Western Price Survey
November 1, 2013
National natural gas consumption by electrical generators should fall this winter based on expectations of higher prices, according to the U.S. Energy Information Administration's Winter Fuels Outlook.
The agency forecasts the Henry Hub natural gas spot price this winter to reach as high as $3.93/MMBtu. This opinion is supported by Barclays analysts who, in their weekly commodities report, say prices are "unlikely to drop significantly below $3.50 for a sustained period."
Total natural gas consumption by the power sector between November 2013 and March 2014 is expected to be 3.8 percent below that of last winter, falling to an average of 18.9 Bcf/day. A slight decrease is also anticipated, says the EIA, in both residential and commercial consumption -- from 36.2 Bcf/d last winter to 36.0 Bcf/d this winter -- based on slightly warmer temperatures outside the eastern United States.
Working gas in storage reached 3,779 Bcf as of Friday, Oct. 25, according to EIA estimates, a net increase of 38 Bcf from the previous week. Storage levels are now 3.1 percent less than a year ago and 1.6 percent greater than the five-year average.
Henry Hub natural gas values dropped about 22 cents since last Friday, trading Nov. 1 at roughly $3.45/MMBtu. Western prices also fell, with Malin gas diving about 39 cents to $3.43/MMBtu and PG&E CityGate down 20 cents, trading at $3.78 by Nov. 1.
Most Western hubs' daytime power prices added several dollars, on average, between Oct. 25 and Nov. 1. The California-Oregon Border led gainers, up $6.50 to $43.85/MWh. Palo Verde proved the exception, down $1.60, finishing at about $32.45.
Off-peak prices dropped in Friday-to-Friday trading, with losses ranging from 70 cents at SP15 to $6.35 at Mid-Columbia. Off-peak prices Friday ranged from about $27.25 at Mid-C to $36.55 at SP15.
Looking back at October, peak-power prices at Pacific Northwest hubs reached higher than in October 2012, while California prices moved lower. Meanwhile, Western natural gas prices varied in comparison to October 2012 (see "Price Trends," next page). Prices at PG&E CityGate, for example were similar, while Southern California Border and Malin prices were significantly higher.
Generation from hydro and nuclear was higher last month compared to October 2012, according to Barclays, which limited natural gas power use. "[G]eneration at the Dalles River Dam in October was stronger than last year's level, the first [year-over-year] improvement since March. The industry watches generation and water levels at the Dalles Dam as a bellwether for the Pacific Northwest . . . home to 46% of hydro generation in the country" [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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