Western Price Survey
January 29, 2016
Despite frigid conditions across the East Coast, domestic natural gas consumption fell 5.4 percent, according to the U.S. Energy Information Administration.
Natural gas used for electric power generation dropped 0.9 percent between Jan. 20 and 27. Heating demand rose 8 percent compared to the previous week.
Natural gas production remained robust, with no disruptions reported as a result of winter storms.
Working natural gas in storage was 3,086 Bcf as of Jan. 22, according to EIA estimates. This is a net decrease of 211 Bcf compared to the previous week. Storage levels are now 20.7 percent greater than a year ago and 16.3 percent greater than the five-year average. The Pacific region recorded an 8 Bcf withdrawal.
"The withdrawal was almost twice as large as last year's pull for the same storage week," noted the EIA. "This marks the fourth consecutive week of triple-digit storage withdrawals in the Lower 48 states."
Henry Hub gas spot values eroded 4 cents in Thursday-to-Thursday trading, ending at $2.16/MMBtu Jan. 28. Western natural gas average values moved even lower, losing between 10 and 15 cents in the trading period. PG&E CityGate posted the greatest loss, down 15 cents to $2.34/MMBtu. A total of six Western hubs recorded prices below $2 at the end of trading.
The movement may be partially attributable to warmer weather forecasts, according to Enerfax.
Indeed, the latest forecast from WSI expects warmer-than-normal conditions across the Northwest throughout February, persisting through April.
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Looking ahead, "the big focus will be on the excess gas in storage and how entities that have the right to that gas will operate on a daily basis," said Jeff Richter, principal at EnergyGPS, in a news release about the forecast. Since national natural gas storage levels are greater than they were in 2015 and production is also flat compared to this time last year, it will be difficult for the forward curve prices "to shift up in the near term," he added.
By April, focus should shift to natural gas consumption for power generation. "Once we start to look at power burns, we will be keeping a close eye on the renewable penetration (wind and solar) in specific ISOs as well as the hydro situation in the Pacific Northwest and California," Richter said.
Meanwhile, Western peak power prices dropped between 2 cents and $2.50/MWh in Jan. 22 to Jan. 29 trading. South of Path 15 posted the greatest loss, falling $2.50 to $28.75/MWh. Prices at the end of trading ranged from $20.65/MWh at Mid-Columbia to $29.75/MWh at North of Path 15.
Nighttime power values varied. Prices Friday ranged from $19.15/MWh at both Northwest hubs to $22.75/MWh at SP15 [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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