NORDIC POWER-Q2 contract gains on dry weather, rising spot price

* Spot price for Wednesday set at 47.49 euros/MWh

* Q2 power seen to be delivered at 40.1 euros/MWh

OSLO, March 26 (Reuters) - Nordic prices for power delivery in the second quarter gained further on Tuesday on a dry weather outlook, and helped by a higher than expected spot price for Wednesday.

The benchmark front-quarter contract

firmed by 80 cents to 41.8 euros per megawatt-hour (MWh) by 1300 GMT, more than 5 euros above the equivalent German contract

,

which traded at 36.5 euros a MWh.

Some traders said that the Nordic contract was overpriced as temperatures were expected to rise, partly offsetting a bullish sentiment from a dry weather outlook.

"The contract is quite a bit overpriced, because in about 5-10 days we should see milder conditions, and consumption in the Nordic area should drop quite a lot," a Sweden-based trader said.

Still, he said the contract could end to be delivered at around 40 euros a MWh, if the dry weather continues.

Analysts at Point Carbon, a Thomson Reuters market analysis company, said they expected the second-quarter contract to be delivered at 40.1 euros a MWh.

"With the current meteorological outlook, we do not expect the market to move lower than this," a Point Carbon analyst said.

The latest medium-term forecast showed precipitation and temperatures remaining below normal for the next two weeks, a bullish factor in a hydro-dependent region.

"Temperatures should slowly get more near normal after next week even with the high pressure remaining in place..., as the sun rises higher and higher each day," said Georg Muller, a meteorologist at Point Carbon.

Due to lasting dry weather, hydro energy available for power generation was expected to fall to 29.6 terawatt-hours (TWh) below normal by April 6.

The Nordic average day-ahead power price

for

Wednesday delivery came out at 47.49 euros a megawatt-hour (MWh), above the market expectations, and compared with 45.87 euros for Tuesday.

"The main reason for the spot price to rise is hydro power producers in western Norway lifting their prices due to weak hydrological situation," a Point Carbon analyst said.

The day-ahead contract in the financial market was last traded at 46.75 euros a MWh.

Further out on the curve, the Nordic contract for baseload power delivery in 2014

surged by 65 cents at 38.90 euros a MWh, in step with rising carbon and long-term power prices in Germany, which trades power with the Nordics.

The equivalent German contract

gained by 45 cents to 41.65 euros a MWh.

The benchmark European Union (EU) carbon contract

firmed by 28 cents to 4.77 euros a tonne, while coal API2 2014 futures

were trading 25 cents lower at $93.25 a tonne.

(Reporting by Nerijus Adomaitis, editing by William Hardy)

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Keywords: MARKETS NORDIC/ELECTRICITY