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European 2014 Power Drops to Record as Near-Term Prices Decline

Jan. 17 (Bloomberg) -- European power for 2014 delivery fell to a record while day-ahead electricity costs slid even as sub-freezing weather boosted demand for heating. European Union carbon allowances dropped.

Baseload German 2014 electricity, for supplies delivered around the clock, tumbled as much as 25 cents, or 0.6 percent, to 43.05 euros ($57.25) a megawatt-hour, a record for the contract, according to broker data compiled by Bloomberg. In France, power for 2014 slid 20 cents, or 0.4 percent, to 46 euros, the lowest since Bloomberg started tracking the contract in January 2011.

“We are now halfway through the coldest spell of weather in the winter to date, but one could be justified for ignoring this fact by the look of energy commodity prices in Europe,” Paolo Coghe, a Paris-based analyst at Societe General AG, said in an e-mailed report. “Supply and demand fundamentals provide little hope for marked improvements in the short-term.”

Day-ahead power lost 6 percent in Germany to 50.30 euros and declined as much as 6 percent to 70 euros in France. Traders use near-term prices to evaluate the price of future deliveries. Carbon allowances for December dropped to a record 5.56 euros a metric ton on the ICE Futures Europe exchange in London.

Low temperatures in Frankfurt are forecast to decline to minus 10 degrees Celsius (14 Fahrenheit) on Jan. 23 versus a 10-year seasonal average of minus 2 degrees, according to CustomWeather Inc. data on Bloomberg. Minimum temperatures in Paris are expected to fall to minus 10 degrees tomorrow, compared with a 10-year average of 4 degrees.

Demand in France, Europe’s second-biggest power market, may reach 92,100 megawatts tomorrow, according to a forecast on the website of Reseau de Transport d’Electricite, the network operator. That compares with 89,203 megawatts today.

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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