Nordic power forward contracts hit a one-week high as cold and dry weather forecasts push up electricity prices

(1) On Wednesday, Nordic power forward prices rose, with both near-term and next-year main contracts hitting new one-week highs. Due to forecasts of cold and dry weather, regional hydropower inventories are under pressure, and coupled with strengthening European natural gas prices, this jointly supports electricity prices. (2) The Nordic near-term baseload power contract increased by 6.0% to 136.22 euros/MWh; the next-year contract rose 4.6% to 77.14 euros/MWh, marking the highest intraday level since November 4. (3) According to institutional sources, a sudden stratospheric warming signal points to dry weather, and temperature models indicate a higher probability of low temperatures from late November to early December, which is favorable for short-term electricity prices. The 15-day estimated available hydropower reserves in the Nordic region are 14.12 TWh below average, compared to a previous day's gap of 12.77 TWh. (4) Dutch and UK natural gas benchmark prices climbed that day, supported by reduced Norwegian gas supply, but warmer expectations and subdued demand limited the increase; European carbon prices also edged higher. (5) The European benchmark German next-year power contract rose 2.3% to 148.71 euros/MWh; the main EU carbon emission allowance contract increased by 0.9% to 89.45 euros/tonne. (6) According to energy agencies, a strong performance in external markets combined with cooler mid-term temperatures expected next week means there is a relatively high probability of further increases in electricity prices.