What Happened - The Market Has Shifted
Yesterday's story is gone. Twenty-four hours ago, we were telling you Cal-27 gas was down 2.6% weekly and falling - good conditions for later renewals. Today, that trend has completely reversed. Cal-27 gas is now up 0.2% weekly. The cold weather forecasts have spooked even the longer-dated market.
What changed? The GFS, EC and AIFS weather models are all confirming strong cold from 26 January. The front month Feb-26 has surged over 21% this week - gas at 86.75p, power at £98.76. But now that fear is spreading. The Sum-26 x Win-26 spread has turned positive for TTF, signalling storage depletion concerns similar to last year.
Power is rising across the entire curve. Cal-27 power up 2.1% weekly, Cal-29 up 1.5% weekly. Wind forecasts remain below seasonal until the weekend of the 24th. Even Cal-28/29 gas, which is still falling (-2% weekly), can't offset the power rises.
LNG remains strong- the US is reporting record export levels - but it's not enough to calm the market. The UK system is slightly short today (about 1mcm), and with demand running below seasonal norms, the market is pricing in what-ifs rather than current fundamentals.
Bottom line: This is a different market than yesterday. Near-term prices have surged 20%+ this week. Cal-27 gas has stopped falling. Power is rising across the curve. If you're renewing in the next 3-4 months, act now before prices climb further. If you're renewing later, watch closely - yesterday's "wait" has become "monitor".
