Western Price Survey
June 2, 2017
Energy prices fell this week as temperatures that are typically warmer heading into the summer season instead stayed on the cool side.
Weather across the United States was cooler in May, but forecasters expect warmer conditions throughout June. The Pacific Northwest in particular should see above-average temperatures this month, which would likely drive energy demand.
Natural gas demand, for example, dropped 5 percent during the U.S. Energy Information Administration report week, thanks to a 6 percent decrease in the amount of gas used for power generation as temperatures moderated across the country. Natural gas used for power generation was 19 percent less than for the same week last year, according to the EIA.
Working natural gas in storage was 2,895 Bcf as of May 26, according to EIA estimates. This is a net increase of 81 Bcf compared to the previous week after reclassification adjustments.
Storage levels are now 12.8 percent less than a year ago and 9.8 percent greater than the five-year average.
Henry Hub gas spot values fell 13 cents to end at $2.93/MMBtu between May 25 and June 1.
Western natural gas prices dropped between 21 and 31 cents in trading. El Paso-San Juan Basin gas lost the most, down 31 cents to $2.48/MMBtu. PG&E CityGate managed to remain above the $3 mark at $3.10/MMBtu after losing 32 cents in trading.
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Western peak power prices lost between 50 cents and as much as $9.35 in May 26 to June 2 trading. Prices started the abbreviated week lower after the holiday and failed to recoup their value by June 2. California-Oregon Border lost the most, down $9.35 to $27.65/MWh.
Markets were closed May 29 in observance of Memorial Day.
In its only trade of the week, North of Path 15 peak power posted an average price of $30/MWh June 1, which was a $22.35 drop compared to its previous trade of $52.35/MWh, posted May 22. The hub has been trading sporadically, with only nine trades in May.
Off-peak power also moved lower. While Palo Verde values fell $1.80, Mid-Columbia nighttime power dropped $14.40, ending at -$3.80/MWh by June 2.
CAISO demand peaked at 29,692 MW June 1; however, the week’s high use is forecast to occur June 2, when use should reach 32,528 MW.
In May, average natural gas prices were higher than those in May 2016 (see “Price Trends,” next page). The average high price at Henry Hub was $3.26/MMBtu, which was about $1.20/MMBtu more than last year. Prices at Western hubs were roughly 90 cents to $1.25/MMBtu higher than in the same month last year.
Average Western power prices in May were between $10.15 and $22.90 greater than last year, with the greatest jump at NP15. –Linda Dailey Paulson.
Archives of the Western Price Survey for the past year are also available online.
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