Western Price Survey
August 29, 2014
Warmer weather buoyed Western natural gas prices, with the Henry Hub benchmark surpassing $4 for the first time since July 18.
Working gas in storage reached 2,630 Bcf as of Aug. 22, according to U.S. Energy Information Administration estimates, a net increase of 75 Bcf from the previous week. Storage levels are now 15.7 percent less than a year ago and 16.5 percent less than the five-year average.
Analysts are scrutinizing additions to natural gas stocks as the storage season draws to a close. The EIA predicts the end-of-October working natural gas inventory level will be 3,463 Bcf; however, an average injection of 83 Bcf per week would be needed through the end of October to reach that level. To meet the five-year average peak storage figure of 3,851 Bcf, average weekly injections through the end of October would have to be 122 Bcf.
Barclays analysts, in an Aug. 29 report, noted that natural gas stocks are being replenished faster than in previous years, "largely due to year-over-year production growth adding supply, also driven earlier this season by cooler-than-normal weather, which now seems to be waning."
But recent warmer weather, notes Barclays, has lifted gas values. Over the Aug. 21-28 trading period, Henry Hub spot natural gas prices jumped 15 cents to $4.02/MMBtu (see table). Opal and Stanfield natural gas both added 10 cents to end at $3.90/MMBtu and $3.85/MMBtu, respectively. Malin gas eked out a 1-cent increase, ending at $3.87 Thursday.
Meanwhile, average Western peak power prices were mixed, with Northwest hubs dropping roughly $6 to $7 in the Aug. 22-29 trading period. Mid-Columbia fell $6.80 to end at $37.50/MWh, while Palo Verde added $4.85 to end at $45.45/MWh.
Average peak prices by Aug. 29 ranged from $37.50/MWh at Mid-C to $51.80 at South of Path 15.
Off-peak power prices were also mixed during the trading period, varying by a dollar or two. Average off-peak prices Friday ranged from $34.65 at Mid-C to $41/MWh at SP15.
Peak demand on the Cal-ISO grid was 42,031 MW on Aug. 28, which should be the week's high. Northwest Power Pool demand reached the week's high of 57,907 MW Aug. 27.
Markets will be closed Monday, Sept. 1, for the Labor Day holiday [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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