Despite the approach of the New Year's holiday, which will close most U.S. markets on Monday, Jan. 1, 2018, the price of power across the country surged Friday, Dec. 29, as record-cold weather drove both load forecasts and natural gas prices considerably higher.
The eastern two-thirds of the U.S. will ring in the new year with record cold "rivaling that of the past 100 years for late December and early January," forecasters with AccuWeather said in a Dec. 29 report.
"While the level of cold will vary from one day to the next, indications are that the frigid weather will linger through the first week of January in the Central and Eastern states," long-range meteorologist Max Vido wrote. "It may not be until toward the second or third week of the month before many areas get above the freezing mark for a time."
The frigid forecast has load forecasts aimed higher and helped fuel ongoing gains at natural gas markets. After adding a collective 26.0 cents in the prior two sessions, the February 2018 natural gas contract continued 3.9 cents higher to close at $2.953/MMBtu.
Spot gas markets also ran higher in the week's final session, as the product covering Jan. 1-2, 2018, posted gains of $1/MMBtu or more in parts of the Midwest and Northeast.
Northeast dailies hit $200 amid cold snap, gas price spike
After pulling back in the prior session, power prices in the East rallied again Friday, topping $200 at some locations.
New England Mass hub traded almost $40 higher in the $200s and $210s, slightly higher than the New York Zone G market. PJM West also saw trades as high as $200 but averaged in the mid-$180s, up more than $60.
Day-ahead markets held high despite trades covering a lower-load weekend day on Dec. 30. Mass hub averaged $167.50 while New York day-ahead prices averaged $91.35 in Zone A, $126.61 in Zone G and $141.44 in Zone J.
In addition to a surging load outlook, spot gas gains helped ignite power value as Transco Zone 6 NY averaged above $30/MMBtu.
New England load could hit 20,370 MW on Jan. 2, 2018, while load in New York is called to top 23,018 MW, each up 300 MW from Friday's peak. Farther south, demand in the PJM Western region could reach 67,896 MW on Jan. 2, 2018, up 6,000 MW compared to Friday, while load in the PJM Mid-Atlantic region could peak at 47,296 MW on Jan. 2, 2018, up almost 5,000 MW.
Midwest markets swept higher with load forecasts amid biting cold
Power prices in the Midwest ran higher Friday in line with load forecasts and natural gas prices as record-cold weather grips the region.
Dailies for Jan. 2, 2018, delivery at the MISO Indiana hub ranged from near $70 to the mid-$90s, up more than $40 on the day on average. Day-ahead markets for Dec. 30 flow, on the other hand, slumped with depleted business-related demand with the AEP Dayton hub at $48.94 and the Northern Illinois hub averaging $42.21.
Demand in the PJM AEP region should reach 22,244 MW on Jan. 2, 2018, up 2,200 MW from Friday, while load in the ComEd region could reach 14,817 MW on Jan. 2, 2018, up 800 MW from Friday.
ERCOT demand set to soar
Demand in the Electric Reliability Council of Texas is set to soar, reaching 61,140 MW on Jan. 2, 2018, up 13,000 MW from Friday, amid a cold front and the return of business-related demand after the holiday.
ERCOT senior meteorologist Chris Coleman said that Jan. 2, 2018, will be "the coldest morning for the ERCOT system, though many locations will not be any warmer on Wednesday morning" as temperatures hold in the upper teens to mid-20s.
Day-ahead markets were little changed as the Dec. 30 delivery product represented lax demand for the holiday weekend. ERCOT Houston averaged $21.35, ERCOT North was seen at $22.43, ERCOT West was pegged at $22.67 and ERCOT South averaged $23.78.
West demand rebounds with post-holiday load
Prices in the western U.S. moved higher Friday with the support of post-holiday demand.
In the north, Mid-Columbia traded about $9 higher in the low $30s, while deals at the California-Oregon Border hub were done in the mid-$30s, up $10. In the south, Palo Verde traded in the high $20s, up $3 to $4, while Mead added $5 to trade in the low $30s.
Demand in California is expected to reach 28,463 MW on Friday and 27,294 MW on Saturday, Dec. 30, but with the return of business demand by Jan. 2, 2018 helping to support buying in the week's final session.
Trades in the West on Friday covered Jan. 1-2, 2018.
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.