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Forwards recap: Term markets inch lower despite rising gas prices

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Forwards recap: Term markets inch lower despite rising gas prices

Elevated fueling costs signaled by an uptick in natural gas futures and modest weather support failed to push forward power markets around the country higher during the week that ended Jan. 27.

Along the natural gas futures arena, the front-month February contract kicked off the review week Jan. 23 supported by technical buying and weather outlooks to settle at $3.243/MMBtu, up 3.9 cents. Gains were extended Jan. 24, as weather forecasts continued to put upward pressure on front-month gas and allowed it to add 3.6 cents to close at $3.279/MMBtu. Opportunities for short covering ahead of the contract's expiration Jan. 27 fueled an additional session of gains Jan. 25, with February gas advancing by 5.3 cents to close at $3.332/MMBtu.

The Jan. 26 session saw a less-than-expected 119-Bcf net withdrawal from natural gas storage for the week ended Jan. 20, which despite being price bearish failed to subdue market bulls who turned their attention to medium-term weather outlooks and the contract's roll off the board the next day. Front-month gas rose by 5.0 cents to settle at $3.382/MMBtu with options expiring that same day.

The February contract spent its final session Jan. 27 defending gains and managed to roll off the board in shallow positive territory at $3.391/MMBtu, up by a scant 0.9 cent. Overall, front-month gas noted a 14.8-cent weekly increase during the review week spanning Jan. 23 to 27.

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Across wholesale electricity markets, price activity leaned mixed to ultimately lower during the review week despite moderating weather forecasts and increased fueling costs.

Representing the week's predominantly bearish sentiment were prompt-month deals at New York Zone G, which were done at $56.40 on Jan. 23 and $53.87 on Jan. 27 for a 4% weekly decline.

Other eastern markets followed suit. Term power at NEPOOL-Mass shed 2% over the week and changed hands at $60.18 on Jan. 23 and $58.93 on Jan. 27, while prompt-month transactions at PJM West saw a 50-cent loss and were assessed at $40.34 on Jan. 23 and $39.84 on Jan. 27.

February packages in the Midwest noted thin trading for the period but were biased to the modest downside. An 80-cent loss was noted at PJM AD, where February packages were pegged at $37.64 on Jan. 23 and $36.84 on Jan. 27. Forward power at PJM Northern Illinois entered the week at $35.23 on Jan. 23 and exited at $34.66 on Jan. 27, shedding 57 cents. Defying the trend were February transactions at MISO Indiana, which started at $40.89 on Jan. 23 and closed at $41.71 on Jan. 27 for a weekly gain of 2%.

In the South, term trades at ERCOT North were priced at $27.25 on Jan. 23 and $26.65 on Jan. 27, slipping 61 cents week on week.

In the West, power markets preferred to post mixed moves. Forward trades at South Path-15 eased by 8 cents and were posted at $32.65 on Jan. 23 and $32.57 on Jan. 27. Prompt-month power at Palo Verde lost 2% over the week and was traded at $26.61 on Jan. 23 and $26.10 on Jan. 27. Running counter to the trend were February packages at Mid-Columbia, which changed hands at $27.50 on Jan. 23 and $29.68 on Jan. 27, for an 8% weekly increase.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.