Looking at the papers this morning one would surmise that we are heading towards meltdown. The Independent asks it's readers whether the hot weather is as a result of global warming or just a freak. Both the Times and Financial Times talk of soaring energy prices and the possibility of an interest rate rise. Seeing these headlines, makes one think that the market is returning to its 2005 ways with price spikes in June and July.

Reality is a different story, day ahead (although starting the morning at £101) is now offered at £67 and there is not a bid in sight. August also down on the morning is now trading at £40.20 and looks set to potentially break the £40 mark. Winter 06 is perhaps the only product to break the trend with some buying strength at £61.50, though it looks as if many sellers will come to the party at £62. So if we wind the clock back to two weeks ago when the market was bearish and oil and emissions prices had not risen the prices further along the curve look remarkably similar. Either the backend of the curve will rise to meet the emissions and oil or and this is more likely the oil and emissions will fall back. Certainly in Europe the sell off has been quite aggressive as France and Germany look to be able to manage their respective systems.