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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: July 25th, 2019  (Wk 30)

 

 

 

POWER MARKETS

 

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WEST Index prices are starting to react to an increase in temperatures in California. With growing demand in the Golden State, Day Ahead ATC is averaging around $35.29/MWh in SP15 today and has averaged $32.19/MWh in Mid-C since last Thursday. As demand continues to climb amid expectations of temperatures above normal in California through the first week of August, an expansion in heat rate may also be imminent.

NATURAL GAS 

The EIA reported Thursday morning that, for the week end-ing July 19, U.S. inventories increased by 36 bcf, more or less matching market expecta-tions of 35 bcf. During the same week last year, invento-ries grew by only 24 bcf. Total stockpiles now stand at 2,569 bcf.

The August NYMEX futures contract, which will expire early next week, had traded around $2.250/MMBtu before the re-lease of the storage report and quickly dropped as low as $2.229/MMBtu within minutes afterward. It eventually recov-ered somewhat and closed at $2.244/MMBtu, 2.5 cents above Wednesday’s final price.

ERCOT  The combination of last week’s low RT prices, a cool front mov-ing across the entire state early in the week, and ebbing loads has trig-gered a selloff in forward prices for this summer. For August, the 5x16 peak price was down by more than $6/MWh for the week and is now around $75/MWh while the 7x24 price is around $51/MWh. Strips for 2020 and beyond have remained relatively flat but are still priced well below $30/MWh.

 

EAST After the latest heatwave failed to make an impact, the forward markets continue to move down. Moreover, with a normal weather out-look for August, nothing seems poised to bolster prices in the near term; merely technical moves and ordinary fluctuations can be expected.

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WEATHER 

Temperatures should be around their seasonal averag-es in most of the country over the 1-to-5-day forecast period. Texas should experi-ence some cooling, and the Pacific Coast should warm up.

During the 6-to-10-day fore-cast period, temperatures in the western half of the U.S. will be slightly above average in while a cooling trend ex-tends across the Mid-Atlantic and Northeast.

Temperatures should return to seasonal averages in all regions over the 11-to-15 day forecast period.

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SATURDAY PEAKS A POTENTIAL BOON FOR BUSINESS?

 

As shown in the charts below, the heatwave that hit the Northeast last weekend managed to incur peak loads for the year to date in both ISO-NE and NYISO. Both peaks fell on Saturday, July 20.

With temperatures flirting with triple digits in the two regions, residen-tial usage likely drove the record numbers. In New England, the peak occurred during hour 19, when temperatures ranged from 90 degrees in Portland, Maine, to 97 degrees in Boston. 

Over in New York, the peak happened during hour 17 as temperatures ranged from 84 de-grees in Buffalo to 99 degrees in NYC. At 23.8 GW, the ISO-NE peak was approximately 7% lower than last year's peak of 25.6 GW on Au-gust 29. Similarly, the NYISO peak of 30.4 GW was roughly 5% below the 2018 peak of 31.9 GW, which also fell on the same date.

This Capacity Obligation Reduction Effort (CORE) season has now reached the midpoint. If another heatwave does not strike, this year may be the first in which peak load falls on a weekend in both of these ISOs, which base their respective capacity costs on the peak-load day from the previous year. Therefore, because electricity consumption is usually less on weekends than on weekdays, last Saturday’s peaks could end up reducing next year’s capacity obligations for the majority of commercial and industrial consumers by shifting costs to residential customers.

In any event, higher peaks may still occur later this summer, and our team at Calpine Energy Solutions will continue to monitor forecasts and send CORE notices as needed.

 

 

 

 

 

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