Market Update Jan 21

The continuing impacts of demand on lockdown measures as a result of rising COVID-19 infection rates
Day Ahead gas prices
General market sentiment amidst optimism regarding the roll-out of various Covid-19 vaccines
Gas storage levels
French nuclear capability
Currency exchange rates
LNG shipments into the UK and Europe
Norwegian gas imports
European weather forecasts for the winter months
Concerns over the rising Covid-19 infection rate across Europe and the likelihood of continuing lock down restrictions for the coming winter
Oil and Carbon prices
Domestic and global economic indicators
Asian gas prices
Weather forecasts for the UK, Europe and Asia

An additional factor in the increases in electricity prices in the last month has been an increase in carbon prices. Have tested the key resistance level of €30 per tonne on a number of occasions, prices broke through this level before Christmas and continued upwards to €35 before losing some value, since when they continue to trade around €33. Representing a tax on electricity generation, any move in the price of carbon is likely to result in a corresponding move in electricity prices.

As can be seen from the graphs below, gas and electricity prices for winter 21 and beyond have also risen sharply over
the last month. Given that one of the main drivers has been short term supply and demand issues it remains to be seen
as to whether these high prices are sustained once these short term issues have been resolved, particularly in light of the
potential long term economic impact of Covid-19.

Oil prices have continued to recover steadily in the last month, partly as a result of growing optimism in demand recovery as various Covid vaccines are rolled out, backed-up by ongoing OPEC production cuts. Oil prices can have an influence on gas prices due to the prevalence of European gas contracts index-linked to oil prices.