100 million Euro loss in Nordic power market.. FT

by Jim Colburn • Thursday, September 13, 2018

Phil Stafford and David Sheppard, Financial Times, write, here:

(my bold)

“The catalyst for the trading loss was a series of backfiring bets on the price difference between German and Nordic power markets, according to multiple sources in the industry. Mr Aas’s trades were positioned for the gap between the two to narrow, but instead it widened sharply to a level 17 times larger than normal. That move was triggered, in part, by a jump in the price of carbon allowances in Europe that have been the best performing commodity so far this year and a source of bumper profits for hedge funds and investment banks. Rising carbon prices, which are trading at a decade high, have dragged up natural gas and electricity markets in continental Europe. At the same time, a forecast of wetter than previously anticipated weather in the Nordic region, where hydropower is a big contributor to electricity supplies, pushed prices on the so-called Nordpool market far lower.”

Isn’t that the way it always happens?  (The market moves some multiple of “normal”.)

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