Nordic electricity for April traded at the highest in six weeks after weather forecasts pointed to lower supply and higher demand.
The April contract gained as much as 2.3 percent to 39.75 euros ($51.71) a megawatt-hour on Nasdaq OMX Group Inc.’s energy exchange in Oslo, the highest since Jan. 17 and the biggest gain since Jan. 7. The benchmark Nordic next-quarter contract advanced as much as 2.2 percent to at 37.85 euros, the highest since Jan. 18, before paring its advance to 37.70 euros.
The Nordic region gets more than half of its power from hydroelectric plants. The amount of water and snow available to generate electricity in the region may be 16.9 terawatt-hours below normal for the time of year in two weeks, down from 14.5 terawatt-hours today, Markedskraft data on Bloomberg show. Drier weather signals less supply and indicates higher prices.
“Weather forecasts have shifted, and become drier and slightly colder than last week,” John Brottemsmo senior analyst at energy adviser Bergen Energi AS said today by phone from Bergen, Norway.
Temperatures in Sweden may average minus 1.7 degrees Celsius (31 Fahrenheit) through March 14, compared with an earlier forecast of minus 1.5, MetraWeather data on Bloomberg using the ECMWF model show. Lower temperatures boost demand for electric heating.
“If the weather stays dry and cold the Nordic next-quarter may rise significantly, to more than 40 euros, especially if the day-ahead prices continue to climb,” Brottemsmo said.
Power for delivery in the Nordic area today costs 42.69 euros a megawatt-hour on average, according to yesterday’s auction on the the Nord Pool Spot AS exchange in Oslo. That compares with an average price of 40.05 euros for supply from Feb. 25 through March 2. Forward prices frequently track movements in day-ahead prices.
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