Western Price Survey
Week's End Edition
National natural gas prices continue to be weighted down by a trifecta of high inventory levels, the approaching end of peak heating season, and higher production levels.
Working gas in storage reached 2,802 Bcf as of Friday, Jan. 25, according to U.S. Energy Information Administration estimates, a net decrease of 194 Bcf from the previous week. Storage levels are now 6.7 percent less than a year ago and 12.2 percent above the five-year average.
Henry Hub natural gas values lost about 8 cents since last Friday, trading Feb. 1 at $3.34/MMBtu. Western prices followed suit with PG&E CityGate natural gas dropping almost 12 cents, trading at $3.65/MMBtu Feb. 1, and Southern California Border losing 7 cents to $3.51/MMBtu by that day.
"Prices dropped sharply after Energy Information Administration data showed that despite widespread frigid temperatures last week, less gas was pulled from storage to meet demand than had been expected," Enerfax stated in a Feb 1 report.
"In fact, there would have been even lower prices [this season] if it were not for freeze-offs in the West curtaining production significantly during the peak of this winter," noted Barclays analysts in a Feb. 1 commodities report. "Unless February weather turns colder, there will be further downside to the March contract, as fundamentals are expected to weaken until production starts to decline by the second half of this year."
Despite the drop in natural gas prices, Western power prices generally made small gains over the Jan. 25 to Feb. 1 trading period. South of Path 15 proved the exception, down $1.45 to $50.35/MWh.
Here's how average peak-power prices at other Western hubs fared since last Friday:
Off-peak power prices rose between roughly a dollar and three dollars since last Friday. Palo Verde led gainers, up $3.25 in the trading period. Average prices Feb. 1 ranged from about $28.10/MWh at Palo Verde to $36/MWh at NP15.
Peak demand on the Cal-ISO grid reached 31,235 MW Monday, Jan. 28, which was the week's high use, according to the grid operator's forecast. Northwest Power Pool demand reached 59,424 MW Monday.
Wind generation at the Bonneville Power Administration fell significantly following a 60-hour period of record high production. Wind generation had hovered around the 4,000 MW mark by midweek and peaked at 4,341 MW on Jan 29. Wind production dropped below 100 MW as of Friday afternoon.
What's ahead: The San Francisco area should be in the 50s after a daytime high around 60 °F Monday, Feb. 4. Rain is possible in the area Thursday. After a 71 °F high Monday, Los Angeles-area highs should be in the 60s the rest of the week with mostly sunny skies.
The National Weather Service forecasts an increased probability of below-normal temperatures in California and Arizona Feb. 6 through Feb. 14, while normal temperatures are expected across the Pacific Northwest [Linda Dailey Paulson].
* Prices represent both day-ahead locational marginal prices (financial swaps, or EZ Gen DA LMPs) and quasi-swap prices (EZ Gen) as reported by ICE.
Archives of the Western Price Survey for the past year are also available online.
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