Volatility Eases, But Headlines Still Loud
Following our earlier update this week, we wanted to provide further insight into how wholesale energy markets have developed over the past 48 hours.
After two days of historic percentage increases, markets have begun to stabilise, although the headlines may suggest otherwise.
Where Do Markets Stand Today?
Wednesday’s trading delivered what can only be described as a mixed picture:
Markets opened lower than Tuesday’s close
Day-ahead pricing moved down
Summer 2026 and Winter 2026 contracts traded lower
A modest afternoon rally occurred, but prices still closed below yesterday
While volatility remains, the extreme upward momentum seen earlier in the week has eased. It’s worth noting that the initial two-day spike represented some of the largest percentage increases ever recorded even compared to movements seen during the energy crisis. However, context matters.
The Reality Behind the Headlines
We’ve seen plenty of media coverage and broker messaging claiming that “markets have doubled.” Technically, certain day-ahead and month-ahead contracts have seen sharp increases. But this does not reflect the full forward curve.
The key distinction:
Near-term contracts (day-ahead, month-ahead) have seen the largest increases.
Contracts for 2027, 2028 and beyond show far more moderate movement.
Further along the curve, pricing drops back into the 70s (£/MWh equivalent levels).
In other words, markets are pricing this as a short-term disruption, not a prolonged structural crisis.
What’s Helping Stabilise Prices?
There have been developments that may be calming markets:
The US has indicated it would back insurance for vessels moving through the Strait.
Discussions of naval escorts for ships.
Reports of efforts to secure airspace in the region.
These signals suggest attempts to reduce supply chain disruption risks — which may explain why we’re not seeing sustained increases across longer-term contracts. Markets appear to believe this may not be a long-term scenario.
A Word on Broker Messaging
As expected during volatile periods, many businesses are receiving urgent communications suggesting immediate action is required.
Common narratives include:
“Markets are skyrocketing.”
“You need to contract now.”
Using day-ahead or month-ahead spikes to imply all future contracts will follow.
This is where context becomes critical. Short-term volatility does not automatically mean long-term price escalation. We saw similar messaging patterns during previous crises, and in many cases, businesses that reacted under pressure locked into unnecessarily high long-term contracts.
Our Position Remains the Same
Our advice has not changed since Monday:
Unless you have a contractual necessity to act, continue to sit on your hands.
Don’t get drawn into sensational headlines.
Don’t get pressured by selective data.
Don’t allow short-term spikes to dictate long-term strategy.
Energy procurement decisions should be based on structured analysis, not noise.
Final Thoughts
Markets have settled compared to the start of the week. Volatility hasn’t disappeared, but the extreme upward trajectory has slowed.
The forward curve tells a more measured story than the headlines. If you would like a clear, honest, straightforward view of the market, tailored to your specific contract position, we’re always available for a conversation.
Measured decisions consistently outperform reactive ones.
