Winter 06 last night breached £59.20 and looks this morning to be offered on in volume. As a result the fall in Winter 06 could be reasonably dramatic. The technicals suggest that the next level to breach is £50 and one would expect a two thirds re-tracement back down to around £53 before resistance would kick in. Pyschologically £55 will be a big hurdle to breach as well.

So why has all of this happened. Well it is now apparent that the system has more than enough plant to cope with this cool weather, and so the prompt has come down to reflect this.It is easier to sell Winter at £59 when the prompt is trading at £38.

But the biggest reason is that the gas price has fallen significantly, traders had put too much wait on the effects of Rough on the system and the truth is that in comparison to last year there will be significantly more gas, this is having a double effect on the power price because both gas prices and emissions prices are falling and so the power price has to follow suit.

At the moment there are few Summers being quoted and it will be interesting to see if Summer 07 and 08 start to fall with the Winters. There is no doubt there has been a flattening of the curve over the last six months.