Western Price Survey
February 15, 2013
Prices for both natural gas and power in the West trended lower on average in the Feb. 8 to Feb. 15 trading period as the region got a dose of warm weather.
Losses were nominal, with analysts still tying market performance to plentiful natural gas storage. Inventory is high for this time of year, but is expected to be shy of last year's record by the end of March.
Working gas in storage reached 2,527 Bcf as of Friday, Feb. 8, according to U.S. Energy Information Administration estimates, a net decrease of 157 Bcf from the previous week. Storage levels are now 9.7 percent less than a year ago and 16 percent above the five-year average.
Barclays analysts note "smaller-than-estimated withdrawals in the past three weeks imply that market fundamentals are weaker than what the market has accounted for," adding that there appears to be little correlation between natural gas prices and national weather conditions.
Softer power demand is decreasing natural gas use, as is year-to-year growth of both nuclear and hydro generation, the firm's weekly commodities report also notes. "We do not believe that prices need to come down below $3[/MMBtu] to encourage more displacement to balance the market," the report states.
Enerfax notes that some traders are now expecting total inventories will end the winter above 2 Tcf, based on the recent lower withdrawals.
Henry Hub natural gas values dropped 7 cents since Feb. 8, trading Feb. 15 at $3.19/MMBtu. Western prices moved significantly lower, with Southern California Border gas falling 17 cents to $3.36/MMBtu. Malin gas lost 16 cents to $3.27and PG&E CityGate shed 13 cents to $3.52/MMBtu.
Here's how average peak power prices at Western hubs fared since last Friday:
Off-peak prices lost value across the board in Friday-to-Friday trading. Losses ranged from $1.35 at Mid-C to $3.50 at NP15. Nighttime prices Feb. 15 ranged from about $26.90/MWh at Palo Verde to $32.50/MWh at NP15.
Peak demand on the Cal-ISO grid reached 29,890 MW Monday, Feb. 11, which should prove the week's high, according to the grid operator's forecast. Northwest Power Pool demand reached 55,996 MW Monday.
What's ahead: Seattle and Portland expect showers Monday with a probability of rain remaining in the forecast through Thursday. Both regions expect high temperatures in the 40s. The San Francisco area should be sunny Monday with rain entering the forecast Monday evening and a possibility of precipitation persisting through Thursday. Daytime temperatures should be in the 50s. Similar conditions are expected in the Los Angeles area, with sunny skies by Thursday. Temperatures in the 60s are forecast for the region.
The National Weather Service forecasts an increased probability of below-normal temperatures from Washington through California and Arizona Feb. 20 through Feb. 28 [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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