Nordic power forward prices rise, supported by insufficient reservoir reserves and higher European natural gas prices

(1) On Tuesday, Nordic power forward contract prices rose, driven by higher European natural gas prices and relatively low regional hydropower reservoir inventories. Nordic quarterly baseload power contracts edged up, quoted at €91.25 per megawatt-hour; next year’s power forward contracts increased to €56.65 per megawatt-hour. (2) Industry analysis points out that the rise in natural gas prices boosted German power contracts, serving as the main factor for the day’s power price increases. Nordic reservoir reserves have remained below normal levels since the end of December last year, and the reservoir shortfall reached 16.24 terawatt-hours on Tuesday. (3) Spot prices for Dutch and UK natural gas strengthened. Rising tensions in the Middle East have further increased uncertainty about energy transportation prospects through the Strait of Hormuz. However, European spot electricity prices moved lower, mainly due to a significant expected increase in Germany’s wind power output and an improvement in photovoltaic generation. (4) Meteorological agencies predict that for the remainder of August, Nordic countries will mostly experience cool, cloudy, and low-pressure weather. Low temperatures will raise expectations for heating-related electricity demand, providing further support for Nordic power prices.