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Western Price Survey

November 20, 2015
Weather May Dictate 2016 Natural Gas Prices

Weather will be the deciding factor in whether the currently oversupplied natural gas market tightens and nears equilibrium in 2016 or continues to be glutted, according to a new Barclays analysis.

Barclays lowered its 2016 natural gas price forecast from $2.95/MMBtu to $2.84/MMBtu based on "high storage levels and resilient production."

Working natural gas in storage reached 4,000 Bcf as of Nov. 13, according to U.S. Energy Information Administration estimates. This is a net increase of 15 Bcf compared to the previous week. Storage levels are now 11.2 percent greater than a year ago and 5.5 percent greater than the five-year average.

This is the first full report in the agency's new five-region format. The Pacific region recorded a net withdrawal of 1 Bcf as a result of colder-than-average temperatures during the report week.

Wild weather was responsible for disrupting power across the West this week. Roughly 900,000 utility customers across the Pacific Northwest lost power as a result of Nov. 17 windstorms in which gusts reached as high as 135 mph.

Transmission and infrastructure damage included 42 transmission lines and 23 substations in Avista's service area; 33 in the Puget Sound Energy area; and nine transmission lines in the Snohomish PUD service area. Crews from Western utilities including Pacific Gas & Electric, the Bonneville Power Administration and NV Energy continue assisting in restoration efforts.

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Henry Hub gas spot values gained 14 cents in Thursday-to-Thursday trading, ending at $2.15/MMBtu on Nov. 19. Western hubs' average values moved higher, adding between 12 and 24 cents in trading. Sumas natural gas posted the greatest gain, up 24 cents to $2.21/MMBtu.

Western peak power prices generally gained between 20 cents and $1.90 in the Nov. 13 to Nov. 20 trading period. Palo Verde proved the exception, down $1.50 to $21.15/MWh. Prices at the end of trading ranged from $21.15/MWh at Palo Verde to $31 at South of Path 15.

Nighttime power prices fared similarly, with Pacific Northwest values up between $3.60 and $4.70 on average by Friday. Prices ranged from $20.20/MWh at Palo Verde to $22.65/MWh at California-Oregon Border.

Demand peaked on the Cal-ISO grid at 29,782 MW Nov. 16, which should be the week's high. Northwest Power Pool demand was 57,199 MW Nov. 16, but the week's high of 57,536 MW was expected Nov. 20 [Linda Dailey Paulson].

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

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