An annoucement from Centrica Storage Limited on the progress of Rough maintenance after the fire in February has spooked the market. Gas prices in Winter 06 rose in the space of ten minutes from 82p/therm to 88.95p/therm. Winter 06 also rose from £68/MWh to £70.25/MWh. The Rough storage facility is beginning to have a significant effect on the market, and tends to cause a herd reaction a clear sign of overbuying or selling when it occurs.

The problem is exacerbated by producing an engineering report which is read by traders. Engineers, are naturally cautious not wishing to get hoisted by their own petard, they hedge their bets. Traders by their vary nature never hedge their bets (there is no point) they make bets. In the history of engineering projects by Centrica and their recent annoucements, the reliability on Rough coming back sooner, and being fixed irrevocably is unlikely particularly as the complete replacement of the cooler systems catastrophically failed, makes the trader go long and bet that they are unlikely to have a sudden turn around of fortune.

Markets are never wrong, but it might take a few weeks, but Powerisk suspects that if oil comes off, if emissions have been massively over subscribed (i.e. players have overbought and banked for the following years) and prompt prices continue to fall with the system being in general oversupplied. The nature of the Rough annoucement whilst important will pale into a semblance of significance.