Continental Europe will probably be warmer than average for a third month in February as the milder counterpart of the polar vortex that gripped North America helps to extend a decline in power and gas prices.
Five of seven meteorologists expect most parts of Europe to be milder than normal next month, according to a Bloomberg survey. Europe and the U.S. are at opposite ends of an Atlantic low-pressure system bringing mild weather to the U.K., France and Germany, while plunging the U.S. into a deep freeze, said Deutscher Wetterdienst, Germany’s national weather forecaster.
“Europe and the U.S. are coupled right now,” Andreas Friedrich, meteorologist at DWD, said in a Jan. 29 telephone interview from Offenbach, near Frankfurt. Over the next two weeks, “we are seeing the mild end of the polar vortex that will bring back frosty temperatures to the U.S.”
Electricity prices in markets from France to Scandinavia touched record lows today after a mild start to the winter cut demand just as the region is emerging from its longest-ever recession. Natural-gas stocks are approaching the seasonal average after starting the winter at the lowest level in at least four years on Oct. 1.
Power for delivery in February in Germany, Europe’s biggest market, fell 12 percent this month to close at 36.70 euros ($50) a megawatt-hour, according to broker data compiled by Bloomberg. Natural gas for delivery next month in the U.K., the region’s largest market, reached a 16-month low of 61.1 pence a therm ($10 per million British thermal units) on ICE Futures Europe in London.
“Temperatures are dominating prices,” Ricardo Klimaschka, energy trader at Energieunion GmbH, said yesterday from Schwerin, Germany. Nordic and German power costs may decline further, he said, without being more specific.
“We just haven’t had a proper winter yet, and power for delivery in March could slide to 32.50 euros,” Frank Woskowski, a power trader at AVU AG fuer Versorgungsunternehmen, said by phone from Gevelsberg, Germany, today. German power for March dropped to a record 34.55 euros a megawatt-hour today, broker data show.
Gasoil for delivery in February fell 3 percent this month to $916 a metric ton on ICE Futures Europe as of 4:34 p.m. London time. Germany is the largest European market for the home-heating fuel.
Meteorologists at MetraWeather, MeteoGroup U.K., MDA, WSI Corp. and DWD predicted warmer-than-normal weather in most of Europe next month. The U.K. will be cold, wet and windy next month, according to the Exeter, England-based Met Office. SMHI, a Swedish forecaster, sees a cold start to February for Scandinavia and northwest Europe, followed by wetter and milder weather from the second week.
Average temperatures across northwest Europe and the U.K. were 1.2 degrees Celsius (2.4 Fahrenheit) above the norm in December and 2.2 Celsius above average in January, according to WSI data on Bloomberg. The region will be 2.1 Celsius warmer than average in February’s first 15 days, the model showed.
Gas demand in the U.K. in January was 10 percent below the seasonal average of 306 million cubic meters a day, according to National Grid data compiled by Bloomberg. The volume of gas in storage in Europe narrowed its deficit to the 2009-13 average to 2.8 points on Jan. 16 from 4.7 percentage points on Dec. 31, according to data compiled by Bloomberg.
“Prices do seem very bearish” for U.K. gas through this quarter, Trevor Sikorski, head of natural gas, coal and carbon at consultant Energy Aspects Ltd. in London, said in a Jan. 27 research note.
Gasoil inventories held in independent storage at the Amsterdam-Rotterdam-Antwerp trading hub surged to 1.95 million tons in the week to Jan. 16, the most in more than two months, according to data from PJK International BV, a researcher based in Breda, Netherlands.
Supplies of heating oil are ample as mild weather limits demand, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said on Jan. 28.
Output from German wind farms averaged 8,256 megawatts amid stormy weather in January, compared with the 12-month average of 5,563 megawatts, according to data from the Leipzig-based European Energy Exchange AG compiled by Bloomberg.
German wind power output is forecast to rise to a record 33,126 megawatts on Feb. 10, according to Bloomberg’s European weather model. The current record is 26,269 megawatts on Dec. 5, according to EEX data.
In the U.K., wind power output rose to a record 6,222 megawatts today, and was 55 percent above the one-year average of 2,242 megawatts across the whole month, National Grid data on Bloomberg show.
U.K. wind generation is forecast to average 4,409 megawatts through Feb. 14, Bloomberg’s model shows. In Germany, average wind power through Feb. 14 output is seen at 11,945 megawatts.
“Wind speeds will remain above normal across northern parts of Germany and France, with periods of particularly windy conditions at times during the week through Feb. 16,” Byron Drew, lead forecaster at MetraWeather, said in an e-mailed report today.