This morning National Grid Transco give their report to the DTI on the outlook for demand and supply for Winter 2007. They do this now twice a year a pre-lim in April which goes to consultation followed by the release tomorrow. No one knows what it will say but any trader worth his salt will be reading it on the NGT website the moment that it is released.

NGT have a way of suggesting that things are far worse that people think and that invariably the market does tend to rise on the initial reaction. That having been said NGT predicted last year that peak demand would be 64GW on a 1 in 50 winter. It was not a 1/50 winter and demand reached 61GW. This 3GW excess is more than the difference that a 1/50 winter would make.

In reality this means that the NGT oulook is likely to say that there is not as much gas in the system as people think, that if nuclears turn off then we would be in trouble, but that it is unlikely that the lights will go out. Some traders will buy on the back of it but one suggests that those traders shorting the market yesterday (it generically fell) have got it right in the long term.