* Cal ‘16 prices below 32 euros/MWh on weak fuels, warm weather
* EEX Year Ahead hits lowest level since April 2004
* Spot up, demand recovering after German holiday
PARIS, Jan 6 (Reuters) - European power forward prices sagged to levels not seen since 2004 on Tuesday, with analysts and traders bracing for another year of above-average temperatures, low electricity demand and oversupply.
Germany’s Cal’ 16 baseload position, the benchmark for European electricity prices for delivery next year, lost 20 cents in morning trade to 31.65 euros ($38) per megawatt hour marking new contract low, Thomson Reuters data showed.
The year-ahead contract on the EEX bourse, at 31.61 euros, was the lowest for that position since April 2004.
The equivalent French contract in the OTC market was down 75 cents to 38.55 euros per MWh, also at contract lows.
A mild start to the winter in western Europe rounded up one of the warmest years on record and power traders are realising that a cold winter is unlikely.
In Germany, 2014 was the warmest year since regular measurements started in the 19th century, commodities broker Marex Spectron said in a research report.
“Does this mean that 2015 will be another record warm year?” Marex Spectron wrote in the note. “It is likely that in the global average, 2015 will again be warmer than the long-term average, simply due to the long-term warming trend and the current El Nino state in the tropical Pacific.”
However, the analysts said a sharp weakening this month of the polar vortex, strong circumpolar winds in the winter stratosphere, could bring colder temperatures in northern Europe by late January or February, boosting power demand.
The drop in European power prices was underpinned by lower energy prices across the board on Tuesday.
Brent oil sank to fresh 5-1/2-year lows, EU carbon prices fell 2 percent to 6.85 euros per tonne, and day-ahead gas prices in Britain dropped 1.69 percent to 46.40 pence per therm.
Also weighing on Europe’s electricity prices are the vast oversupplies due to a rise in renewable power generation which outweighed closures in thermal production, while demand is flagging in stagnant economies.
“There are all kind of anomalies and paradoxes in the European power sector and nobody is really looking at fixing the issue,” said Mark Lewis, a senior analyst at Kepler Cheuvreux.
European spot power prices were up, with German demand expected to rise by more than 2 GW on Wednesday after a religious holiday on Jan. 6 in some regions weighed on consumption.
German baseload power for Wednesday delivery rose 1 euro to 38.50 euros, while the French contract was up 2.25 euros at 46 euros.
Elsewhere, Paris-based EPEX Spot said that in December 2014, it traded a volume of 37.2 terawatt hours (TWh) on its day-ahead and intraday power markets, up from 31.6 TWh a year earlier and a new monthly record. The bourse hosts spot trading in Germany and Austria, and in France and Switzerland.
$1 = 0.8405 euros Reporting by Michel Rose; additional reporting by Vera Eckert in Frankfurt; editing by Jason Neely