Western Price Survey
November 8, 2013
The last natural gas storage injection of the season should prove sufficient for projected winter heating needs, according to research analysts at Barclays.
Working natural gas in storage reached 3,814 Bcf as of Friday, Nov. 1, according to U.S. Energy Information Administration estimates, a net increase of 35 Bcf from the previous week. The addition was in line with market expectations. Storage levels are now 2.9 percent less than a year ago and 1.5 percent greater than the five-year average.
A total of 1.9 Tcf should remain in national natural gas stores by March 2014, Barclays analysts said in a weekly commodities report, provided winter weather follows normal patterns. "Prices, in our view, should trade around the high end of the $3-4 range and breach the $4 level in Q1 during this coming winter season," they added.
The addition to Western natural gas storage was 3 Bcf, which was less than average. The five-year average injection for the region is 7 Bcf, according to the EIA. The small net addition was attributed to cooler temperatures throughout the country during the EIA's report week.
Over the Nov. 1 to Nov. 8 trading period, Henry Hub natural gas values gained 8 cents to $3.54/MMBtu. Western prices ended the week mixed, with Southern California Border gas increasing 13 cents to $3.60/MMBtu while PG&E CityGate closed down 2 cents at $3.76.
Although 10- to 15-day forecasts turned incrementally colder, natural gas production continued to hit fresh highs, Barclays analysts said. "Growing production should continue to keep a lid on prices."
Western power prices dipped at most hubs in the Nov. 1 to Nov. 8 trading period. By Friday, peak power at Northwest hubs lost three to four dollars on average. Palo Verde was the only Western hub to gain in the trading period, climbing 40 cents to $32.85 on average (see chart).
Off-peak prices ended the trading period mixed. Mid-Columbia led gainers, up $1.90 to $29.15/MWh.
Renewables keep growing: Cal-ISO renewables production peaked at 7,601 MW at 1 p.m. on Nov. 3, just 39 MW shy of thermal-power production, which had hit a low point for the week at that time. At that point, renewables were supplying 34 percent of all power produced for the grid during that hour, according to Cal-ISO figures. Meanwhile, peak wind production at the Bonneville Power Administration surpassed 4,000 MW this week (see "Power Gauge," next page).
What's ahead: The National Weather Service forecasts an increased probability of above-normal precipitation from Oregon into Northern California from Nov. 13 to 21. Southern California and Arizona temperatures are expected remain above normal from Nov. 13 through 17 [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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