Western Price Survey
October 10, 2014
A combination of less heating demand and greater production should keep a lid on natural gas prices this winter, according to a newly released forecast from the U.S. Energy Information Administration.
Despite the lower natural gas supply at the start of this winter's heating season, the agency expects the Henry Hub natural gas spot price to average $4/MMBtu this winter, compared with $4.53 in winter 2013-2014.
"This price forecast reflects both lower expected heating demand and significantly higher natural gas production this winter," noted the agency in an Oct. 7 outlook report. EIA is projecting a $4/MMBtu average price for natural gas through November, which is typically the start for winter heating demand. The agency also expects Henry Hub natural gas yearly average prices to be $4.45/MMBtu this year and $3.84/MMBtu next year.
Meanwhile, prices for both electricity and natural gas in the West generally moved lower this week.
Average peak power prices in the West ended the week a bit lower. California-Oregon Border proved the exception, remaining roughly even at $41.95/MWh, while other hubs dropped between about $1 and $3.65 in Friday-to-Friday trading. Palo Verde saw the greatest losses, off $3.65 to $37.80/MWh. By the end of the week, prices ranged from $35.05/MWh at Mid-C to $53.45/MWh at South of Path 15.
Off-peak prices also lost value during the trading period. Both Northwest hubs and Palo Verde dropped $3 to $4 in trading. Average off-peak prices Friday ranged from $30.45 at Mid-C to $33.20 at COB.
Working gas in storage reached 3,205 Bcf as of Oct. 3, according to EIA estimates, a net increase of 105 Bcf from the previous week. Storage levels are now 10.1 percent less than a year ago and 10.5 percent less than the five-year average.
Natural gas values dropped, with Henry Hub spot values tumbling 13 cents since last Thursday to trade Oct. 9 at $3.87/MMBtu. Western natural gas prices also fell, losing between 5 and 14 cents in Thursday-to-Thursday trading. Southern California Border and Sumas fell 14 cents to $3.97 and $3.55, respectively.
Renewable-energy production on the Cal-ISO grid reached 8,663 MW on Oct. 9. Solar production peaked at 4,779 MW Oct. 3. Thermal generation has been ramping up and down substantially (see "Power Gauge," next page).
Peak demand on the Cal-ISO grid reached 37,906 MW Oct. 6, which should prove the week's high [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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