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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: July 9th, 2020  (Wk 28)

 

POWER MARKETS

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WEST Since the reopening of commercial activity, demand has rebounded slightly and been relatively stable over the past month. Nonetheless, amid healthy volumes of natural gas stockpiles and projections of hydro genera-tion at 106% of normal, forward prices have fallen.

ERCOT  Term prices have climbed by $0.20-$0.50/MWh this week, mainly because of an increase in term natural gas prices. Moreover, each day this week has featured an hour or so of triple-digit real-time prices, which have brought the MTD averages for the different load zones out of the cellar and into the low $20s/MWh. The ORDC adder has also shown signs of life, hav-ing settled near $3.00/MWh for the month.

EAST This has been a strong week for summer demand and attendant prices in PJM. Three peaks have been set this week so far, and another peak is likely today. RT prices are averaging $35/MWh during on-peak hours this week and have been as high as $141/MWh during the high-demand midday hours. The overall DART spread in PJM for those on-peak hours is about $4/MWh for the week. Over in ISO-NE today, demand is meeting expectations, DA prices have leapt by an average of $8/MWh from yesterday in the on-peak hours, and RT prices have so far followed the increase in DA prices.

NATURAL GAS 

The EIA reported Thursday morning that, for the week end-ing July 3, U.S. inventories in-creased by 56 Bcf, practically bisecting the predicted range of 50-66 Bcf. Total stockpiles now stand at 3,133 Bcf, up by 28% from a year ago and 16.9% above the five-year average for the same week . At 10:00 a.m. PDT, the NYMEX August package was trading at $1.808/MMBtu, $0.016/MMBtu under yesterday’s close. Basis was higher at SoCal Border from the front term through five years out. It was more of a rollercoaster in PG&E Citygate, where basis was up for the next 12 months, down for the following 12 months, and up again for the three years after that. August cash prices did rise at both PG&E and SoCal Citygates. However, Aliso Can-yon having reached allowable capacity, prices may not climb much higher at SoCal Citygate unless demand increases dra-matically, for all of that gas cur-rently has nowhere to go.

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WEATHER 

While temperatures will be above average in the south-western quadrant of the United States over the 1-to-5-day fore-cast period, showers will be present in the Mid-Atlantic. Heat and humidity from thunder-storms should cross the Mid-west and span the East Coast during the 6-to-10-day forecast period. Temperatures should reach triple digits in parts of Texas. High temperatures are expected across the entire country in the 11-to-15-day forecast period. The Midwest is projected to be particularly hot. 

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SUMMER POWER SURGES

As the number of COVID-19 cases continues to climb nation-wide, trying to anticipate regional shutdown efforts going for-ward might be a fool’s errand. However, it is increasingly evi-dent that, for various reasons (political and otherwise), the full-scale lockdowns endured in the spring seem unlikely to be repeated. Consequently, energy demand has already ap-proached pre-pandemic summer expectations in most ISOs. Commercial and industrial facilities, which decreased their electricity usage significantly in the second quarter, are now largely operating near full capacity (again, at least in terms of electricity usage). This development is not to say that residential usage, which rose sharply in April (as illustrated in the chart below from the U.S. Energy Information Administration), has necessarily subsided. Most work-from-home orders remain in place as temperatures have turned decidedly summerlike, so residen-tial electricity consumption is still steadily increasing. Whatever the extent of the continuation (or return) of shut-downs, high energy demand has arrived. Indeed, this week’s warm weather has triggered CORE alerts from Calpine Ener-gy Solutions throughout the Midwest and Northeast. Summer-peak prices are almost certain to loom ahead, and future ca-pacity charges need to be monitored closely as well. Fortu-nately, Calpine Energy Solutions stands ready to help navi-gate the gauntlet of energy expenses 

 

 

 

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