Western Price Survey
March 4, 2016
Concerns about storage overhang coupled with continuing robust natural gas production pushed prices to record lows.
Henry Hub prices dropped to $1.59/MMBtu March 2, the lowest spot price since 1998, according to the U.S. Energy Information Administration. SoCal CityGate also dropped to a record low of $1.59/MMBtu Feb. 29.
Working natural gas in storage was 2,536 Bcf as of Feb. 26, according to EIA estimates. This is a net decrease of 48 Bcf compared to the previous week. Storage levels are now 45.6 percent greater than a year ago and 35.6 percent greater than the five-year average.
Henry Hub gas spot values continued their downward trajectory, losing 13 cents in Thursday-to-Thursday trading to end at $1.56/MMBtu March 3.
Western natural gas average values lost between 11 and 15 cents. El Paso-San Juan Border and Stanfield posted the greatest losses, down 15 cents to $1.42/MMBtu and $1.35/MMBtu, respectively. Alberta gas traded below a dollar, ending at 92 cents.
Likewise, natural gas futures prices dropped. Futures values have fallen 34 percent since January, according to Enerfax, which also said the market "is trading at its lowest price in 17 years." May futures ended Thursday at $1.77/MMBtu. According to Enerfax, the slide results from "continued output from shale production and weak demand due to mostly mild winter weather."
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Natural gas consumption was nominally higher, up 2 percent week over week, according to EIA data. This was driven by power-sector use, which was up 4.7 percent.
Western peak power prices eroded in Feb. 26 to March 4 trading. Mid-Columbia prices fell $2.20, to $12.25/MWh. By Friday, prices ranged from $12.25 at Mid-C to $22.25 at North of Path 15.
Nighttime power values followed suit, with Mid-Columbia falling $4.05 to $11.05/MWh.
Demand peaked on the Cal-ISO grid at 29,780 MW Feb. 29, which should be the week's high. Total renewables production on the Cal-ISO grid reached 9,889 MW Feb. 27. Solar generation reached a record-high instantaneous peak output of 6,661 MW Feb. 29, surpassing the Feb. 22 record of 6,637 MW.
Western energy prices for February were lower on average compared to the same period last year. Western natural gas values were lower by between 80 cents and almost a dollar compared to the same month last year. Western power prices, meanwhile, were between $2.55 and $5.40 less, on average, than in the same month in 2015 [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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