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Western Price Survey

November 11, 2016
Natural Gas Prices Continue Descent

Natural gas prices continued to plummet for yet another week, with Henry Hub gas spot values dropping 30 cents in Thursday-to-Thursday trading to end at $2.07/MMBtu on Nov 10.

Western natural gas values fell between 9 and 24 cents in trading. Sumas natural gas lost the most value, ending at $1.75/MMBtu. Western hubs—save for PG&E CityGate—fell below the $2 mark by the end of Thursday trading.

Working natural gas in storage was 4,017 Bcf as of Nov. 4, according to U.S. Energy Information Administration estimates. This is a net increase of 54 Bcf compared to the previous week and surpasses the highest reported level of working natural gas in storage—4,009 Bcf—recorded last November. Storage levels are now 1.2 percent greater than a year ago and 4.9 percent greater than the five-year average.

“Unseasonably mild temperatures mitigated consumption of natural gas and contributed to considerably larger-than-average net injections,” noted the EIA.

The refill season, which traditionally spans April 1 to Oct. 31, ended with 3,986 Bcf of working gas in storage, which is also a record.

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Natural gas consumption was up 3 percent week over week as a result of a 22 percent increase in residential and commercial use; however, the agency reports natural gas for power generation declined 7 percent week over week.

Barclays analysts remain optimistic, stating, “We do not see the warm start to Q4 as a significant enough concern to abandon our constructive outlook for natural gas in 2017.” They add that “The market is no longer entirely dependent on Mother Nature for a bullish narrative. A warm start to winter may delay the bullish narrative but cannot cancel it. Non-weather-dependent demand should increase 2.6 Bcf/d this winter.”

Meanwhile, Western peak power prices moved roughly a dollar between Nov. 4 and Nov. 10. Palo Verde ticked up 50 cents, while other hubs lost about a dollar in the holiday-abbreviated trading period. Trades posted Nov. 10 were earmarked for Nov. 14 delivery.

Average nighttime power prices gained between $1.40 and $1.75, on average. Palo Verde posted the greatest gains, adding $1.75 to reach $18.95/MWh.

Demand peaked on the CAISO grid at 32,608 MW Nov. 9, which should be the week’s high. Northwest Power Pool demand reached 53,255 MW Nov. 7 [Linda Dailey Paulson].

Archives of the Western Price Survey for the past year are also available online.

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