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AM Power Report: Dailies could move in sundry pattern amid dueling drivers

Day-ahead power prices could vary Thursday, June 1, as predominantly weaker demand expectations for the close of the workweek combine with renewed gains at the natural gas futures complex.

Sliding 7.4 cents on the day May 31, NYMEX July natural gas futures were rebounding early Thursday ahead of the midmorning release of the latest round of weekly gas storage data from the U.S. Energy Information Administration. At about 6:40 a.m. ET, the contract was up 3.1 cents to trade near $3.102/MMBtu.

Analysts and traders surveyed are looking for a 70-Bcf to 80-Bcf injection, with the consensus expectation being a storage addition of 75 Bcf, below the respective year-ago and five-year average builds of 80 Bcf and 97 Bcf.

Looking at demand, load forecasts for the close of the workweek are mixed but mostly lower, as business-related demand typically wanes approaching the weekend break.

In the Northeast, demand in New England should near 15,000 MW on Thursday and 13,900 MW on Friday, while load in New York could peak at 18,625 MW on Thursday and 18,502 MW on Friday. Farther south, PJM Western region demand is seen touching a high near 51,104 MW on Thursday and 51,056 MW at the end of the business week, while PJM Mid-Atlantic load is projected to crest at 34,498 MW on Thursday and 31,917 MW on Friday.

In the Midwest, the PJM grid operator sees load in the PJM AEP region hitting highs at 16,054 MW on Thursday and 15,875 MW on Friday, while demand in PJM ComEd is expected to defy the wider decline as it is called to reach 12,336 MW on Thursday and 12,591 MW on Friday.

In the South, load in Texas is forecast to see highs at 52,789 MW on Thursday and 55,675 MW at the close of the workweek, also running against the broad downtrend.

In the West, demand in California is poised to top out at 29,450 MW on Thursday and 32,370 MW on Friday, which could run counter to the typical pressure seen on power dailies in the region Thursday when the day's offering is revised to feature two-day partly weekend parcels for Friday-Saturday delivery.

In term trade, ongoing weakness at the natural gas futures arena that kept fueling costs deflated encouraged the downside to prevail in price activity for June and July power delivery in the former's final day as the front-month offering May 31 and just ahead of the latter's debut as the new lead product.

In the East, June power was quoted in the high $20s to the low $30s in transactions down almost $4 day on day in New England and off more than $2 at PJM West. Power for July delivery was valued in the low $40s in deals done 5 cents softer on the day in New England and more than $1 weaker at PJM West.

In the Midwest, pricing for June power tumbled by about $2 at PJM Northern Illinois and fell by around 90 cents at both PJM AD and MISO Indiana to indexes spread in the low $30s. Price action for July power climbed by more than $1 against the broad decline at PJM AD but slid by roughly 30 cents at PJM Northern Illinois and faltered by nearly 70 cents at MISO Indiana to average in the high $30s to the low $40s across the three hubs.

In the South, losses of about 10 cents to as much as 50 cents at the ERCOT markets drove trading activity for June power to indexes in the low to high $30s. Reductions ranging roughly from 10 cents to 60 cents across the region took transactions for July power to indexes in the high $30s to the high $40s.

In the West, both North Path-15 and South Path-15 in California saw June power values unravel more than $2 to average in the low $30s and July power prices deflate by more or less 90 cents to indexes in the low to high $30s. Mid-Columbia saw June and July power parcels shed nearly $2 in deals done in the high $10s and in the high $20s, respectively, as Palo Verde saw June power slump by roughly $1 to an index in the low $30s and July power flounder by about 10 cents to an index in the high $30s.

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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.