Moderating weather and falling demand forecasts continued to exert pressure on U.S. power dailies Wednesday, Dec. 21, despite a recovery in the natural gas market, as trading volumes thinned ahead of the Christmas holiday.
Following a cumulative loss of 48.3 cents in the previous seven sessions, January 2017 natural gas rallied 27.9 cents to settle at $3.542/MMBtu, supported by the likelihood of another large storage withdrawal for the week ended Dec. 16.
The futures gains helped drive up most spot gas markets by about 15 cents higher with smaller gains in the West and fairly large losses in parts of New England.
Despite the gas gains, power dailies were pressured by demand prospects, most of which pointed lower amid declining heating load and reduced commercial and industrial demand ahead of the holiday weekend.
New England dailies firm as others fall
Power prices in the Northeast were mixed but mostly lower as milder weather is expected to send demand lower ahead of Christmas.
The New England Mass hub saw the only gains, up a scant $3 to an index in the low to mid-$50s while New York Zone G fell more than $5 to the mid-$40s and PJM West slipped close to $3 to an index near $30.
Day-ahead markets posted similar moves with Mass hub at $68.38 while New York DAMs fell to $46.91 at Zone J, $42.62 at Zone G and $28.73 at Zone A.
New England could see load top 17,850 MW on Thursday, off 500 MW from midweek, while load in New York is poised to hit 21,144 MW on Thursday, off about 100 MW on the day. In the Mid-Atlantic, the PJM Western region should see demand reach 58,184 MW on Thursday while the PJM Mid-Atlantic region looks to peak load of 38,488 MW on Thursday, each down close to 1,000 MW.
According to a report from AccuWeather, a fast-moving storm will spread light snow and rain across northern part of the Northeast on Thursday.
Midwest dailies step lower with demand ahead of stormy weekend
The price of next-day power at Midwest markets was on the retreat Wednesday amid moderating weather and declining demand. In a session of thin trade, MISO Indiana saw action in the low $30s, off about $3 on the day, and holding a slight premium to neighboring PJM markets.
Demand in the PJM AEP region in Ohio is expected to reach 17,890 MW on Thursday, off 1,500 MW on the day, while load in the ComEd region is poised to reach 13,358 MW on Thursday, down about 600 MW on the day.
While the Midwest is currently experiencing a brief break from the frigid cold, a potent storm will cause blizzard conditions over parts of the central U.S. during Christmas weekend. "The storm will deliver everything from a wintry mix and a blizzard to drenching rain and severe thunderstorms," AccuWeather senior meteorologist Alex Sosnowski wrote in a Dec. 21 report.
Weak demand keeps pressure on ERCOT day-ahead markets
After a bout of extreme cold earlier this week, milder weather in Texas continued to pressure day-ahead markets in ERCOT on Wednesday.
DAMs were down $2 in most cases with very little disparity, bringing averages to $27.76 at ERCOT North, $27.77 at ERCOT South, $27.78 at ERCOT West and $27.74 at ERCOT Houston.
The ERCOT grid operator sees load reaching 41,747 MW on Thursday, off more than 1,000 MW on the day. "After the big chill to start this week, temperatures will continue to trend much warmer," ERCOT meteorologist Chris Coleman wrote in a Dec. 21 report. "An above-normal pattern will remain in place into at least the middle of next week."
West markets retreat in revised trade
Despite stormy weather forecasts for the second half of the week, western U.S. power markets continued to unwind Wednesday, as traders dealt electricity for Dec. 23-24 flow, a time of soft demand due to the approaching weekend and holiday.
The storm helped contain losses in the Northwest, where Mid-Columbia and COB were down a little more than $1 apiece to indexes just above $30. In California, South Path-15 was down more than $2 but still saw the highest prices in the low $30s. In the Southwest, Palo Verde and Mead were down $2 each to indexes in the mid-$20s and upper $20s, respectively.
Peak demand in California is expected to hold steady at just below 30,000 MW through Thursday but will likely decline thereafter despite the approach of a storm that could bring 1-2 feet of snow to the Sierra Nevada and southern Cascades into Saturday, according to AccuWeather's Sosnowski.
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