The market fell back from the small rises we saw yesterday. This was mainly because fears were overhyped. Most of Europe was plunged into blackouts as a surge in E.Ons German power lines caused blackouts. This fear lifted power prices in the UK as it was felt that the market would have to supply some of Europe through the interconnector.

In reality most continental players were up and runnning and so the perceived demand was short lived. The market is now hitting new lows and one suspects that there is every chance that with more gas supply a further bear push will come in. At some point the Winter months will get cold and players tend to start buying in these circumstances.

Expect volatility to drop off significantly as prices stagnate at these levels. Some buyers will trade at these prices but many will have bought already. Drax has forward sold at £55 for 2007 and so some have bought at these levels.