Western Price Survey
October 30, 2015
A combination of natural gas storage inventories nearing record levels and mild weather continues eroding natural gas prices, leading analysts to question how much further prices may have to fall.
The pressure caused NYMEX prompt-month contract prices to fall to $2.32/MMBtu -- the lowest level since the second quarter of 2012, according to a Barclays analysis.
"At this point it looks as though those hoping for higher prices will also need to hope for cold weather to help boost residential/commercial demand," wrote Barclays analysts.
Working natural gas in storage reached 3,877 Bcf as of Oct. 23, according to U.S. Energy Information Administration estimates, a net increase of 63 Bcf from the previous week. Storage levels are now 11.8 percent greater than a year ago and 4.1 percent greater than the five-year average.
The West recorded a net addition of 7 Bcf of natural gas to storage, which is 13 Bcf greater than the five-year average.
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The amount of natural gas now in storage is edging nearer the all-time record high of 3,929 Bcf, which was recorded by the EIA for the week ending Nov. 2, 2012. For this record to be reached, additions to storage would have to be greater than the five-year average for the next two weeks.
Additions to natural gas storage typically stop at the end of October, but they have continued into November in recent years.
Henry Hub gas spot values fell 23 cents in Thursday-to-Thursday trading, ending at $2.12/MMBtu on Oct. 29. Western hubs' average values generally fell between 6 and 18 cents. Alberta proved the exception, adding 3 cents in trading to reach $1.89/MMBtu. PG&E CityGate lost the most value, down 18 cents to $2.64/MMBtu.
Western peak power prices lost from $5.15/MWh to almost $8/MWh on average in the Oct. 23 to Oct. 29 trading period. California-Oregon Border daytime power posted the greatest loss, down $7.90 to an average of $25.25/MWh. Prices ranged from $23.20/MWh at Palo Verde to $31.50/MWh at North of Path 15.
Nighttime power prices fared similarly, with Pacific Northwest hubs posting losses of roughly $7/MWh to dip below $20/MWh. Palo Verde values, by comparison, lost $1.10 to hit $20.40/MWh by Oct. 30. Prices ranged from $17.25 at Mid-Columbia to $26/MWh at South of Path 15 [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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