Nordic power futures rise with the energy market, supported by cold wave expectations and tight water supply

⑴ Nordic forward power prices strengthened on Thursday, with front-quarter base load power contracts rising by approximately 0.7% to 91.5 euros per MWh, and front-year contracts up by around 0.5% to 55.3 euros per MWh. This was mainly driven by broad gains in the European energy market and forecasts of regional cold wave weather. ⑵ Over the next 10 days, the Nordic region will continue to be affected by low-pressure systems, with cool and cloudy weather prevailing. Overall temperatures will remain below seasonal norms, which is expected to boost heating demand and power consumption forecasts, providing fundamental support for electricity prices. ⑶ Nordic water reserves have continued the negative deviation trend since the end of December last year. On Thursday, reserves were about 12.3 TWh below normal levels—a slight narrowing of the gap compared to the previous day, but still in a tight range. Persistently low hydropower availability has further reinforced supply shortage expectations in the power market. ⑷ Benchmark contracts in the European carbon market rose modestly by about 0.4% to 81.45 euros per ton. Germany’s next-year power benchmark contract edged up by around 0.1% to 100.8 euros per MWh, while Dutch and UK wholesale gas prices moved slightly higher in early trading. The market is also closely monitoring the potential impact of developing agreements in the Strait of Hormuz on the energy supply chain. Going forward, attention will focus on changes in Nordic temperatures, water reserves, and the dynamics of European natural gas inventories and their transmission effects on electricity prices.