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NORDIC – Spot to drop as midsummer holiday curbs demand

(Montel) Nordic spot power prices for Friday should drop by around EUR 2 as midsummer holidays in Sweden and Finland will reduce demand, analysts said.

The day-ahead contract on Thursday was quoted in a bid-ask range of EUR 25-28.75/MWh on Nasdaq, down from the current system of EUR 30.11/MWh.

“Surely prices will drop as the midsummer celebrations reduce demand, and we will also see more wind power in the system tomorrow,” said Sigbjørn Seland, chief analyst at StormGeo.

“But we will not see a repeat of the price collapse we saw two weeks ago, when spot prices fell below EUR 10, since [hydropower] inflows then were twice as high as now [due to strong snowmelt],” he said.

He forecast the system price for Friday to settle around EUR 28/MWh.

Data from Montel’s Energy Quantified (EQ) shows power consumption in the Nordic region will drop from 36.7 GW on Thursday to just below 34 GW on Friday, while average wind power generation should rise from 3.4 GW to 4.2 GW – both factors being bearish for spot prices.

Nuclear output should stay unchanged at close to full capacity.

EQ predicts a Friday system price of EUR 29.03/MWh, while Montel’s AI-based model expects the spot to delivery at EUR 28.62/MWh.

Stable futures 
Futures prices were little changed on the day amid thin trading volumes.

The benchmark front-quarter contract traded last down EUR 0.05 at EUR 31.80/MWh. It had been as high as EUR 32.13/MWh this morning.

Storm Geo’s Seland attributed the price retreat to a shift in weather forecasts, from drier to wetter conditions during the morning – though overall there were no significant changes day on day, he said.

Different models predict rain equivalent to 3-6 TWh of potential hydropower output over the next 10 days, compared with a seasonal average of 4.1 TWh, according to EQ.

Further out on the power curve, the 2020 contract traded last up EUR 0.04 at EUR 34.55/MWh, with traders citing a rise in coal prices for lending support.

Reporting by:
Olav Vilnes
11:07, Thursday, 20 June 2019