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Western Price Survey

November 17, 2017
Cold Start to November Could Buoy U.S. Natural Gas Prices

A colder start to November has prompted homes and businesses across the country to turn on the heat, triggering the first net natural gas withdrawals from storage.

The number of heating degree days so far for November is up 52 percent compared with last year, according to Barclays analysts. Residential and commercial demand for natural gas increased 34 percent year over year, which has supported prices.

Natural gas prices may increase between 8 and 31 cents/MMBtu in the first quarter of 2018, according to analysts. Barclays is forecasting natural gas prices to be $3.27/MMBtu in the first quarter.

Working natural gas in storage was 3,772 Bcf as of Nov. 10, according to U.S. Energy Information Administration estimates. This is a net decrease of 18 Bcf compared to the previous week and the first net withdrawal of the heating season.

A total of 2 Bcf of natural gas was withdrawn in the Pacific region. Currently, the amount of natural gas in storage is 2.6 percent less than the five-year average and 6.7 percent less than the amount reported last year at this time. This is the greatest deficit compared to the five-year average since April 2015.

Residential and commercial gas demand increased 41 percent week over week and drove use during the week of Nov. 13, according to the EIA. Total natural gas consumption rose 14 percent during the EIA’s report week; however, natural gas used for power generation eroded 1 percent week over week.

Henry Hub gas spot values dropped 11 cents to $3.07/MMBtu between Nov. 9 and 16.

In Thursday-to-Thursday trading, Western prices lost between 15 and 34 cents. El Paso-Permian and Alberta gas each fell 34 cents to $2.52/MMBtu and $1.59/MMBtu, respectively, by Nov. 16. Pipeline constraints continue in California.

As for Western daytime power prices, the majority of hubs shed a few dollars in the abbreviated Thursday-to-Friday trading period. Mid-Columbia was the exception, adding $4.25 to reach $26.25/MWh. By Nov. 17, prices ranged from $26.25/MWh at Mid-Columbia to $40/MWh at South of Path 15.

Pacific Northwest off-peak prices added roughly $2, while Palo Verde values fell $3.45 to $23.90/MWh. Neither North nor South of Path 15 off-peak power posted trades this week.

Power demand on the California Independent System Operator grid reached 29,699 MW Nov. 15, which was the week’s high. Total renewables reached 12,327 MW Nov. 10, while thermal generation was 13,591 MW that same day.

Demand should tick up slightly in the week ahead. The grid operator expects use to reach roughly 31,475 MW by Nov. 22.
–Linda Dailey Paulson.

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

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