Nena News

NORDIC – Prices slide on wet forecast, profit-taking

 (Montel) Nordic power prices fell early on Friday amid a combination of wet weather forecasts and profit-taking before the weekend, market participants said.

The October contract last traded at EUR 21.20 EUR/MWh, down EUR 0.7, on the Nasdaq Commodities exchange, while the Q4 15 contract was EUR 0.60 lower at EUR 23.95.

"The EC 00 operational forecast is very bearish, so the market has to react on that. However, the prognosis is very volatile, so players are reluctant to go all in just based on that forecast," said analyst Sigbjørn Seland at Oslo-based consultancy Nena.

"If we get so much rain as the EC 00 indicates, there will be a huge production pressure on the hydropower producers especially in Southern and Eastern Norway and a potential of a crash in the spot price," Seland said.

"Prices gained much yesterday so today we see some profit-taking ahead of the weekend and some sell-off due to wetter, windier forecasts," said Phong C. Le, head of Nordic trading at Energi Danmark.

On Thursday, the Q4 contract gained EUR 1.2.

The trader said the Q4 contract could slide back towards EUR 23/MWh due to the healthy supply for hydropower.

Wet outlook
Different weather forecasts indicate 4.3-12.4 TWh of potential hydropower output from rain in Norway and Sweden over the next 10 days, compared to a norm of 6.1 TWh, with the most recent EC 00 forecast being the wettest, according to SMHI.

Hydropower reservoirs in southern and eastern Norway are more than 93% full, according to regulator NVE. This will leave little room for producers to save additional water, said Seland.

The day-ahead contract was last quoted in a bid-offer spread of EUR 15-16.20/MWh, compared to the Friday system price of EUR 20.13.

"We will see a substantial drop in the spot to within the current spread due to reduced consumption and increasing wind power generation," Seland said.

Nena data shows Nordic wind power output to rise from an average of 3.7 GW on Friday to 5.3 GW on Saturday.

Further out, the 2016 contract last traded at EUR 23.50/MWh, down EUR 0.35, albeit in thin volumes.

Gert Ove Mollestad
10:36, Friday, 11 September 2015