For the last six months, buyers have been teased by fleeting windows of opportunity, only to see them swept away by another wave of relentless upward momentum. Yesterdays move down is a perfect example. Glimpses of a potential peace deal and a sharp market reaction as you would expect.
With gas and power prices once again looking technically stretched in recent weeks, is this the start of some real easing, or just another pause for breath before the next leg higher?
I’ve spent 20 plus years in these markets and have seen some challenging periods. I remember the bullish surge in 2007/8 when power prices rose from around £30/MWh to almost £90/MWh in the space of a few months. At the time, it felt completely extraordinary. Then came 2022, which blew common sense out of the window.
The current market carries echoes of both periods, albeit for different reasons. What stands out today is not just the direction of travel, but the number of occasions where the market has appeared ready to offer buyers some relief before quickly turning higher once again.
Those false dawns are every bit as challenging as the rally itself, particularly when procurement decisions are being scrutinised with the benefit of hindsight. Hopefully, most consumers have already taken a significant proportion of their Winter risk off the table. Good risk management isn’t about picking the bottom of the market, its about reducing exposure to outcomes that could materially damage the business. For those still carrying sizeable open positions, however, it probably feels like a rollercoaster right now.
The encouraging thing is that the curve further out still contains opportunity. From Summer 2028 onwards especially, there are pricing levels that many consumers would have welcomed much this year. No one knows exactly how this will play out from here. But if you’d like a second opinion, a sounding board, or simply an exchange of views on the market, feel free to get in touch. I’m always happy to have a chat.