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Western Price Survey

December 18, 2015
Natural Gas Futures See 16-Year Low

Unseasonably warm weather continues reining in natural gas demand and weighing on prices. Without frigid weather, natural gas spot and futures prices continue moving lower.

Working natural gas in storage was 3,846 Bcf as of Dec. 11, according to U.S. Energy Information Administration estimates.

The report week saw the third-smallest net withdrawal -- 34 Bcf -- reported in December since the agency began its Weekly Natural Gas Storage Report. The smallest net withdrawal on record in December was 11 Bcf in 2006, the agency noted.

Storage levels are now 16.4 percent greater than a year ago and 9.1 percent greater than the five-year average. The Pacific region recorded no net change.

Henry Hub gas spot values shed 17 cents in Thursday-to-Thursday trading, ending at $1.75/MMBtu Dec. 17.

Western hubs' average values also moved lower, generally dropping between 1 and 10 cents in trading. Sumas posted the greatest dip, down 10 cents to $1.89/MMBtu. El Paso-San Juan Basin and Opal natural gas both ended even by Dec. 17.

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Natural gas futures prices have also taken a hit from limited demand and strong production, noted Enerfax in its Dec. 18 report. "Prices whipsawed after the [Dec. 17] storage data release, and then fell decisively in the afternoon, extending the losing streak to 7 sessions, the longest since December 2012. The January contract settled at the lowest price since March 1999" -- $1.75/MMBtu. With 70-degree weather expected on the East Coast, traders are concerned "the shortened winter will keep stockpiles bulging far into next year."

Western peak power prices added between 60 cents and $2.25 in the Dec. 11 to Dec. 18 trading period. Prices at the end of trading ranged from $18.70/MWh at Mid-Columbia to $28.40/MWh at South of Path 15.

By contrast, nighttime power prices eroded between 40 cents and $1.05, on average, by Friday. Prices ranged from $17.05/MWh at Mid-Columbia to almost $20/MWh at the California-Oregon Border.

What's ahead: More unsettled weather should bring both snow and rain to the Western U.S. in the week ahead. Forecasters expect inclement weather in the Sierra along with seasonally normal temperatures in Southern California, portions of which may see rain and/or snow in time for Christmas [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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