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AM Power Report: Dailies could diverge with gas volatility, slump in demand

Next-day power prices could be mixed with a downside bias Thursday, Jan. 19, as predominantly weaker demand forecasts for the close of the workweek combine with recent volatility in natural gas futures.

After losing 11 cents in the prior session, February natural gas futures were trekking higher early Thursday ahead of the midmorning release of the latest round of weekly gas storage data. At last look, the contract was up 2.7 cents to trade near $3.329/MMBtu on short covering ahead of the report, which, covering data for the week ended Jan. 13, is likely to show an average pull of 236 Bcf. The figure will compare to a 170-Bcf five-year average pull and the 175-Bcf drawdown reported for the same week in 2016.

On the demand side, outlooks suggest predominantly softer load at the close of the workweek, when business-related demand typically wanes approaching the weekend break.

In the Northeast, demand in New England is called to reach 16,830 MW on Thursday and 16,520 MW on Friday, while load in New York is forecast to see highs at 20,126 MW on Thursday and 19,619 MW on Friday. In the Mid-Atlantic, PJM Western region demand could peak at 52,601 MW on Thursday and 49,985 MW on Friday, while PJM Mid-Atlantic load is poised defy the broad decline as it is projected to hit highs at 34,816 MW on Thursday and 35,011 MW at the end of the workweek.

In the Midwest, demand in the PJM AEP region is projected to crest at 16,497 MW on Thursday and 15,710 MW on Friday, while load in PJM ComEd is expected to top out at 12,649 MW on Thursday and 12,452 MW on Friday.

In the South, demand in ERCOT should near 38,774 MW on Thursday and 37,949 MW at the close of the business week. In the West, load in CAISO could reach highs at 30,880 MW on Thursday and 28,920 MW on Friday, which should place downside pressure on next-day power pricing in the region Thursday, as traders book revised partly weekend parcels for Friday-Saturday delivery.

At the term markets, price activity for February power predominantly unraveled at midweek, as weakness at the natural gas futures arena implied cheaper fueling costs.

In the East, the front-month power offering shed about $5 in trades done near $66 at NEPOOL-Mass and gave back more than $2 in deals carried out at roughly $42 at PJM West. Along the forward curve, power for March delivery was transacted in the low $50s in New England and in the high $30s at PJM West.

In the Midwest, losses of about $2 at the PJM markets took power prices for February to indexes at close to $39 at the AD hub and atop $36 at the Northern Illinois hub, as a near $1 gain against the dominant decline steered MISO Indiana prompt-month pricing to an average at above $42. Power values for March across the three hubs spanned the low to high $30s.

In the South, transactions for February power at the ERCOT markets recoiled by about $1 across the board to indexes ranging from atop $28 to about $33, while regional trading activity for March power was similarly spread in the high $20s to the low $30s.

In the West, California saw power values for February slump by about 30 cents to as much as 40 cents to indexes at above $34 at North Path-15 and atop $32 at South Path-15, as Mid-Columbia February advanced by 40 cents against the broad downtrend and Palo Verde February deflated by 10 cents to both average near $26. Power prices for March were spotted in the high $20s to the low $30s in California and in the low $20s 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.