Weather-Trading – 16.03.2021 at 10:45

Main outlook next 30 days

• The shift into a CWW is seen, periods of WRMe-WDC will calm forecasts down
• Normally March-April is moderate WWW or CDC but for now, a rising Hydbal into April is likely
• SRA:
  • Anomaly strong PV and WRM signals suggest solid observed CWW low pressures into late March and the first part of April is likely
  • => As long as PV-core stays west closer to Greenland this is likely

Short-range (front months:1+2 and front Quarter)

• WRM(e)+PV/Jet+SRA

  • WRM(e)-CWW effect is seen in the last runs and thus looks to effect forecasts into week 11
  • WRMe-WDC will most likely calm forecasts over the weekend even if WRM supports a lasting CWW setup

• Statistics – normal vs WRM+PV/Jet

  • Strong PV, PV core west, and WRM-CWW signals suggest accumulated CWW and that massive low-pressure can develop and thus we are facing the outer edge of the CWW-statistic
  • Thus, March and April could see a surplus of 10-14 Twh precipitation if PV stays west

• Volatility forecasts – “strategy”

  • Too strong WRMe-WDC risk over the weekend suggest closing positions
  • The WRMe-WDC response vs market outlook within Friday will determine how the weekend price-risk is

• Hydbal/Inflow/Wind/Temp/Flow

  • Into next week there is a bearish risk with both observed WWW and also WWW forecasts
  • This supports higher inflow and hydbal and thus lower water values
  • But, the WRMe-WDC outlook and the normal-period suggest that a solid lasting WWW setup is less likely

• NC SYS price vs. futures

  • SYS price is strong and needs observed WWW + WWW forecasts to come down significantly
  • As for now the bearsih risk is in forecasts only but could be seen over the weekend also for SYS price outlook/water values
  • But, SYS price does show a bull potential for now…

• DEU SYS price vs. NC

  • S-NO and S-SE/DK shows a bull potential for SYS-price since DEU keeps being higher than NC and there is no solid WWW regime for DEU into late March
  • We have seen that NC is stong when DEU collapse during strong windy days so for a signeficant bearish impact we need NC+DEU in a “lasting” CWW setup, which for now is not likely until April

• NC spread to DEU

  • As long as Hydbal is below 7-8 Twh surplus DEU prices will be a bull motivator during dry and calm days/periods

• Fundamental market models and thermal-carbon

  • Futures vs. market models
    • Market models support current prices and show a bull potential
  • Thermal and Carbon
    • Carbon can turn crazy bull so for bearish thinking we need rising hydbal, inflow and CWW forecasts
    • As soon as NC sees WDC bull DEU, which does not see solid lasting bearish weather, will pull NC up

Weather-trading and hedging: short-range

(Trading will be done stepwise and per step, we need profit on each step and a confirmed WRM+PV/Jet analysis. If no profit awaits confirmation or close positions. Portfolio: 60 MW monthly (1-3) and 20 MW front quarter)

• Week 11

  • Hold positions and profit-taking Wednesday
  • Too risky either way to go short/long over the weekend

• Week 12

  • Await WRMe-WDC effect over the weekend and evaluate PV and WRM outlook
  • If solid CWW setup seen into April new bearish positions after a bull correction into the week

• Hedging

  • The WRM-WWW period week 11-13 will lower prices, and thus if hedging is planned to be carried out during this timeperiod it should be down prior to the WRM-WWW period into week 11-13

Weather-trading and hedging: medium-range

• As for now the outlook for March+April is accumulated CWW
• Depending on the FSW and its effect new strategies will be made

• Timing of hedging – medium time frame

  • The gap between NC and Germany is too large, and even if prices come down to “panic-mode” in shorter periods, the main outlook up to summer does not support a collapse and thus, we could see more bull NC prices later on
    • 1 of Oct the UK cable is 100% operational, and in 2022 the Nordlink cable increases its effect
    • =>, as we have seen, there is a bull potential on SYS price, even when NO has almost 100% reservoirs, in that SYS price went mega bull as soon as inflow and wind came down below normal (week 48, from 1,5 to +20 Euro…)
    • Panic-mode looks to be related to shorter periods when we see massive wind and inflow in NC, especially when DEU follows up with strong wind. For May-June massive WWW is not likely…

• Correction of portfolios

  • Especially if we see accum dry up to June that will be needed since then the Gap between NC and Germany will be less => hedging prices are about  28-30 Euro for large companies
  • Into the winter new UK cable and low SE nuclear power production, as seen this winter, has strong bull potential during CDC periods regardless of Hydbal as long as inflow, wind and temps are low…