Uncertain weather forecasts lead to marginal price fluctuations
Focus week 9 2017
The Nordic energy market moved largely sideways last week following several
days of changing weather forecasts.
Here and now
Price falls appear likely in the Nordic region
The Nordic energy market also experienced prices changing direction
several times last week. The weather forecasts for the start of March
have been relatively uncertain, and
the market adjusted itself in relation
to this uncertainty. At the same time,
the market reacted to the coal market, in which the price climbs have
come to a halt for now, while anticipating further news from China. The
Q2-17 contract closed at EUR 25.55/
MWh on Tuesday, a marginal fall of
EUR 0.55/MWh from last week. The
YR-18 contract also experienced a fall
of EUR 0.32/MWh and closed at EUR
23.70/MWh on Tuesday.
For a few weeks now, there has
been a tendency for larger or smaller
downwards adjustments in the Nordic
energy market. After a period of very
dry weather, the weather forecasts for
the Nordic region have now become
somewhat wetter and milder, but this
has so far not resulted in the price
falls that would have been expected
as a result of the changes. Naturally,
the future is still dependent on the
weather forecasts, but the possibility
of a downside is clearly greater than
the chance of further increases,
considering the events of recent weeks.
The developments in the commodities
Our recommendation
As things stand, we currently believe,
as we also did last week, that the potential for falls is greater than the potential for increases. In the coal market, it appears that there are no more
immediate climbs to be found in the
speculation about Chinese production. As such, we believe there will be
another week of minor price falls, unless more specific news arrives from
China during the course of the week.
market also support a potential fall in
the Nordic energy market. Both the
coal and oil prices currently appear to
have peaked. Some technical barriers
will need to be broken down in order
for the price to increase further. The
possibility of falls is greater, and we
believe there will be a slight downtrend
for coal and oil over the next couple
of weeks. However, there is a joker
at play, and whether China will make
an unexpected announcement with
regard to the country’s coal production
has very much been the focus of
recent weeks.
Forward
Wk 8 (EUR/MWh)
Wk 9 (EUR/MWh)
Expectation (wk 10)
ENOMMAR-17
30.25
27.60
↘
ENOQ2-17
26.10
25.55
↘
ENOYR-18
24.02
23.70
↘
SYHELYR-18
6.69
6.65
↗
SYOSLYR-18
-0.40
-0.40
→
Minor increase in the carbon emissions market
Forecasts
Precipitation: Following a relatively dry and cold end to the
week, the weather in the Nordic
region appears to become wetter and milder than the average
for this time of year again from
the start of next week. There is
still a major hydro-balance deficit of approximately 11 TWh.
The European carbon emissions market increased to its highest level for more
than a month last week, but even though the EU’s allowance system reform is
under way, the European Parliament cannot take the credit for the small price
climb. The demand in the market has been increasing slightly over the last couple
of weeks and the interest in buying at the allowance auctions has pushed the
prices up. On Friday, the market closed with an allowance price of EUR 5.39/t,
and even though this remains well below the EU’s desired allowance price, it is
still an increase of 10% in just two weeks.
Spot prices falling slightly
Production and spot: We anticipate that the average Nordic system price for the coming
week will be around EUR 30/
MWh, relatively unchanged from
last week. Nordic wind power
production is expected to drop
below the norm from the end of
this week.
The EPADs
The Finnish YR-18 EPAD remains
the most expensive in the Nordic
region, even though the price fell
slightly last week. It now costs
EUR 6.65/MWh. In Norway, the
NO1 EPAD for YR-18 remains
stable at EUR -0.40/MWh.
Peter Lønbro Lehm, Sales Director
([email protected])
Tel.: 8742-6720
Following several relatively expensive weeks in the Nordic spot market, the system price has fallen slightly over the last week. The average Nordic system price
was EUR 29.84/MWh in week 8 and it was the first time for a month that the
average price for a week fell below EUR 30/MWh. Wetter and milder weather has
relieved some of the pressure in the spot market. The falling prices are also a
contributing factor to why we believe there will be a falling forward market over
the coming week. So far, the falling trend in the spot market has not affected the
more distant contracts.
Michael Bendixen, Customer Manager
([email protected])
Tel.: 8744-6790
Communicative Analyst
Karsten Sander Nielsen
([email protected])
Tel.: 8745-6948