The market has rallied recently on the emissions farce. There is not doubt that many players feel that this is a short term thing caused by German power players who feel that when their market rises so should emissions (this is as discussed previously not necessarily correct.) The UK has responded more to a gas price move up on the back of oil.

So is this a sustained bullish run on energy commodities. There is no doubt that the rises have caught the market knapping, and one suspects that most of the shorts in Winter 06 will feel uncomfortable being unhedged with a market which is exposed to Rough pressures of gas injections, and emissions markets which do not run on fundamentals. However, June will be a quiet month, with the World Cup discouraging traders to put large positions on and this is when perhaps those who are short will continue to push the market up, with no real resistance as a result of the market being quiet. It is also the time when prompt prices will collpase, and if oil also starts to fall (something which is looking less likely as annoucements on hurricanes suggest that last year was less of a freak occurence), then we have to accept that the world is likely to continue to move the market up a little in the near term.

No one denies that fundamentally the market should be falling on the back of emissions and at €18 tonne the fall could be quite dramatic.