Professional Energy Purchasing

Market Update

We’ve seen a large amount of upward movement on the gas market today and the information below will hopefully shed some light on the situation.

The movement has been partially due to increased political tensions between Ukraine and Russia, Ukraine has currently made no payments to Gazprom to reduce its $2.2 billion debt for gas supplies. Gazprom has suggested that they may ask Kiev to pay in advance for gas if it can’t meet its monthly deadline.

Many traders kept short positions over the weekend and as soon as prices started increasing they looked to close out their positions – leading to a chain reaction as the increase in demand for the NBP products led to further price hikes.

The power market tends to follow the gas and traders held short term positions for the last week, they were quite happy as the market was at a low and could buy up relatively cheaply. Because of the issues in Ukraine and Russia (them putting up the price of gas, Ukraine looking at western Europe for gas supplies, thus taking supply away from the UK) that pushed prices a little higher. Traders got nervous, and all scrambled to cover their own position, and as a result probably caused the market to over react.

Energy Efficiency & Procurement Consultants