Weekly Energy Market Updates by Region

Issue week: June 3rd, 2022  (Wk 22)

 

POWER MARKETS

 

WEST  Over the month of May, Day Ahead prices averaged around $60/MWh in CAISO and $56/MWh in Mid-C. As June bows, hydro generation should increase as warmer weather is expected to melt the snowpack in upper elevations to improve the supply stack during the nightly ramp throughout the month. In the forward market, prices have been flat this week. Market participants remain wary of any potential heatwave along the entire West Coast that could yield very high spot prices.

ERCOT  Term prices remain buoyed by surging natural gas prices throughout the curve this week. Real-time prices have also stayed strong, especially in the Houston Load Zone. In fact, settled prices for last month were 300% higher than those of May 2021 in all zones save Houston, where they were 500% above those of a year ago. Temperatures and, in turn, loads are expected to climb next week, so spot prices should hold firm.

EAST Fears of price shocks fizzled over Memorial Day weekend and this short workweek after unusual heat had only a modest effect on index prices. “Peak” averages for last weekend and this week have ranged from $70/MWh to $124/MWh, in line with recent trends.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending May 27, U.S. inventories increased by 90 Bcf, outpacing market expectations of 82 Bcf. Total stockpiles now stand at 1,902 Bcf, down by 17.3% from a year ago and 15.1% below the five-year average for the same week.

Whereas the NYMEX futures contract for June settled last week at $8.908/MMBtu—the highest final for any monthly contract dating back to August 2008—the current prompt month of July finished today at $8.485/MMBtu, $0.211/MMBtu shy of yesterday’s close and $0.423/MMBtu lower than last Thursday‘s. It reached $9.057/MMBtu early in the day but sold off sharply after the EIA report was released.

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