surge in (particularly) short-term power and gas prices, although Annuals have been affected too. The combined effect of the gas price drivers mentioned in the publication – the delay on functionality of the Freeport LNG facility and the cut of Russian gas flows – has had a profound impact and sent contract prices much higher again in an already bullish market. Month-ahead gas is thus now near the levels seen just after the Ukraine invasion, and power has naturally followed.

Current conditions highlight yet again how reactive energy markets are and how extreme the volatility is. Day-ahead gas aptly demonstrates this. Last week, when the Bacton pipeline to Belgium was closed for maintenance, the Day-ahead price was at one point circa 0.3p/kWh as the UK gas market was massively oversupplied; the Day-ahead closed last night above 6p, and will probably be at least 10p later today.

Aside from gas, there is market stimulus from sustained $120+ per barrel crude oil prices and also from continued French nuclear issues, leading to increased UK power exports to France. There are also concerns in the Short-term regarding the efficacy of continental hydro output this summer, with reduced rainfall equating to lower lake levels.  

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