Western Price Survey
September 28, 2015
With none of the wild weather or high renewables output seen in recent weeks, Western energy prices this week entered tamer territory.
As natural gas fall shoulder season approaches -- that limbo period in which the final additions to natural gas storage are made and weather-prompted withdrawals to accommodate heating demand start -- analysts aren't expecting much natural gas price movement.
In fact, the U.S. Energy Information Administration noted the total amount of natural gas used for power generation this week was flat.
"Unexpected warm weather in the second week of September helped prop up U.S. natural gas prices from their typical shoulder season slump," noted Barclays analysts in a Sept. 21 report. "However, as fall weather rolls in and the market fixates on high storage levels and the risk of a mild winter, prices will continue to struggle in gaining any upward momentum."
Analysts expect prices may move to roughly $2.60/MMBtu through October. Fourth-quarter natural gas prices should average $2.75/MMBtu, according to Barclays.
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Working natural gas in storage reached 3,440 Bcf as of Sept. 18, according to EIA estimates, a net increase of 106 Bcf from the previous week. Storage levels are now 15.7 percent greater than a year ago and 4.5 percent greater than the five-year average.
Henry Hub gas spot values shed 11 cents in Thursday-to-Thursday trading, ending at $2.57/MMBtu Sept. 24; prices at most Western hubs fell between 3 and 16 cents. Alberta natural gas dropped the most, falling 16 cents to $1.99/MMBtu. Southern California Border natural gas was the exception, up a cent to $2.73 in trading (see table).
Average peak power prices varied a few dollars in the Sept. 18 to 25 trading week. California-Oregon Border posted the largest loss, down $4.90 to $29.05/MWh, while Mid-Columbia added $1.60 to $27/MWh. Average daytime prices Sept. 25 ranged from $27/MWh at Mid-C to $37.50/MWh at South of Path 15.
Nighttime power prices were relatively unchanged, with Mid-C adding $2.20 to reach $24.80/MWh and Palo Verde eroding 50 cents to $25.05/MWh. Prices ranged from $24.35 at COB to $32.15/MWh at SP15.
Demand peaked on the Cal-ISO grid at 41,189 MW Sept. 24. Total renewables production on the Cal-ISO grid reached 10,153 MW Sept. 22, while solar production reached 6,390 MW Sept. 18. [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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