Western Price Survey
November 22, 2013
An Arctic air blast chilled the West and, as temperatures plummeted, Western energy prices saw a boost by week's end.
Working gas in storage reached 3,789 Bcf as of Friday, Nov. 15, according to U.S. Energy Information Administration estimates, a net decrease of 45 Bcf from the previous week. Storage levels are now 2.3 percent less than a year ago and 0.4 percent greater than the five-year average. The Western region saw a 1 Bcf withdrawal during the agency's report period.
This is the first official withdrawal of the 2013-14 heating season. The Nov. 8 storage level of 3,834 Bcf is the fifth-highest annual storage level recorded by EIA. It also follows a recent trend of high inventories at the start of winter, notes the agency.
Henry Hub spot natural gas jumped 21 cents in the Nov. 15 to Nov. 22 trading period, reaching an average of $3.77/MMBtu. Average prices at Western hubs experienced similar increases, with Permian Basin gas climbing 31 cents to $3.70/MMBtu and Southern California Border adding 27 cents to $3.85.
"Prices received further support on Thursday from a larger-than-consensus weekly withdrawal from storage," noted Barclays analysts in their weekly commodities report. "We expect continued production growth to keep a lid on prices, yet colder-than-normal weather during the winter could give significant upside and volatility to prices."
However, any potential price increases could be muted, according to the EIA, due to strong production and ample storage.
Western power prices on average added between $1.75 and about $4.15/MWh in the trading period. Mid-Columbia led gainers, up $4.15 to around $41.65/MWh by Nov. 22 (see chart). By Nov. 22, average prices for Western peak power ranged between $34.90/MWh at Palo Verde and $45/MWh at South of Path 15.
Off-peak power prices also gained value in Friday-to-Friday trading, with Northwestern hubs jumping $7/MWh on average. Prices Nov. 22 ranged from $31.40/MWh at Palo Verde to $38.70/MWh at SP15.
Peak demand on the Cal-ISO grid was 30,164 MW Nov. 19, according to the grid operator. Northwest Power Pool demand was 56,862 MW Nov. 21, which may be the week's high.
What's ahead: The cold weather may be short-lived, as the National Weather Service forecasts an increased probability of above-normal temperatures from Washington into Southern California from Nov. 27 to Dec. 5. Between Nov. 29 and Dec. 5, temperatures in Arizona are forecast to fall below seasonally normal conditions [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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