Western Price Survey
January 3, 2014
Traders are warily watching weather cues as more cold weather across the United States prompts natural gas withdrawals to meet power-generation needs.
Working gas in storage reached 2,974 Bcf as of Friday, Dec. 27, according to U.S. Energy Informa-tion Administration estimates, a net decrease of 97 Bcf from the previous week. Storage levels are now 15.9 percent less than a year ago and 8.9 percent less than the five-year average. The Western region saw a 17 Bcf withdrawal during the agency's report period.
The storage data was released a day late as a result of the holidays. The next report is scheduled for release Jan.9.
"With the abnormally cold start of the winter, end-of-season storage is now heading towards 1.5 Tcf," noted Barclays analysts. "Yet, with three winter months still ahead of us, significant weather risks to balances remain, and volatility looks set to persist." Given adjustments for weather, however, the supply-demand balances are "very similar to 2013," analysts stated.
Henry Hub natural gas values dropped 7 cents since last Thursday, trading Jan. 2 at $4.33/MMBtu. Western prices ended mixed, with Opal/Kern adding 9 cents to hit $4.38/MMBtu and Southern Cali-fornia Border gas up 2 cents to $4.46. PG&E CityGate shed 7 cents in the trading period, ending at $4.55 by Jan. 2.
Over the Friday-to-Friday trading period running Dec. 27, 2013 to Jan. 3, 2014, Northwest peak-power prices added roughly five dollars on average. Values ranged from $42/MWh at Palo Verde to $51.55/MWh at the California-Oregon border (see chart).
Most off-peak prices gained a few dollars, save for SP15's, which shed $1.50 over the trading period, ending Friday at $42.25/MWh.
Looking back at December, prices across the West responded to cold weather and were between $33.75 and $70 higher than in December 2012. Northwest peak-power prices jumped to a $100/MWh high.
Meanwhile, Western natural gas prices were also higher in comparison to December 2012 (see "Price Trends," next page). Henry Hub prices were relatively higher versus the previous year, but did not fluctuate as dramatically as Western gas prices [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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