As a trader sitting at your desk on a Wednesday morning, you have decided that 2005 was a year of rising prices fundamentally because supply struggled to meet demand in the short term. Your first new years resolution is to make sure that you are never knowingly short a month ahead to two months ahead. The next piece of analysis you do is to establish which of the the five key markets moves first. Oil emissions gas power or coal. You immediately dismiss coal as a slow moving commodity with low volatility and accept that emissions tends to be more reactionary to European prices. Oil and gas have always been linked, and nothing has changed here and then you look at power, and see that fundamentally the merit order is still nuclear, coal and gas and therefore in the winter the marginal plant is gas and in the summer it is likely to still be gas, but less so because demand is less. You suspect that the Winters will be well bid, and you see that Summer 07 is in backwardation to Summer 06, the curve looks out of kilter and as your first trade of 2006 you decide that going short is not an option, you therefore start to buy Winter 06, and this makes your Summers look cheap and so you buy those as well. Not a large trade, because you know that if the front winter gets mild, everything will fall off..............