Western Price Survey
Week's End Edition
A greater-than-expected withdrawal from national natural gas storage prompted gas prices to jump by as much as 15 cents/MMBtu.
Working gas in storage reached 1,938 Bcf as of Friday, March 8, according to U.S. Energy Information Administration estimates, a net decrease of 145 Bcf from the previous week. Storage levels are now 18.5 percent less than a year ago and 11.4 percent above the five-year average.
Since Friday, March 8, Henry Hub natural gas added 32 cents to reach $3.89/MMBtu, with much of the gain coming after the March 14 storage report. Western prices followed suit with Ruby-Malin and PG&E CityGate gaining 24 cents, trading at $3.80/MMBtu and almost $4.12/MMBtu, respectively. Malin gas gained 23 cents to $3.81/MMBtu.
Although this was the third consecutive larger-than-expected withdrawal, Barclays analysts noted the higher prices may not stay. "The bullish factors that the market is rallying on are temporary," the analysts said in a March 15 commodities report. Prices have less support into April when cold weather subsides.
Based on recent withdrawal from national gas storage, the EIA estimates inventory at the end of March will be 1,959 Bcf. Last year storage was a record 2,477 Bcf at the end of March. Additions to natural gas inventory between April 1 and Oct. 31 are forecast to total 1,961 Bcf.
Recent Western power prices have been dictated by weather fluctuations and softer demand.
The latest report from the California Department of Water Resources, issued March 14, shows runoff forecasts "have remained even" despite a recent net loss in snowpack in areas south of the Merced River. The statewide snowpack is now 62 percent of the March 14 average and 60 percent of the April 1 average, according to the latest analysis.
Meanwhile, both peak and off-peak Western power prices ended the week mixed. Here's how average peak prices at Western hubs fared since March 8:
South of Path 15, which routinely copes with transmission congestion, also has been without the San Onofre Nuclear Generating Station since early last year.
Off-peak prices were similarly mixed in Friday-to-Friday trading. COB led gainers, up $1.25 to $33.60 since March 8, while SP15 posted the greatest drop, down almost $3 since March 8. Off-peak prices Friday ranged from $27.65/MWh at Palo Verde to $41.60/MWh at SP15.
Demand on the Cal-ISO grid reached 29,557 MW March 13, which should prove the week's peak-power use. Northwest Power Pool peak demand reached 52,011 MW Monday, March 11.
What's ahead: The National Weather Service forecasts an increased probability of below-normal temperatures from Washington into Arizona for March 20 through March 24. Colder conditions should persist in the Northwest, while normal temperatures are anticipated in Southern California and Arizona between March 22 and 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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