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Forwards recap: Recovering natural gas prices fuel more term market gains

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Forwards recap: Recovering natural gas prices fuel more term market gains

Closing the previous week with gains, power packages for November delivery continued higher during the week ended Oct. 13 as a rebound in fueling costs driven by a recovery in natural gas futures countered the slack demand implied by weather forecasts.

Following losses the week prior, trading activity in the natural gas futures arena turned lower Oct. 9 with the front-month November contract crumbling to bearish pressures and closing the day down 3.0 cents to $2.833/MMBtu. November gas regained its footing the following day Oct. 10 with short covering fueling gains and allowing the front-month contract to add 5.8 cents to $2.891/MMBtu. However, the November contract revisited the modest downside Oct. 11 in positioning ahead of the release of the U.S. Energy Information Administration's weekly storage report the following day, which sent it down by a scant 0.2 cent to $2.889/MMBtu.

Despite reports of an 87-Bcf net injection during the week ended Oct. 6 that was above consensus estimates and matched the five-year average, front-month gas surged Oct. 12 by 10.0 cents to climb to $2.989/MMBtu. November gas managed to defend gains Oct. 13 amid a tighter supply and demand balance and exited the week 1.1 cents higher at $3.000/MMBtu. Overall, from Oct. 9-13, the front-month November contract added 16.7 cents.

The higher settlement in gas futures gave a boost to fueling costs and helped keep wholesale electricity markets on the positive side of the ledger during the review week.

Closely mirroring the movement in gas futures were term deals at South Path-15, which opened the week at $34.81 on Oct. 9 and closed at $36.89 on Oct. 13, up 6% during the period.

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Other term markets in the West also moved higher. Palo Verde November was pegged at $26.22 on Oct. 9 and $27.60 on Oct. 13, rising by 5% for the week. November power prices at Mid-Columbia also rose by 5% over the period with deals done at $24.45 on Oct. 9 and $25.59 on Oct. 13.

In Texas, prompt-month power at ERCOT North changed hands at $23.64 on Oct. 9 and $25.38 on Oct. 13, adding 7% week on week.

Hubs in the central U.S. also leaned flat to predominantly higher for the week. PJM AEP-Dayton saw November power trade 5% higher over the week in trades noted at $32.18 on Oct. 9 and $33.77 on Oct. 13. MISO Indiana quoted November transactions at $33.93 on Oct. 9 and $35.02 on Oct. 13, increasing 3% during the period. PJM Northern Illinois November power was traded 26 cents higher for the week with deals seen at $30.65 on Oct. 9 and $30.91 on Oct. 13.

Wholesale power markets along the eastern seaboard continued the uptrend and notched gains as well. PJM West November was valued at $32.24 on Oct. 9 and $33.32 on Oct. 13, adding 3% throughout the week. The New England Mass hub saw November packages climb 69 cents for the week with deals starting at $34.58 on Oct. 9 and ending at $35.27 on Oct. 13. New York Zone G November was priced at $32.53 on Oct. 9 and $32.72 on Oct. 13, notching a 19-cent gain week on week.

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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, natural gas and coal index prices, as well as forwards and futures, visit our Commodities pages.