Energy market summary

As normality returned to short-term forecast temperatures at the start of the calendar year, prices remained relatively steady and even experienced a modest drop towards the end of January. Nonetheless, a bullish response from the underlying gas and coal markets to rising crude prices drove the power curve up during the February period. Indeed, this trend was only amplified by surging gas prices following the Japanese earthquake.

Comments from the last 3 months

A - The unexpected harsh conditions seen in December were not expected to return at the beginning of 2011, and consequently curve prices began to fall gradually in line with gas-led day-on-day losses.

B - Growing concerns with regards to the ongoing unrest in oil and gas producing regions triggered sharp gains in crude prices, and impacted on the power curve accordingly. Despite occasional dips in prices at the beginning of March, the power curve remained closely correlated with the underlying volatile gas market.

C - The gas market in particular reacted strongly to the high-magnitude earthquake in Japan and drove already unstable prices even higher. Decided day-on-day gains continued through the middle of March. Despite the markets calming slightly, concerns with government plans for a carbon floor price from 2013 saw the curve make strong gains once again.