Europe Poised for a Mild January Following Record Warm Year

Most of Europe is forecast to be warmer than usual in January, with higher winds boosting power supply after the region’s mildest year in at least three decades helped push electricity and natural gas prices to record lows.

A westerly airflow is expected to bring above-normal temperatures and strong winds to Europe this month, particularly the U.K., according to Stephen Davenport, an energy meteorologist at MeteoGroup U.K. Ltd. Temperatures will be “very mild” during the next 10 days, according to WSI Corp., rising as much as 13 degrees Celsius (23 Fahrenheit) above normal on Jan. 10 in southern France and 11 degrees in Germany.

Last year was Europe’s warmest, according to MDA Information Systems LLC in Gaithersburg, Maryland, whose records date to 1981. Paris was frost-free for 379 days until Dec. 28, Meteo France said last month. German and French power contracts for delivery in February 2015 fell to records today and the equivalent U.K. gas price reached an all-time low, data compiled by Bloomberg show.

“Last year’s weather was warmer than normal, and everyone was hoping for a better time this winter and some spikes in prices,” Roland Vetter, head of research at CF Partners U.K. LLP, a London-based trader and adviser, said yesterday by phone. “This hasn’t happened so far,” said Vetter, who has worked in energy since 1996 at companies including Morgan Stanley.

10-Year Average

The temperature in Germany will average 2.4 degrees next week, above the 10-year average of 0.4 degrees, according to WSI data on Bloomberg using the GFS model. France will be at 4.2 degrees, compared with the 4.1-degree 10-year average.

Wind-power generation in Germany and France is forecast to be above average through Jan. 25 amid low pressure, before dropping in line with norms in the week to Feb. 1, according to MetraWeather.

German wind generation will peak this week at 26,906 megawatts at 4 p.m. Berlin time on Jan. 10, compared with 12,763 megawatts today, according to Bloomberg’s wind model. In the U.K., wind output will peak at 6,479 megawatts at 4 a.m. London time on Jan. 10, the model shows. U.K. wind energy reached a record 6,835 megawatts on Dec. 9, according to National Grid Plc data. A megawatt is enough to power 2,000 households.

“January will start out stormy and normal to mild as storms roll in through the north from the Atlantic,” Joe D’Aleo, chief meteorologist at New York-based WeatherBell Analytics, said last week by e-mail.

Still, temperatures in Scandinavia may fall as much as 4 degrees below normal this month, according to MetraWeather.

Scottish Storm

Parts of the U.K. may experience rain and gales in the three days to Jan. 11, with stormy weather possible in northern Scotland, the Met Office said yesterday on its website.

German power for February 2015 delivery fell as low as 34.05 euros ($40.35) a megawatt-hour and the French equivalent reached 44 euros, both record lows, according to broker data compiled by Bloomberg. Gas for delivery in February in the U.K., Europe’s biggest traded market, slid as low as 45.2 pence a therm ($6.84 a million British thermal units), a record for the contract, on ICE Futures Europe.

Last year’s “persistent warmth can be credited to a stubborn Icelandic low that was a mainstay throughout much of the year,” Bradley Harvey, a meteorologist at MDA, said in an e-mailed note.

WSI and MDA forecast a colder-than-normal February in Europe. A Siberian chill is expected to spread into the region’s center and west from northern Europe, according to an e-mailed report from MDA.

“Times are tough if you have to hope for a cold winter,” Paolo Coghe, an analyst at Societe Generale SA, said yesterday by phone from Paris. “Monthly power prices are already lower than they were last year, so we’re also starting from a lower base.”

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