Nordic electricity for delivery in July through September had its biggest gain on record after forecasts for drier weather in the region pointed to a decrease in hydropower supplies.
Power for next quarter gained as much as 4.4 percent, the most since the contract began trading in January 2011, to 31 euros ($40.54) a megawatt-hour and closed at 30.70 euros as of 3:29 p.m. on Nasdaq OMX Group Inc.’s energy exchange in Oslo. The price rebounded from a June 21 record low of 29.30 euros.
Nordic hydropower reserves are poised to be 4.88 terawatt-hours below the seasonal average in two weeks, more than triple the 1.16 terawatt-hour deficit forecast on June 21, according to Markedskraft data on Bloomberg. Shrinking supplies tend to underpin prices in the Nordic area, which meets more than half of electricity use by running water through turbines.
“All traders seem to have been short-positioned, expecting prices to fall further after a prolonged period of rain, but then the weather forecasts bucked, causing people to reverse their positions and squeeze into the same buying window,” Anton Holton, head of trading at utility company Gaevle Energi AB, said today by phone from Gaevle, Sweden. “Compounding the price rise is the fact that the contract dropped to a record low on June 21, which contributes to a natural upward correction.”
Power for delivery around the clock tomorrow will cost an average 33.69 euros a megawatt-hour, 7.3 percent more than yesterday’s price for today, according to data form the Nord Pool Spot AS exchange in Oslo. That’s more than the financial contract for tomorrow, which closed at 32.35 euros. Forward contracts frequently track movements in prompt prices.
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