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Western Price Survey

December 5, 2014
Weather Depresses Natural Gas Values

Forecasts calling for warmer weather across the United States and unexpected additions to natural gas storage caused gas prices to retreat below the $4 mark in the first week of December.

Working gas in storage reached 3,410 Bcf as of Nov. 28, according to U.S. Energy Information Administration estimates, a net decrease of 22 Bcf from the previous week. Storage levels are now 6.2 percent less than a year ago and 9.8 percent less than the five-year average.

Use of natural gas increased in all demand sectors, stated the EIA, save for the power sector, in which demand fell 2 percent.

Markets were closed Nov. 27 and 28.

Natural gas values dropped, with Henry Hub gas spot prices losing 58 cents since Tuesday, Nov. 25, to trade Dec. 4 at $3.55/MMBtu. Western natural gas prices followed suit, dipping under $4/MMBtu by Thursday. Hubs fell between 48 and 69 cents in trading, led by Southern California Border, which tumbled 69 cents, ending at $3.58 Dec. 4.

Western peak power prices also fell in the Nov. 26 to Dec. 5 trading period. Mid-Columbia lost $15.50 over the stretch, ending at $29.45/MWh. By Dec. 5, average daytime prices ranged from $29.45/MWh at Mid-C to $34.10 at California-Oregon Border. Neither South nor North of Path 15 posted trades for peak power Friday.

Off-peak prices fell, with Northwest values dropping $7 on average while Palo Verde lost 90 cents in trading to end at $26/MWh. Average off-peak prices Friday ranged from $25.90/MWh at Mid-C to $37/MWh at SP15.

Warmer weather is expected across most of the U.S. in the weeks ahead. In parts of the West, forecasters expect near- or below-normal temperatures.

Western natural gas prices as a whole were higher in November compared to November 2013, with average high prices higher than the five-year average. For power, average prices at Western hubs during November were greater than last year (see "Price Trends," next page).

During the first four weeks of November, working natural gas storage inventories fell 161 Bcf -- the second-largest net withdrawal for that period in more than 10 years, according to the EIA's Weekly Natural Gas Storage Report. The agency attributes this to the 162 Bcf withdrawal for the week ending Nov. 21, which tied for the largest weekly November storage withdrawal on record [Linda Dailey Paulson].

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

The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Chris Raphael, editor with questions regarding Price Survey Content.

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