All markets tend to have cycles. Traders are like sheep, and although Gordon Gekko was famous for saying that I do not want sheep they are for slaughtering, it is fair to say that if one market has grassier plains than another then many of the true traders will leave the barren lands to trade in the volatile fleshier market. So for those of us left looking at the wilderness of the UK power market it is fair to say that we could pack up and catch whatever water is around whilst the dustbowl continues to grow. The alternative is to look at the way the cycle has come and will reappear and be ready for when the rain comes.

In Portugal and Spain they have declared a close to drought warning, and much of their power comes from hydro plant. This suggests greater imports from Italy and France. Who in turn import from Germany and the UK, so the German and UK power markets have risen as there are more buyers. Be warned though that the number of buyers is limited by the size of the interconnector, and so the squeeze can only be limited. The Uk is in a healthy position and although forward prices for the Summer are very high for those not hedged becoming hedged would be prudent.