(Montel) First-quarter prices edged lower amid milder and wetter weather forecasts on Wednesday morning, indicating spot prices will be “very low” at the start of the year.
The Q1 contract last changed hands at EUR 20.15/MWh on the Nasdaq Commodities exchange, down EUR 0.05 from the prior close, though the contract is still, however, valued more than EUR 1 higher than the record low it hit during trading on Monday, at EUR 19/MWh.
“Prices are falling because it has become increasingly likely that we will see a mild and wet start to 2016 and very low spot prices at the start of the year,” Sigbjørn Seland, chief analyst at Oslo-based analysis firm Nena, told Montel.
Trader Kai Vidar Myrhol at Sognekraft shared a similar view, saying that “forecasts are continuing to show mild and wet weather and that’s pulling the market downwards”.
Forecasts showed 9.1-12.6 TWh of potential hydropower generation from rain and snow in Norway and Sweden over the next 10 days – about double the seasonal norm, which is 4.9 TWh, according to SMHI, while temperatures are expected to average 3-4.1C, well above the norm of -1.8C.
Cheap Christmas
“It looks like we will get a record warm Christmas and New Year’s week now and that we could see the system price settling as low as EUR 13-15/MWh next week, possibly on 25 December [a public holiday],” Seland said.
The week-ahead contract last traded at EUR 17/MWh, down EUR 0.30 on the day.
Further in, the day-ahead power contract last traded at EUR 27/MWh on Tuesday and lower than the prior system price of EUR 30.16/MWh.
“The system price will probably fall markedly because the weather is forecast to be milder and wetter tomorrow and consumption will fall significantly,” said Seland.
Wind output in the Nordic region is expected to rise from an average of 2.7 GW in the current session to 3.1 GW on Thursday, while temperatures are set to increase to an average of 2C, up from 0C on Wednesday, Nena and SMHI data showed.
Reporting by:
Iselin Rønningsbakk
iselin@montel.no
10:51, Wednesday, 16 December 2015