In the shorter term, it has been all about weather and LNG for prices in January. With temperatures steadily dropping off throughout December, cold temperatures persisted into the new year. Following some reprieve mid-month, temperatures dropped off again earlier this week before recovering from Thursday. Wind output has also out turned relatively poorly in January and the outlook for February paints a similar picture. Bullish sentiment from cold weather and lack of wind pressured prices upwards at the front of the curve. Day-ahead power prices reached £195/MWh on 14th January with monthly gas and power contracts also peaking. With shorter-term drivers have the most influence, volatility was also a consisted feature on markets throughout January. 

The weather conditions were compounded by a severe reduction in LNG reaching UK shores. Throughout January, Asian spot gas prices continued to rise astronomically, with the front month (Feb) contract trading as high as $20/MMBTu. In comparison, front month prices on European hubs were trading at $7-8/MMBTu with the US Henry hub trading at $2-3/MMBTu. This incentivised LNG Eastward with only 3 cargos arriving into the UK. Since the expiry of the Asian front month product, prices have begun to ease and now sit more inline with European hubs. As a result, the UK already has 5 LNG tankers due by mid-February.