Western Price Survey
October 9, 2015
California power values rose this week in response to an October heat wave, but Western natural gas prices remain constrained by a combination of greater production and generally milder temperatures elsewhere in the continental United States.
Peak power prices at North and South of Path 15 jumped roughly $9 to $10, to $42/MWh and $42.40/MWh, respectively, in the Oct. 2 to Oct. 9 trading period as a result of lingering, unseasonably warm weather. Temperatures are expected to remain above seasonal norms across Southern California into the week of Oct. 12.
Off-peak power prices fared similarly, with SP15 up $4.50 to $33.25/MWh on average. Prices ranged from $23.65/MWh at Mid-Columbia to $36/MWh at NP15.
Demand peaked on the Cal-ISO grid at 36,351 MW Oct. 8, but the week's high of 38,673 MW was expected Oct. 9.
Pressures on natural gas prices have been most obvious on Henry Hub values. The spot price for the benchmark hub fell to $2.26/MMBtu Oct. 2, its lowest level since July 2012, according to the U.S. Energy Information Administration. Continuing production growth and high injections have kept Henry prices less than $3/MMBtu most of this year, a trend forecast to continue through January 2016. The agency now expects the hub's average price to be $3.05/MMBtu in 2016.
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This winter, Henry Hub spot pricing should be $2.92/MMBtu compared with $3.35/MMBtu last winter, according to the EIA's "Short-Term Energy and Winter Fuels Outlook 2015." Conditions in the West should be 12 percent colder than last winter, which was warmer than average.
Working natural gas in storage reached 3,633 Bcf as of Oct. 2, according to EIA estimates, a net increase of 95 Bcf from the previous week.
The EIA projects working gas stocks will surpass the previous record-high weekly level of 3,929 Bcf, posted Nov. 2, 2012. A total of 3,956 Bcf is forecast to be in storage by Oct. 31, with additions continuing into November. Working gas levels should reach 3,960 Bcf by Nov. 6, with the possibility for inventories to top 4,000 Bcf.
Henry Hub gas spot values rose 7 cents in Thursday-to-Thursday trading, ending at $2.44/MMBtu Oct. 8. Western hubs' average values added between 1 and 5 cents; however, three hubs -- Malin, Alberta, and Sumas -- stayed even. Southern California Border gained the most, up 5 cents to $2.51/MMBtu [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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