It is often at around this time that traders will look at the raw fundamentals so that come the 2nd January they have an overall strategy for buying or selling positions to hold over a 9-12 month window. The spark spread for prompt is at £7.00 (90p/therm for gas and £69.50 for power) whilst one would expect this prices to fall in the future the spread will not fall significantly. Spark spread for January and February are both trading at just below £5 if one is to include emissions this would be running a station at a long term loss. So expect gas prices to fall and power to increase. Perhaps more worryingly gas has to come from Europe and European gas and power prices have been hitting new highs.

Fundamentally supply is under some pressure, if demand rises then expect prices to rise significantly and expect some demand side controls rather than supply which is close to full capacity. Even though gas storage facilities, are full the cost of using this option has become very expensive and so prices have to rise to justify it. Although the bears have returned in the last couple of weeks, the market should be aware that the bulls could just be resting and if demand rises, the bulls will return rampantly.