Price Cap level contracts are almost 100% underwater
Near term wholesale energy prices continue to increase across Europe, with significant increases in all along the forward curve.
Pricing a 12 month contract at the October Price Cap gives us Gross Margin losses of £1,138. That's almost 100% underwater - it will be interesting to see how the costs of 'Onerous Contracts' are handled in suppliers accounts this year.
European gas storage levels continue to new lows, with withdrawal rates higher than seasonal norms - we're at a real risk of getting to 'lowest ever' storage levels by mid/late March 2022.
The risk of a lack of European gas storage now also appears to be factoring in to Winter 22 contracts.
Nord Stream 2 doesn't look like it will be resolved anytime soon, which combined with lowering temperatures as Winter sets in is likely to mean high prices are here for a while longer until a structural change happens in the market.
Looking back at ~20 years of wholesale data, we can't currently see prices dropping below the Summer-22 prices any time soon.