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NORDIC – Tuesday’s spot to surge on cold, low wind

(Montel) Tuesday’s system price is set to surge on higher demand due to cold weather, low wind power output and high continental prices.

The day-ahead contract for 27 November was last quoted with a bid of EUR 57/MWh, although no ask price were offered, according to the Nasdaq Commodities exchange.

“Most interesting in the market today is the contract for 27 November. It will definitely trade higher than EUR 57/MWh. We see no sellers today,” said senior analyst Sigbjørn Seland at StormGeo, adding that low wind power production, high demand and high continental power prices were driving up Tuesday’s price. 

The German peak contract for the coming week was last quoted in a bid-offer range of EUR 76 – 78/MWh on the EEX exchange.

Nordic wind power should drop below 2 GW on Tuesday, some weather models indicated, while Nordic consumption would rise to above 56 GW, well above the norm of 52.4 GW due to falling temperatures, according to Montel company Energy Quantified (EQ).

“After Tuesday, wind power generation will pick up, so we will see sliding spot prices again,” Seland said.

Closer to delivery, the day-ahead contract last traded in a bid-offer range of EUR 48.15 – 49.75/MWh, compared to the current session’s price of EUR 52.63 and Seland expected Saturday’s system price to be pegged within the range.

Thin curve trade
On the curve, trade was subdued by mixed signals.

The front month contract was last seen up EUR 0.35 at EUR 49.95/MWh, while the front quarter contract traded down EUR 0.05 at EUR 50.7/MWh. The front year contract gained EUR 0.15 at EUR 41.6/MWh.

“The coal market is weak, and correlated to the [sliding] oil market, while we have seen a gain in EUA prices which outbalance the lower coal price,” Seland said.

The Cal 19 coal contract in the API2 window last traded at USD 84.15/t, down USD 0.45, after hitting a low of USD 83.5/t earlier on Ice Futures. The December 18 EUA contract last traded up EUR 21.14/t, up EUR 0.22.

“The Nordic market is all about the weather in the coming months. It will be difficult to raise prices more if the weather turns mild and wet, while there is a considerable upside potential if the weather turns cold and dry. But we see no such indications now,” Seland said.

Different weather forecasts indicate 3.7 – 7.8 TWh of potential hydropower output from rain and snow for the next 10 days, compared to a norm of 8.7 TWh, according to EQ.

Reporting by:
Gert Ove Mollestad
12:08, Friday, 23 November 2018