Weekly Energy Market Updates by Region - Archive




Issue week: March 18th, 2021  (Wk 11)





WEST Throughout March, Day Ahead prices have averaged around $34/MWh in CAISO and $29/MWh in Mid-C. Demand for non-CAISO source power has driven forward prices for Q3 of 2021 in Palo Verde to historic highs, pushing the forward curve for Q3 higher in all regions.

ERCOT  With relatively mild weather for most of the week, 7x24 real-term prices have ranged from the lower to the upper $20s/MWh. Amid the considerable congestion across the system, prices in the Houston Load Zone are averaging $8/MWh more than in the North Load Zone. Addition-ally, whereas the South Trading Hub is averaging only $13/MWh, the South Load Zone is averaging around $24/MWh because of local conges-tion. Meanwhile, term 7x24 prices have given up approximately $0.50/MWh this week on the continuing selloff in natural gas. Nonetheless, CY strips are up by $2-$3/MWh but, at approximately $30/MWh, still represent good entry points in light of last month’s real-time price volatility.

EAST Higher temperatures continue to soften prices across the region. Both Day Ahead and Real Time in ISO-NE’s Mass Hub are in the mid-$30s/MWh. Elsewhere, prices are settling in the mid-to-high $20s/MWh with minimal DART spreads.









In its latest monthly report, the International Energy Agency states that it does not expect a new “supercycle” of extended bull market prices for oil. An excess of crude already withdrawn from stockpiles should keep supplies plentiful to meet demand in the short term, but the myriad shutins and cuts in capital expenditures throughout the U.S. will probably depress production in the near term, especially if prices do not rise appreciably. Compounding the lack of American policy support to reduce the supply of oil in the short term are continuing cuts by OPEC.

Ironically, the curtailment of oil production due to a drop in demand and prices may, in turn, force an increase in the price of natural gas, a byproduct of oil extraction, by squeezing its production right when demand for it is set to rise in the U.S. As the vaccine rollout continues in the U.S., economic activity is poised to pick up earlier than expected and lift demand for electricity and the natural gas needed to generate it. Moreover, as shown in the map above from the National Oceanic and Atmospheric Administration, summer heat waves are not that far off, so it would be no surprise if future prices of natural gas start spiking before too long.




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