Markets have shown significant falls over the past fortnight in spite of the weather conditions turning colder. Whilst heating demand for gas is up, along with generation demand as wind speeds have dropped, the overall picture has been distinctly bearish. A lot of the risk built in following the Hamas attack has been removed as the possibility of the conflict spreading seems less likely.

Fundamentals relating to gas supply and electricity generation seem very strong too. A lot of this is to do with the mild “shoulder months” of October and November where things were generally a lot milder than anticipated and energy demand was thus lower. The mild start to winter gives confidence for Q1 ’24 as gas storage has barely been touched (is still up on the 2022 record levels at present across the EU) and Norwegian flows and LNG shipments remain robust. European power prices are falling alongside those in the UK as the wider confidence in energy security is felt.

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