Western Price Survey
Week's End Edition
The release of national storage data sent natural gas prices lower at the end of the week.
Working gas in storage reached 1,777 Bcf as of Friday, April 26, according to U.S. Energy Information Administration estimates, a net increase of 43 Bcf from the previous week. Storage levels are now 30.9 percent less than a year ago and 6.2 percent below the five-year average.
After reaching a $4.30/MMBtu high at midweek, average Henry Hub spot prices dropped 32 cents over the next few days, finishing April 26 at $3.98/MMBtu. Western hubs tended to follow suit, with Malin prices moving well below the $4/MMBtu mark and SoCal Border just shy of that.
The natural gas storage addition was greater than analysts anticipated. "The figure suggested demand for the fuel was weaker than expected last week. It was the biggest percentage drop since August last year," Enerfax stated in a May 3 report.
Higher natural gas prices so far this year have prompted power generators to switch to coal from natural gas, although it remains unclear whether the trend will continue. "[W]e believe the impact of higher natural gas prices on power generation demand has not yet been fully felt in the balances," note Barclays analysts in a May 3 commodities report. "We look to the next couple of weekly storage reports for a confirmation."
Meanwhile, Western power prices ended the week mixed. South of Path 15 prices, which have significantly outpaced other hubs since the loss of the San Onofre Nuclear Generating Station, dropped $9.50 since April 26, ending May 3 at $53.55/MWh. More gas-fired units are being called on to replace SONGS, making the hub's power prices more sensitive to natural gas volatility.
Here's how other average peak prices fared since last Friday:
Off-peak prices were similarly mixed in Friday-to-Friday trading, with Pacific Northwest prices up several dollars. Mid-C led gainers, up $5.30 in the trading period to $29.85/MWh, while SP15 nighttime power plunged $8.30 on average to $41.50/MWh.
Peak demand on the Cal-ISO grid reached 34,187 MW Thursday, which should be the week's high, according to the grid operator. Northwest Power Pool peak demand reached 49,807 MW Tuesday.
Unit 1 of the Palo Verde Nuclear Generating Station began returning to operation April 29 after being off line for scheduled refueling and maintenance. The unit was fully operational May 2, according to the Nuclear Regulatory Commission.
What's ahead: Los Angeles temperatures are expected to gradually warm as the week progresses, with downtown Los Angeles expecting a high of 72 °F by May 9. San Francisco should have partly sunny conditions with temperatures in the 60s the week of May 6. Clear, cooler conditions are expected in the Pacific Northwest. Seattle daytime highs could drop to 60 °F by Thursday, while Portland highs move from 82 °F Monday to 70 °F by May 9 [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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