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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: March 18th, 2021  (Wk 11)

 

POWER MARKETS

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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.

NATURAL GAS 

The EIA reported Thursday morn-ing that, for the week ending March 12, U.S. inventories de-creased by 11 Bcf, which the analysts had perceptively antici-pated when they projected a with-drawal between 4 Bcf and 29 Bcf. Total stockpiles now stand at 1,782 Bcf, down by 12.4% from a year ago and 5.0% below the five-year average for the same week.

The NYMEX prompt month of April lost $0.047/MMBtu from yesterday with its preliminary settlement price of $2.481/MMBtu as of 2:30 p.m. PDT today. All strips in the futures market have continued their downward spiral since last month’s big freeze, which not only upended the do-mestic energy industry but also moved global markets. April 2021 is well under its February 17 peak of $3.049/MMBtu by $0.568/MMBtu, suggesting that the cur-rent Henry Hub market remains to consumers’ benefit when com-pared with last month’s prices. However, regional basis in South-ern California and PG&E remains elevated despite seasonable weather, healthy storage levels, and normal maintenance activity.

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WEATHER 

While the Northern Tier enjoys warm weather in the 1-to-5-day forecast period, a severe storm will threaten tornadoes across the Southeast.

During the 6-to-10-day forecast period, temperatures should be above average in the eastern half of the U.S. The Midwest should be especially warm in the back half of the period.

Typical spring temperatures are projected across the country over the 11-to-15-day forecast period.

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OIL PRICES NOT LIKELY TO MIX WITH GAS PRICES

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.

 

 

 

Previous Weekly Market Reports: Archive

 

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