Western Price Survey
January 15, 2016
Although temporarily arrested by colder weather last week, energy prices continued to drop in response to persistent oversupply conditions.
Working natural gas in storage was 3,475 Bcf as of Jan. 8, according to U.S. Energy Information Administration estimates. This is a net decrease of 168 Bcf compared to the previous week. The market expected a net decrease of 178 Bcf.
Storage levels are now 20.3 percent greater than a year ago and 15.8 percent greater than the five-year average. The Pacific region recorded an 18 Bcf withdrawal.
Henry Hub gas spot values tumbled 16 cents in Thursday-to-Thursday trading, ending at $2.19/MMBtu Jan. 14.
Western natural gas average values also moved lower, losing between 11 and 30 cents in the trading period. Malin posted the greatest loss, dropping 30 cents to $2.21/MMBtu.
Markets will be closed Jan. 18 in observance of the Martin Luther King Jr. holiday.
"Traders took the opportunity to drive the prices even lower and will likely continue to do so until they are stopped by weather or technicals," noted Enerfax in its Friday report. Although the week's gas withdrawal from storage was the greatest this year to date, it was still less than both the five-year and year averages. Supply conditions are driving both spot and futures prices lower. "The natural gas market," Enerfax added, "is expected to remain oversupplied through the rest of the winter."
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Natural gas inventories are now forecast to be 2,043 Bcf by March 31, the end of the winter heating season, according to the EIA's Short-Term Energy Outlook. This would be 38 percent greater than the level of natural gas in storage at the same time in 2015. Henry Hub spot prices should average $2.65/MMBtu in 2016 and $3.22/MMBtu in 2017, according to the EIA forecast, compared with an average of $2.63/MMBtu in 2015.
Meanwhile, Western peak power prices dropped between $1.60 and $5.85 in Jan. 8 to Jan. 15 trading. South of Path 15 posted the greatest loss, down $5.85 to $29.25/MWh. Prices at the end of trading ranged from $20.25/MWh at Palo Verde to $29.25/MWh at SP15.
Nighttime power values were down between $1.10 and $2.55 on average by Friday. Prices ranged from an average of $19/MWh at Palo Verde to $22.60/MWh at California-Oregon Border.
Demand peaked on the Cal-ISO grid at 29,683 MW Jan. 11, which should be the week's high. Total renewables production on the Cal-ISO grid reached 7,909 MW Jan. 13 [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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