Nena News

NORDIC – Front rises as weather forecasts turn colder

(Montel) Nordic front power futures were trading higher on Wednesday amid a cooler weather outlook, which could delay snowmelt, increase consumption and support spot prices.

The contract for week 14, starting 5 April, last traded up EUR 1.1 to EUR 33.25, and the front-month contract rose EUR 0.4 to EUR 32.90/MWh. The front-quarter contract last traded up EUR 0.75 to EUR 30.05/MWh on the Nasdaq Commodities exchange, albeit in very thin trade.

“The front contracts are trading higher today as temperatures are forecast to dip below normal from 2 April. If these weather forecasts are correct, the inflow will be reduced and the consumption will be relatively high after Easter, which will give high peak prices,” said chief analyst Sigbjørn Seland at StormGeo.

Since many reservoirs were being emptied as the winter came to an end, less hydropower would become available in the Nordic system until temperatures rose and the spring thaw began, he added.

“We could easily see higher spot prices after Easter than what the market currently is pricing in, at least until temperatures start to rise again,” Seland said.

Different weather forecasts indicated that temperatures in the Nordic region would drop from the current above-normal levels to below the norm of 2.9C from 2 April. Potential hydropower production from rain and snow would total 7.2-8 TWh, well above the norm of 4.6 TWh for the period, according to Energy Quantified (EQ), a Montel firm.

The Nordic market was also taking cues from higher German power prices and fuel prices, Seland said.

Strong exports
The German Q2 contract last traded at EUR 48.9/MWh, up EUR 0.32, on the EEX exchange and EUR 18.4 above its Nordic equivalent, indicating strong exports from the Nordic region to Germany in the coming quarter.

The April contract on the Dutch TTF hub last traded up EUR 0.13 to EUR 18.52/MWh.

Closer to delivery, the day-ahead contract was quoted in a bid-offer range of EUR 34.5-37/MWh.

Montel’s AI-based tool pegged Thursday’s system price at EUR 31.47/MWh, compared with the current session price at EUR 31.08/MWh.

Nordic wind power production was expected to slide from an average of 12 GW on Wednesday to 7-8 GW on Thursday, according to EQ.


Reporting by:
Gert Ove Mollestad
11:21, Wednesday, 24 March 2021