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AM Power Report: Dailies could diverge amid dithering fundamentals

Day-ahead power values could chop around Thursday, April 6, as mixed demand outlooks for the close of the workweek combine with volatility in natural gas futures trading.

Ending 2.7 cents down April 5, NYMEX May natural gas futures were extending slightly lower at 6:35 a.m. ET early Thursday, moving near $3.262/MMBtu, easing 0.4 cent, as participants prepare for the mid-morning release of weekly gas storage data from the U.S. Energy Information Administration.

Traders and market analysts expect the report, which will cover the week ended March 31, will detail an average natural gas storage injection of 9 Bcf. This will compare against a 13-Bcf five-year-average storage pull and the 6-Bcf addition reported for the same week in 2016.

On the demand side, forecasts suggest varied load at the close of the workweek.

In the Northeast, weaker load is in store, as demand in New England is projected to top out at 15,750 MW on Thursday and 14,250 MW on Friday, while New York load is seen reaching highs at 18,038 MW on Thursday and 17,633 MW at the end of the business week. In the Mid-Atlantic, outlooks point to stronger load, as demand in the PJM Western region is expected to crest at 47,994 MW on Thursday and 50,019 MW on Friday, while PJM Mid-Atlantic load should near 30,632 MW on Thursday and 30,960 MW on Friday.

In the Midwest, diverging demand is on deck, as PJM AEP region load is projected to peak at 14,640 MW on Thursday and 15,870 MW on Friday, while PJM ComEd load is forecast to hit highs at 11,430 MW on Thursday and 11,210 MW at the close of the workweek.

In the South, load in ERCOT could see highs at 38,035 MW on Thursday and 40,215 MW on Friday, joining the uptrend.

In the West, demand in CAISO could touch a high near 28,030 MW on Thursday and 26,700 MW at the end of the workweek, which should exert downside momentum on power dailies in the region Thursday when the offering is typically altered to feature two-day, partly weekend products for Friday-Saturday delivery.

In term trade, power prices for May were varied with a dominant downside bias at midweek, as losses at the natural gas futures arena implied cheaper fueling costs.

In the East, both NEPOOL-Mass and PJM West saw the front-month power offering give back more than $1 in transactions carried out at about $35 and $37, respectively. Power for June delivery at both hubs was marked in the mid- to high $30s.

In the Midwest, pricing for May power at the PJM markets shed between $1 and $2 to average above $35 at the AD hub and $34 at the Northern Illinois hub, as MISO Indiana price action for May power advanced by roughly 20 cents against the wider decline to an index at almost $37. Power values for June across the three hubs were similarly spread in the low to high $30s.

In the South, losses of 60 cents to as much as 90 cents at the ERCOT markets drove prompt-month power deals to indexes ranging roughly from $26 to $35. Regional trading activity for June power spanned the low to high $30s.

In the West, power values for May defied the broad downtrend by adding roughly 70 cents to average above $13 at Mid-Columbia and climbing by around $1 to indexes between $25 and $26 at Palo Verde and at both North Path-15 and South Path-15 in California. Power prices for June were spotted in the mid- to high teens at Mid-C and in the high $20s to the low $30s elsewhere in the region.

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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 and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.