Nena News

NORDIC – June, July dive to fresh lows on weak spot

(Montel) Contracts for June and July fell 8% and 5%, respectively, to new record lows in afternoon trading on Thursday after the spot settled more than EUR 1.50 lower than expected.

The June contract fell for the sixth consecutive trading day on the Nasdaq Commodities exchange, last changing hands at an all-time low EUR 15.40/MWh, down EUR 1.30 from the prior close, while July last traded down EUR 0.60 at EUR 13.90/MWh, having traded at a record low EUR 13.80/MWh earlier.

“The front months are falling now because the system price settled lowered than expected,” said chief analyst Sigbjørn Seland at Nena.

“The latest weather forecasts showed more precipitation than previously expected and that’s also putting some pressure on the contracts,” analyst Ole Tom Djupskås at Thomson Reuters added.

“Forecasts are showing very wet conditions until around 5 June, when high-pressure weather is expected to come in, so spot prices will be very low [until then],” Djupskås added.

Weather forecasts showed 8.2-12 TWh of potential hydropower generation from rain and snow in Norway and Sweden over the next 10 days, well above a seasonal norm of 4.3 TWh, while temperatures are expected to average 10.1-11.7C, below a norm of 12.6C, according to Swedish forecaster SMHI.

Weak spot

The Nordic system price for Friday settled at EUR 21.19/MWh, down EUR 1.69 from the current spot and its lowest level for a normal working day since 13 May.

The last OTC trade for Friday seen at EUR 22.75/MWh, 7% higher than the final out-turn.

The system price settled lower than expected due to an increase in unregulated hydropower production caused by wet weather, said Djupskås.

“Inflows to the hydropower plants are increasing rapidly now and unregulated production will rise by about 1,500 MW from Thursday to Friday and that’s higher than had been expected,” he added.

The bearishness also affected the front-week contract, last seen down EUR 0.95 at EUR 17.55/MWh.


Reporting by:
Iselin Rønningsbakk
14:40, Thursday, 28 May 2015