Q1 06 hit by the fall in prompt

23 September 2005

Market looks to be returning to an element of normalcy with serious calendar spread trading developing.

Players have seen a relentless fall in Q4 05 and as the front end of the curve falls, players are aware that Q1 06 looks high. As usual at this time of year there are various doom mongers predicting a cold Winter. There is no doubt that the country has not had one for some years and so the odds are getting shorter. Also the weather reporting is getting better and will continue improve with a new weather computer being introduced at Exeter. Despite all of this the indications of predicting weather patterns 3 - 6 months ahead are difficult and not very accurate. Perhaps the best indication of weather predictions is the way the market is responding in terms of price. Isle of Grain an oil plant owned by E.On is being returned to service having been mothballed. Also some key industry users are hinting that they are worried about supply brown outs due to demand. There is no doubt that the pressures on demand and supply are tighter than they have been for some time. In reality though it is unlikely that the market will drive brown outs, NGC are under tight financial remits to make sure that the lights do not go out.


Supply  Generation  Transmission  Weather 

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