Last week Powerisk suggested that 50 was a magic number and yesterday on small volume Winter 05 traded twice at £50/MWh. The bullish activity was predominantly led by all the fundamentals shifting up. Whilst this number does seem high, it also means that the individual months are hitting new highs with Jan 06 close to £60/MWh. With prompt prices behaving relatively normally, and with rumours of more capacity that last Winter and with more gas in storage, the market being in contango, only encourages the hedgers to leave it too the last minute.

It is a brave risk manager who widens risk limits in these conditions, but the evidence is overwhelming that the cost of buying forward is worth managing risk exposures. Suppliers will tell you that locking in now seems to be a wise choice, and certainly those who struck October annual deals, will now be looking at MtM profit. The real question is whether holding for next October is wise, with this volatile and gappy market.