Panic buying undoubtedly played a part in the latest spike with holders of short positions covering before the usually illiquid holiday period. However, the 23rd began 2 days of sharp losses that reversed both the spike and many of December’s gains with the Quarter 1 month back below their October peaks.

Prices on the near curve, also saw drastic movements with Summer 22 and Winter 22 gas topping over 300p/th falling back to the 200 level and the power equivalents getting to over £270/MWh falling back to under £200/MWh.

There was less volatility further out, but all gas and power contracts remain close to contract highs. Fear over a possible Russia Ukraine conflict continues to support prices with Russian gas flows still well down year on year and Nord Stream 2 delayed to at least H2 2022 while pressure remains from some European nations and the U.S. to cancel it altogether.

The drop in prices was triggered by the U.S. diverting two large LNG cargoes from China to Europe and announcing that it would direct more gas to Europe to increase pressure on Russia. The record mild temperatures forecast for the end of December and Jan also helped, prices remain volatile but continue to show signs of easing overall.