July 16, 2012 / 10:24 AM / 5 years ago

NORDIC POWER-Benchmark prices rise on drier weather

* Nordic system price seen rebounding above 10 euros/MWh
    * Drier and more stable weather seen ahead

    OSLO, July 16 (Reuters) - The Nordic system price for
Tuesday delivery was expected to rebound to 11.7 euros a
megawatt-hour (MWh), lifted by lower wind output, after dropping
below 9 euros on Monday, its lowest in a year.
    "Lower wind power output should lift both night prices and
peak prices," analysts at Point Carbon said.
    Combined Danish and Swedish wind power generation was seen
falling by 930 MW to 2,150 MW on Tuesday.
    However, significantly lower hydro inflows, seen down by
6,450 MW compared with Monday, adds to the uncertainty, analysts
    The benchmark quarter-ahead contract for baseload
(24 hours) delivery was up 45 euro cents to 36.50 euros a MWh at
0915 GMT on Monday from Friday's close.
    "Both weather and fuel are marginally on the bullish side
this morning," analysts at Point Carbon said.
    Traders said the benchmark contract was lifted by a drier
weather forecast, and rebounding after short position covering
on Friday.
    "The fourth-quarter contract was a bit oversold on Friday,
and now is coming back. Also we've got more stable weather
conditions to trade on," a Swedish-based trader said.
    The Nordic region relies on hydro power for more than 50
percent of its electricity generation, and drier weather is a 
bullish price signal.
    Further along the curve, the baseload contract for delivery
in 2013 was up 20 euro cents to 37.15 euros per MWh.
    Brent crude held steady above $102 per barrel on Monday on
optimism over the outlook for demand growth in China, the
world's second-largest oil consumer. 
    "The Nordic market is going to remain pretty stable for
two-three weeks as producers have hedged contracts ahead of
summer vacations," the trader added.

 (Reporting by Nerijus Adomaitis; Editing by Alison Birrane)

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