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NORDIC – Prices hit 3-month low as mild spell persists

(Montel) Curve contracts continued their rapid decline of the last few days on Wednesday hitting three-month lows amid mild, wet weather forecasts and softer carbon.

The bellwether front-quarter contract last traded down EUR 0.95 at EUR 38.85/MWh, after hitting EUR 38.80/MWh earlier – Its lowest since 26 November, while the front month was EUR 1.05 lower at EUR 42.75/MWh on Nasdaq Commodities.

“Forecasts are incredibly mild and remain wet but the main driver is the temperatures which are 4-5C over the seasonal norm for the coming 10-15 days,” said trader Peter Dentler from Entelios.

“The hydrological balance is improving by several TWh and consumption is falling. The market is pricing in winter being over,” Dentler added.

Different forecasts indicated precipitation levels of 9.7-12 TWh over the coming 10 days, compared to a seasonal norm of 7.2 TWh, while temperatures were set to reach as high as 6C over the seasonal norm on Friday, before dropping to between 2-3C above average for the rest of the period, figures from Montel company Energy Quantified showed.

Too big a fall?
Dentler questioned whether prices had come down too much since there was still a hydrological deficit, while the Nordic front quarter had declined EUR 11 in three weeks.

The hydrological balance – a measure of reserves stored in reservoirs, snow and soil – had “strengthened by 5-6 TWh since Friday”, however, StormGeo analyst Sigbjørn Seland told Montel on Tuesday.

"[It] would improve to -14 TWh at the end of week 9 [3 February]."

Nordic front-year power, meanwhile, was last seen down EUR 0.80 at EUR 33.30/MWh, while the Dec 19 EUA contract shed EUR 0.56 to EUR 20.14/t in Ice

Closer in, the Nordic day-ahead contract was last seen in a bid/ask range of EUR 44-45/MWh, compared to the current system price of EUR 46.07/MWh.

Montel’s AI-based forecast tool pegged the spot to settle at EUR 46.29/MWh.

Reporting by:
Mikko Mäkitalo
11:56, Wednesday, 13 February 2019