Next two weeks will affects future prices into 2021
The massive WWW-weather foreseen prior to Christmas has caused a massive drop in spot prices and futures. There has been no evidence for a turn, just some colder and drier “dips” have been indicated. Weather Risk Management is crucial in such dominate weather periods in order to find the turning point and to prevent unnecessary losses in a falling “predictable” market. In case of persistent Warm, Wet and Windy (WWW) regime up to March, the Nordic power market will experience massive new selloff sine prices above 24 Euro will be “a good price”.
If the weather pattern does not turn soon forecasted Hydbalcan reach a surplus of 50 Twh within early March
The polar vortex (PV) role in energy weather forecasting is an important factor to understand
How the PV affect surface weather must be understood in order to foresee development in any professional tools (NENA, Wattsight, Eikon,…)
For now, there is hope for a “cold dip” that will show up in forecasts for next week (= some less precipitation, colder temps and more moderate wind)
Energy (WaF) keeps hitting the PV and in case of the effect of the WaF we will see less intense PV over the Atlantic
= less intense Jet stream = less westerly strong lows as seen last weeks = less WWW weather and risk for cold air in from the north over NC and N-EU
The risk for a cold dip is high and thus further massive bearish weather-pressure is called off, for now
But, no persistent solid cold, dry and calm winter weather is confirmed over NC and C-EU
We are now talking about a model-phenomena and more evidence is needed to verify a possible stable observed colder and some drier period into February
Most likely will a bullish correction take place based on less WWW (warm, wet, windy) forecasts and indications of some CDC (colder, calmer, drier) trend = a “cold dip”
If the “cold dip” fades off as the dip seen in last week forecasts, and no effect of the WaF on very strong PV-core = a new massive WWW period will take place in February and into March
Then, Hydbal = >40-50 Twh is not crazy thinking…
TradeWpower can be your guide and discussion partner in energy weather risk analysis and support decision-makers with weather-tuned strategies. Details on outlook are presented in the “TradeWe” service.
Next two weeks will be a turning point or the end of high Nordic future prices fare into 2021…
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