The market in Summer07 ticked up marginally on Friday and seemed not to fall again this morning. The gas market looks a little more bullish than it has done for a while, as the Norwegians note that they hold the marginal gas supply into the UK and so can manipulate price a little. A simple calculation can work out if buy reducing flow by a small amount they get an exponential increase in price.

The oil market rose a little as well, and at this time of year there tend to be significant forward buyers catering for the American holiday driving season. Furthermore, gas players are looking to fill storage and pick up volume so that they are flat to long for engineering purposes. With supply ticking down, the normal price absorption that would occur (i.e. equal numbers of buyers and sellers) is not occurring and the gas market moves marginally up on the back of it.

So will it be sustained, probably not and when prices rise a bit further the sellers will open the taps again, but it does mean that the bottom is rising marginally. Is this a sign that hedging should occur sooner rather than later, again better to wait and watch the market before rushing in.