Europe Power Curve Holds on to Previous Session Gains

European power curve prices on Friday held on to the gains made in the previous session on heightened geopolitical risks, but traders said the market remained capped by weak fundamentals.

Oil prices surged 2 percent on Thursday on news of a Malaysian jetliner being shot down over eastern Ukraine.

European carbon and gas prices, which interact with power prices, rose by nearly 3 and 5 percent respectively, due to fears of a deterioration of relations between the West and major energy supplier Russia, and the power curve rose in sympathy.

"Today, people look at things more soberly and fact is there is enough energy supply in the market," one trader said. "The typical summer demand lull also puts a downer on things," he added.

German baseload power for the year ahead, calendar year 2015 , was unchanged from Thursday at 34.9 euros ($47.2) per megawatt-hour (MWh), the highest in 2-1/2 months.

The less-liquid contract for French power delivery in 2015 was also stable, at 41.95 euros per MWh.

European carbon was at 6.06 euros a tonne, which was down 1.8 percent on the day and back at the level of Wednesday's final settlement.

UK gas retraced some of Thursday's gains after an initially weaker start to the Friday session <0#TRGBNBP:> and North Europe coal also clawed back some losses of the previous day. August coal cargoes into ARA ports gained 35 cents to $74 a tonne .

Oil climbed above $108 a barrel on the plane crash and escalating Middle East violence as Israeli ground troops advanced into Gaza.

In European spot power, the prospect of a sharply higher wind power influx early next week curbed prices for Monday delivery.

Together with high solar supply, this outweighed what could have been a more bullish effect of tight thermal plant availability, traders said.

The German baseload power contract for delivery on Monday was 1.75 euros down from Friday levels, at 32.75 euros per MWh.

The equivalent French contract was 4.35 euros lower, at 31 euros/MWh.

German daily wind power output is likely to rise nearly five-fold between Friday and Monday to 5.8 gigawatts (GW), Point Carbon data showed. Daily solar output on Monday is expected to be 5.5 GW, down from 8.9 GW on Friday - but Friday's level was unusually high.

Weather reports said the current heatwave in the region would make way for a low-pressure front from Sunday, in which 24-hour temperatures will fall by 3 degrees Celsius in Germany to 23 degrees and by 5 degrees in France to 21 degrees.

Power demand was expected to drop by 2.4 GW on Monday in France, compared with Friday, and to remain stable in Germany.

There were diverging announcements on thermal plant supply. French nuclear power availability went up by 2 percent to 83.5 GW while that in Germany is due to fall, once the Gundremmingen C plant goes offline on Saturday.

German utilities reported some short-term, unscheduled coal plant outages - including at RWE's Neuhaus F, E.ON's Heyden and EnBW's Rostock sites.

But traders noted that operators had indicated to the EEX exchange that they would raise overall capacity next week.

The bourse receives notifications of German and Austrian plant availabilities, which showed that the region will likely see a 7.7 percent rise in thermal and hydroelectric capacity over the seven days to July 25.

($1 = 0.7393 Euros)

(Reporting by Vera Eckert; Editing by Pravin Char)