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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: November 19th, 2020  (Wk 47)

 

POWER MARKETS

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WEST In the term market, prices for Calendar Year 2021 have fallen signifi-cantly in response to corresponding drops in NYMEX and SoCal Citygate, which has softened amid long-term projections of mild temperatures in Cali-fornia throughout the upcoming winter. Additionally, strong precipitation in the Pacific Northwest over the past week has snowpack levels off to a prom-ising start, which is bearish for forward prices across CAISO and Mid-C.

ERCOT  Term prices were down by $0.50-$2.00/MWh out the curve over the past week, mainly because of the drop in term natural gas prices. The current weather forecasts calling for above-normal temperatures east of the Mississippi River over the next two weeks provide little, if any, catalyst for a rebound there. Aside from a few hours of spikes in the West Load Zone dur-ing the morning ramp, real-time prices have settled back into the mid-$20s/MWh. The scarcity adder has also been minimal for the week.

EAST A bit of cold weather has boosted prices from last week’s lows across the Northeast. In ISO-NE, DA is up by approximately $13/MWh from last week while RT has increased by roughly $17/MWh. Following suit is NYISO’s Hudson Valley, where DA has jumped by $10/MWh and RT has risen by $15/MWh from last week.

NATURAL GAS 

The EIA reported Thursday morning that, for the week end-ing November 13, U.S. invento-ries increased by 31 Bcf, which easily landed within the ana-lysts’ broad estimates, which ranged from a withdrawal of 19 Bcf to an injection of 41 Bcf. Total stockpiles now stand at 3,958 Bcf, up by 8.0% from a year ago and 6.2% above the five-year average for the same week.

Thanks not only to recent fore-casts predicting warmer weather but also to two consecutive weeks of storage increases dur-ing what is typically withdrawal season, the NYMEX contracts for December and beyond have sold off. December was down by as much as $0.17/MMBtu from yesterday and is trading around $2.60/MMBtu. Likewise, all of the NYMEX contracts through January 2022 fell by as much as $0.10/MMBtu today. The recent warm weather has pushed SoCal basis lower. Cash prices at both PG&E Citygate and SoCal Citygate have dropped as well.

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WEATHER 

The entire U.S. will be pretty warm in the 1-to-5-day forecast period. In fact, the Southwest will be downright hot. The Great Plains and Midwest will also be windy.
 

The warmth should persist into the 6-to-10-day forecast period in most of the country, but more typical fall temperatures should register in the Pacific Northwest.
 

The seasonable autumn weather should spread throughout the U.S. during 11-to-15-day fore-cast period, although the North-Central states are projected to stay balmy while the Pacific Northwest is expected to be wet.

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STIGMA FACING ENERGY INDUSTRY ENDURES

Now that FERC, as reported on October 15, has blessed PJM’s expanded Minimum Offer Price Rule (MOPR-Ex), which should allow most, if not all, existing and new state-subsidized resources—such as onshore wind, solar, nucle-ar, and demand-side facilities to be able to clear the PJM capacity auction, PJM has announced the return of its capacity auction, also known as the Base Residual Auction (BRA), after a two-year hiatus. The new schedule for the next six BRAs is shown in the table below from PJM.
FERC had ordered the suspension of the BRA because it had deemed PJM’s capacity market increasingly untenable in light of state subsidies for preferred resources. Although the debate will likely continue over how MOPR-Ex will frustrate some states’ climate policies, FERC’s imprimatur means that the auction will again be able to restore some stability to wholesale capacity prices in PJM.

Because of current excess capacity in PJM, capacity prices in the RTO are not expected to be largely affected by this development in the near term. Nonetheless, market operators are sure to welcome this news, for the forward price signals and capacity commitments yielded in the auc-tions help participants make more informed investments in their generation resources, ultimately benefiting ratepayers.

 

 

 

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