The power market last month rose significantly on genuine speculation of carbon prices and gas prices. The main cry was that at least the markets were rising on the back of their own fundamentals, and that oil traders were not driving all other markets. As power and gas dropped dramatically in one day, the market started to worry, that further big drops were possible, players reevaluated positions and looked to see where the next fundamental push would come from. This navel gazing caused the market to drop a little with most players naturally long having been forced to buy from rising prices throughout all the markets. Perhaps those most hurt were the ones who were not playing and had vertically integrated positions probably maturally slightly short. However, in the last couple of days, oil has started to hit new highs, with geopolitical uncertaintity (terror attacks in the Middle East) and the refusal of China and the US to accept the need for growing energy crises.

Naturally in these circumstances, the power and gas players, only see bullish tendencies and the market lapses into talks of hitting new highs soon. Power in reality has seen wide illiquid markets and players treading carefully but low offers will be snatched up.