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Power markets stumble on slack fundamentals

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Essential Energy Insights - February 2021

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


Power markets stumble on slack fundamentals

Forecasts for declining Friday demand alongside softer spot gas prices offered no support to U.S. next-day markets on Thursday, Aug. 3.

Despite reports of a less-than-expected 20-Bcf net injection during the week ended July 28, the front-month September contract still slipped by 1.1 cents to settle at $2.800/MMBtu, its lowest close in five months. In addition, owing to outlooks for subdued demand, spot gas markets moved flat to predominantly lower.

Looking at the supply of nuclear generation, increased output at two reactors pulled up total plant availability to 97.83% by early Aug. 3, its highest level so far this summer season.

West values tumble as weekend approaches

Expectations for some relief from the current heatwave by the weekend worked to sharply pull down power prices in the West on Thursday with a decline in spot gas prices contributing to the fall.

According to the National Weather Service, "a dangerous heat wave continues to grip the West Coast states this week," with some relief forecast this weekend though it will remain hot.

Power packages in the West changed hands for the combined delivery days of Aug. 4-5, with subdued weekend demand alongside partial relief from the heatwave pulling down values across the board.

The biggest losses of the session were seen in the Northwest. The California-Oregon Border saw packages exchanged in the high $30s to low $40s, down from a midweek index of $130.75, while on-peak power in Mid-Columbia dropped more than $50 and ranged in the mid-$30s to low $50s.

In California, South Path-15 deals tumbled more than $40 and were done in the low $40s. The California ISO is projecting load to run up to 46,742 MW on Thursday and 42,430 MW on Friday.

Southwestern markets fared no better with Palo Verde and Mead down more than $40 from Wednesday to span the low to mid-$30s at the former and the high $30s at the latter.

The California ISO declared Restricted Maintenance Operations on Aug. 3 from 6 a.m. ET to 10 p.m. ET amid high loads and temperatures.

East dailies flounder as fundamentals decline

Power markets in the East took a few steps back Thursday amid forecasts for falling Friday demand and lower spot gas prices.

Losses of $4 to $7 were noted at next-day markets, with the New England Mass hub and PJM West seeing power traded in the low $30s.

Day-ahead deals in New York slipped by $5 to $8 on the session with packages averaging $37.71 at New York Zone A, $34.45 at New York Zone G and $38.36 at New York Zone J.

Demand is expected to fall sharply by the end of the workweek. Load in New England is expected to reach 20,570 MW on Thursday and 19,500 MW on Friday while demand in New York could touch 23,200 MW on Thursday and 21,530 MW on Friday. The PJM Mid-Atlantic region should see load top out at 48,251 MW on Thursday and 47,374 MW on Friday, while demand in the PJM Western region should crest at 69,220 MW on Thursday and 57,791 MW on Friday

Midwest dailies lack support ahead of weekend

Dailies in the Midwest saw no support Thursday from sluggish Friday demand outlooks and soft spot gas prices. On-peak power prices at PJM AEP-Dayton and MISO Indiana slipped by $3 to $4 on the session with deals in the high $20s.

Load is projected to wane as the business week comes to a close. The PJM AEP region should see demand peak at 20,640 MW on Thursday and 17,619 MW on Friday while the PJM ComEd region should see highs of 17,198 MW on Thursday and 12,833 MW on Friday.

Texas values ease on conflicting fundamentals

Day-ahead deals in Texas were modestly lower Thursday amid strong load forecasts and sagging gas prices.

Demand in Texas may run up to 60,095 MW on Thursday and 63,639 MW on Friday. However, day-ahead deals in the region slipped less than $1 from midweek and averaged at $32.36 at ERCOT Houston, $31.12 at ERCOT North, $31.90 at ERCOT South and $31.22 at ERCOT West.

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.