Nena News

NORDIC – Futures edge up amid drier outlook, buoyant coal

(Montel) Nordic power futures edged up early on Tuesday, taking a cue from a slightly drier weather outlook coupled with stronger coal and German power prices.

The front quarter last traded up EUR 0.35 at EUR 24.95/MWh, while the front year was EUR 0.35 higher on the day at EUR 23.30/MWh in an otherwise thinly-traded market.

Haakon Knudstad at Norwegian utility BKK attributed the bullish tone in part to stronger coal prices, though noted that coal’s API 2 contract has been stuck in a narrow range of USD 64-70/t in recent sessions.

“If this range in the coal market is maintained, price movements in the Nordic power market will be limited,” he said, adding that Nordic prices were also underpinned by modest revisions in weather forecasts showing drier conditions than seen in previous outlooks.

In the coal market, the Cal 18 API 2 contract last traded up USD 0.35 at USD 65.65/t on Ice Futures, while the German power front year was up EUR 0.37 at EUR 29.80/MWh on the EEX.

Different weather forecasts indicate 6-9.3 TWh of potential hydropower output from rain and snow in Norway and Sweden over the next 10 days, compared to a norm of 3.9 TWh, while temperatures are expected to average between 1-2.1C, above the norm of 0.9C in the period, according to SMHI.

Analyst Joachim Jernæs at Nena said the hydrological balance – a measure of energy stored in reservoirs, snow and soil – had improved by around 6 TWh the last week to only a slight deficit.

High wind output
Further in, the day-ahead contract was last quoted in a bid-offer spread of EUR 27.75-27.90/MWh, compared to the current session’s price of EUR 29.50.

Knudstad expected a spot around EUR 27.50/MWh, while Jernæs predicted a price just shy of EUR 28/MWh.

“We could see a new Nordic wind power record on Wednesday. We predict an output of about 11,500 MW in hour 13,” said Jernæs.

Nordic wind power output is set to increase from an average of 7.4 GW in the current session to 11.2 GW on Wednesday, according to Nena figures.

“Despite the high wind power output, the spot is relatively strong, which shows that the hydropower producers have good control after they have maintained a strong production through the winter,” Knudstad added.

Reporting by:
Gert Ove Mollestad
10:56, Tuesday, 14 March 2017