Nena News

NORDIC – Q4 slides to 5-week low as wet outlook intensifies

(Montel) Nordic power futures slipped in Friday trading as forecasts pointed to above-normal precipitation and amid weakness in fuel prices.

The front-quarter contract last traded down EUR 0.70 at EUR 29.80/MWh, its lowest level since 22 August at Nasdaq Commodities.

The front-week contract shed EUR 1.20 to EUR 26.40/MWh, while the front month was EUR 0.80 lower at EUR 27.70/MWh – pulling further away from its 18 September contract high of EUR 32.55/MWh.

“The weather forecasts are pretty brutal, with plenty of rain, a lot of wind and high temperatures. The weather input is maximal bearish,” said senior analyst Sigbjørn Seland at Nena.

Spot prices were likely to remain under pressure in the coming 10 days as the wet weather puts pressure on Nordic hydropower producers which are already facing reservoirs approaching near full levels, he said, noting some hourly prices could fall below EUR 10/MWh.

Different weather forecasts indicate 10.7-15.7 TWh of potential hydropower generation from precipitation in Norway and Sweden over the next 10 days, well above the norm of 6 TWh for the period. 

Norwegian regulator NVE has issued a flood warning for parts of southern Norway due to expectations of much rain on Saturday and Sunday.

The contract for Saturday was last quoted in a bid-offer range of EUR 27.5- 28/MWh, compared with a close of EUR 28.50/MWh on Thursday.

“EUR 28.50/MWh is definitely way too high,” Seland said.

Rising wind, softer coal
Nordic wind power generation is expected to increase from an average of 5.4 GW in the current session to 6.12 GW on Saturday.

Trader Frode Myrland at Norwegian utility NTE also pointed to relatively weaker fuel prices for contributing to the bearish sentiment.

“We see quite a correction today which is driven both by the coal market falling significantly after the Nordic power market closed yesterday, and not least the wet weather forecasts. The combination is quite explosive,” he said.

In the coal market, the API 2 Cal 18 contract traded last down USD 0.04 at USD 79.35/t – extending yesterday’s daily decline of USD 2.28.

“I think that the coal market has the potential to fall further, after rising significantly over a long period. If this happens, the long end of the curve will be lowered even more,” Myrland said.

Indeed, the Nordic power 2018 contract traded last down EUR 0.65 at EUR 27.60/MWh.


Reporting by:
Gert Ove Mollestad
10:28, Friday, 29 September 2017