Oil price scares caused by short term oil supply worries as a result of Hurricane Katrina had the biggest effect on Winter 06 baseload which rose by over £2 yesterday. Perhaps worryingly this has been put down to the problems in the Gulf of Mexico. In reality if oil supplies are a worry in the Gulf of Mexico, and if oil prices are as high as they are there is a huge financial incentive to get back into production as quickly as possible. It would be most surprising if this damage limitation was not achieved within a year which is why the Winter 06 rise is surprising. What is more likely is that as Winter 05 diasppears from trading, players used to increased volatility, realise that it is worth adding length to a position in a crises and would have bought in Winter 05 already and so will now be buying Winter 06 on the back instead. All short term oil worries will have a small effect on the power market as most people will be looking to be balanced for the four to six weeks, managing simple temperature fluctuations in the balancing market.