Western Price Survey
Week's End Edition
Western energy prices diverged at week's end, with natural gas prices gaining across the board and peak-power values mixed by March 1.
Working gas in storage reached 2,229 Bcf as of Friday, Feb. 22, according to U.S. Energy Information Administration estimates, a net decrease of 171 Bcf from the previous week. Storage levels are now 12.1 percent less than a year ago and 16 percent above the five-year average.
In its weekly natural gas report, the EIA noted that diminished rainfall in the Pacific Northwest boosted natural gas demand. "Generally dry conditions likely contributed to the increase in demand for natural gas used for electric generation in the [Pacific] Northwest where a large portion of the generating mix comes from hydroelectric power, and the region's forecasted water supply decreased following a dry January."
Enerfax noted that the withdrawal amount was greater than anticipated, adding that continued colder weather throughout the United States "could mean three more triple-digit storage withdrawals in the winter season."
Henry Hub natural gas values jumped 27 cents since Feb. 22, trading March 1 at $3.54/MMBtu. Western prices also moved higher, with PG&E CityGate up 20 cents, trading at $3.79/MMBtu. Malin gas rose 12 cents to $3.50 and Southern California Border gained 9 cents to $3.57/MMBtu by Friday.
Barclays analysts, in their weekly natural gas report, focused on nuclear generation's role in spring natural gas demand. They noted that the nuclear-generation shortfall was eliminated in February "and is poised to transition into a surplus in the near term." Analysts also expect natural gas power to keep replacing San Onofre nuclear generation.
Here's how average peak-power prices at Western hubs fared since Feb. 22:
Off-peak power prices were generally down in the Feb. 22 to March 1 trading period. Mid-C led the losers, dropping almost $2.80 to $29.10/MWh. SP15 proved the exception, up $2.05 to $43.06.
Peak demand on the Cal-ISO grid reached 29,403 MW on Monday, Feb. 25, which will be the week's high, according to the grid operator. Northwest Power Pool demand reached 55,733 MW Monday.
What's ahead: Rain is expected in the San Francisco area between Tuesday evening and Thursday. Temperatures should be in the high 50s throughout the period. Conditions in downtown Los Angeles are expected to cool after a 68 °F high Monday. In the Pacific Northwest, after sunny, warm weather Monday, rain should return to the forecast into Thursday. Seattle and Portland highs are expected to hover around the 50-degree mark starting Tuesday.
The National Weather Service forecasts an increased probability of below-normal temperatures from Washington into Southern California from March 6 to March 14 [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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