Western Price Survey
Week's End Edition
Electricity prices defied higher power demand in the West and jittery predictions that Hurricane Gustav would become a Category 3 or higher storm and plow through the Gulf of Mexico's natural gas and oil-producing facilities.
Power usage across the Golden State slowly crept higher this week, moving from around 42,000 MW on Wednesday to above 44,000 MW Thursday. Friday's peak demand was expected to brush up against 45,000 MW.
Despite the pressure of electricity demand and the ominous path of Gustav, traders went into Friday anticipating extremely slack demand over the Labor Day holiday. The abbreviated trading schedule meant that Thursday and Friday peak deliveries were traded Wednesday, while Friday exchanges were for Monday and Tuesday.
Average daytime power traded around $82/MWh Wednesday at both North of Path 15 and South of Path 15 but then dropped to around $74 Friday. Nighttime deliveries picked up about $6 over the week after reaching a high of $67 in Thursday trading.
Palo Verde peak prices wobbled $5/MWh early in the week and traded Wednesday at an average of $77/MWh -- a 42-cent increase for the three-day period. By Friday, the price had descended to around $68.25. Off-peak values, meanwhile, marched $2 higher to an average of $48 by Friday, after ascending to as much as $56 in Thursday.
High temperatures are expected to moderate in California over the weekend. San Francisco could reach a high of 72 degrees Fahrenheit while Los Angeles, at 83 degrees Saturday, would fall to the high 70s by Monday.
And both Seattle and Portland, Ore. will have trouble breaking 70 degrees this weekend, as cool air from Canada is blanketing the Northwest thanks to a dip in the jet stream.
At the California-Oregon border, average prime trades dropped $6 for the week to finish at around $70/MWh. Deliveries for nighttime power went for an average of $51, a $3 decline for the week.
Average prime trades for Mid-Columbia power closed at $64, a $4 decline since Monday, while off-peak power finished at $47, about $6 below where it started the week.
The West's major nuclear facilities were running at nearly 100 percent capacity this week except for Unit No. 2 of the Diablo Canyon plant. Last week, the 1,130 MW unit closed after a transformer fire; it remains off line while a new transformer is installed [Chris Raphael].
Natural Gas Prices Blow Off Gustav
Approximately 102 Bcf of natural gas went into storage last week -- an unusually high injection for August, according to the U.S. Energy Information Administration.
Total working gas in storage is 2.6 percent above the five-year average. The West, which gained 8 Bcf, is just a hair's width above the five-year average.
Natural gas futures closed at $7.82/MMBtu on Monday, their lowest level since February. But Henry Hub futures reached about $7.98 Friday as Tropical Storm Gustav threatened to become a Category 3 or higher storm as it careened toward the Gulf of Mexico. Already some oil and natural gas production has been shut in.
Nevertheless, natural gas prices dropped in the West as traders anticipated slack demand from the three-day Labor Day weekend.
Permian Basin gas went for an average of $6.38/MMBtu in Friday trading after reaching $7.20 Wednesday. Southern California border gas dropped to a bit under a $7 average in Friday trading after having fetched as much as $7.79 on Wednesday.
If Gustav doesn't inflict too much damage on oil and natural gas rigs, expect even lower prices: The EIA stated that many of the key market factors leading to lower natural gas prices remain in place, including moderate temperatures across much of the nation, lower crude-oil prices, and increased production at unconventional fields, such as shale deposits in Texas [C. R.].
Archives of the Western Price Survey for the past year are also available online.
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