Western Price Survey
January 23, 2015
Natural gas prices across the United States are retreating as traders worry about long-term bear market conditions.
Working gas in storage reached 2,637 Bcf as of Jan. 16, according to U.S. Energy Information Admini-stration estimates, a net decrease of 216 Bcf from the previous week. Storage levels are now 8.2 percent greater than a year ago and 5.5 percent less than the five-year average.
"The storage withdrawal was among the 20 larg-est in EIA records dating back to 1994, but many traders have been looking past that and have focused on the chance that record supply could lead to a glut later this year," according to Enerfax.
Natural gas futures fell 32 cents in the Jan. 15 to Jan. 22 trading period, ending at $2.83/MMBtu. Spot values also dropped, with Henry Hub losing 35 cents to $2.94/MMBtu. Western natural gas prices followed suit, dropping between 31 and 36 cents by the end of trading. Sumas natural gas values lost the most, down 36 cents to end at $2.60 on Jan. 22. PG&E CityGate was the only Western natural gas hub to remain above the $3 mark by Thursday, trading at $3.18/MMBtu.
Markets were closed Monday, Jan. 19, in obser-vance of the Martin Luther King Jr. holiday.
Mild weather reined in natural gas consumption in all sectors. During the EIA report period, U.S. natural gas consumption fell 21 percent and recorded a low of 80 Bcf/d on Jan. 18. "Natural gas burned in the electric sector (power burn) fell 17% for the report week, but was 5% higher than this week last year," according to the EIA. Despite the week-over-week decline, consumption by the power sector is on track to be at record levels this month, EIA said.
Average prices for Western peak power remained relatively static in the Jan. 16 to Jan. 23 trading period. Palo Verde values lost $1.10, ending at $24.25/MWh. Average daytime prices ranged from $24.25/MWh at Palo Verde to $35.70/MWh at North of Path 15.
Average off-peak prices also did not move much (see chart).
Peak demand on the Cal-ISO grid reached 29,663 MW Jan. 20, which should be the week's high.
Cal-ISO wind power stayed low during the week, breaking to a peak of 1,078 MW Jan. 19. Bonneville Power Administration figures show that wind-power production, which on some days surpassed 4,000 MW, tapered off as the week progressed [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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