Western Price Survey
January 31, 2014
Western natural gas prices have climbed to levels last seen in the winter of 2009-2010, according to recently released data.
Natural gas spot prices at Northwest Sumas averaged $4.61/MMBtu between Nov. 1, 2013, and Jan. 29, 2014 -- the highest average natural gas price for the hub in this period since it hit $5.37/MMBtu in the same period in 2009-2010, according to U.S. Energy Information Administration data. The Sumas average is a 45 cent/MMBtu premium compared to Henry Hub over the same time frame, and a five-year winter high. In September, the spot price for Sumas gas was more than $1/MMBtu below the Henry Hub benchmark.
Regional gas demand jumped 18 percent in the first 90 days of winter compared to last year. Factors contributing to higher gas prices included more expensive Canadian natural gas and constrained natural gas supplies from the Rocky Mountains, which coincided with an uptick in Pacific Northwest demand from residential and commercial customers as well as electrical generators.
California natural gas prices have also climbed this winter. Spot prices at PG&E CityGate gained 13 percent in the past month to reach $5.23/MMBtu -- a four-year seasonal high, according to Bloomberg data. Southern California Gas CityGate natural gas followed suit, also up 13 percent to $5.26/MMBtu.
Working gas in storage reached 2,193 Bcf as of Friday, Jan. 24, according to EIA estimates, a net decrease of 230 Bcf from the previous week. Storage levels are now 22.5 percent less than a year ago and 16.6 percent less than the five-year average. The Western region saw a 22 Bcf withdrawal during the agency's report period.
Henry Hub natural gas moved lower, losing 27 cents since last Thursday to trade Jan. 30 at $5.29/MMBtu. Western hubs, however, moved higher, led by Stanfield and Sumas, each of which jumped 47 cents, ending at $5.27 and $5.19, respectively (see table). PG&E CityGate added 43 cents to $5.39.
With higher gas prices, electricity prices are bound to increase. Peak prices at Northwest hubs jumped between $17.50 and $22.50/MWh on average in the Jan. 24 to Jan. 31 trading period (see chart). By Jan. 31, average prices ranged from $48.15/MWh at Palo Verde to $69.70 at the California-Oregon Border.
What's ahead: Some relief of the Western drought pattern appears in the forecast. Above-normal precipitation is expected across the Pacific Northwest into Northern California between Feb. 7 and 13, with below-normal precipitation forecast across the Southwestern U.S. during the period [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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