Nordic August to Possibly Drop on Strong Hydro Balance

The Nordic August came under pressure in the previous session as the German power market moved down owing to losses in TTF. The contract could continue downward as Norway's hydrological balance is anticipated to sharply rise towards the beginning of August, however, gas prices are currently retreating from earlier losses, while the equivalent DE product is trending upward.

• Nordic Base Power AUG 24 closed down 2.9% at 28.55 EUR/MWh on 23 July.
• Germany Base Power AUG 24 up 1.3% at 72.75 EUR/MWh
• EUA DEC 24 up 0.1% at 65.78 EUR/MT
• TTF Gas AUG 24 up 0.1% at 31.655 EUR/MWh
• Norway’s hydrological balance is expected to rise to around -40GWh on 7 August – sharply up from the 6-10 day low of -1,002GWh forecast on 25 July. This could likely support hydro stocks and limit supply risks in the region.
• But rainfall in the Nordics will drop below the 30-year norm over the 6-10 day ECMWF forecast from 27 July, with precipitation expected as low as just 0.4mm on 2 August – which may weigh down stocks.
• Nordic nuclear reactors were operating at around 87% of capacity on Wednesday morning, moving up 80-83% over Monday-Tuesday – likely placing downward pressure on delivery costs
• Average temperatures in the Nordics are forecast to be above the 30-year norm of about 17.8C for most days over 24 July-2 August, only dipping below on 29 July.
• Max temperatures over the same period in Finland are anticipated to be reached on 25 July at about 25C, Norway on 2 August at 22.1C and Sweden also on 2 August at 23.4C.
• Norwegian wind is anticipated at a 9% load factor, or 0.497GW on 25 July – which could support power prices on delivery, albeit with high nuclear gains could be limited. Wind will then increase to a 15% load factor on Friday – which could place some downward pressure on power costs in the region.