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NORDIC – Curve firms on drier weather forecasts

(Montel) Nordic power contracts traded higher on Friday amid drier weather forecasts and a slightly stronger carbon price.

The April contract last traded at EUR 40.4/MWh, up EUR 0.6, on Nasdaq Commodities. The contract shed EUR 1.6 on Monday and EUR 1.45 on Wednesday.

The front quarter contract last traded up EUR 0.5 at EUR 38.65/MWh.

Analysts attributed the gains to forecasts of dry weather and stronger carbon prices, with the Dec 19 EUA trading at an intraday high of EUR 23.10/t earlier in the session. It last traded at EUR 22.85/t, up EUR 0.11, on Ice Futures

The operational EC 00 forecast was drier than in the previous session. Friday’s fresh four-week forecasts also indicated drier conditions than earlier in the week, said senior analyst Sigbjørn Seland atStormGeo.

The start of April does not look particularly wet, Seland said, adding that moderate temperatures would also not trigger any major snowmelt and inflow, so hydropower producers would be able to keep spot prices above EUR 40/MW for the coming three weeks.

Different weather forecasts indicate 9.6 – 10.6 TWh of potential hydropower production from rain and snow over the next 10 days, well above the norm of 5.9 TWh. However, after some wet days at the start of the period, precipitation will then dip a bit below normal levels, according to figures from Energy Quantified, a Montel Company.

Improved hydro
However, prices fell over the past few weeks due to an improvement in the hydrological balance – a measure of reserves stored in reservoirs, snow and soil – of 7-8 TWh over the last two weeks, Seland said.

The analyst estimated the current deficit at between minus 5 and minus 10 TWh.

In the spot market, the day-ahead contract was last quoted in a bid/ask range of EUR 40.80 – 41.50/MWh, compared to the current price of EUR 42.74/MWh.

EQ forecasts Nordic wind power production to increase from an average of 4.2 GW today to around 5 GW on Saturday, and consumption to decline from 51.6 GW to 47.6 GW in the same period.

Montels AI based tool pegged Saturday’s system price at EUR 41.4/MWh, while EQ predicted EUR 40.60/MWh.

Reporting by:
Gert Ove Mollestad
10:47, Friday, 15 March 2019