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AM Power Report: Dailies could shift higher with demand support

Price action for power dailies could move higher in most cases Wednesday, Dec. 27, as traders look to predominantly stronger demand outlooks for the latter part of the workweek.

Eyes will also remain on the natural gas futures complex for power price direction. During the Dec. 26 session, the January 2018 gas futures contract settled at $2.643/MMBtu, down 2.4 cents ahead of its Wednesday afternoon expiration. At 6:40 a.m. ET, January 2018 gas futures were trading near $2.669/MMBtu, up 2.6 cents, while the February 2018 natural gas futures contract was pegged at $2.685/MMBtu, increasing 3.1 cents.

The natural gas market was advancing early Wednesday, as stronger demand for heating supported by colder weather outlooks for the medium term are likely to boost natural gas demand.

Next-day natural gas prices could climb in most cases Wednesday, with bullish weather in many key consuming regions already pushing heating demand higher.

Looking at electricity load, projections for the latter part of the workweek are steady to higher.

In the Northeast, load in New England is expected to reach highs at 19,200 MW on Wednesday and 20,350 MW on Thursday, while New York demand is poised to top out at 22,444 MW on Wednesday and 23,124 MW on Thursday. In the mid-Atlantic, load in PJM Western region is seen peaking at 64,890 MW on Wednesday and 65,832 MW on Thursday, while demand in PJM Mid-Atlantic is projected to touch a high near 42,690 MW on Wednesday and 44,693 MW on Thursday.

In the Midwest, the PJM grid operator sees PJM AEP region load cresting at 20,597 MW on Wednesday and 21,880 MW in the latter part of the business week, while PJM ComEd demand is seen holding near unchanged at highs at 14,531 MW on Wednesday and 14,528 MW on Thursday.

In the South, load in Texas should near 49,303 MW on Wednesday and 50,065 MW on Thursday. In the West, demand in California is called to reach 28,870 MW on Wednesday and 28,780 MW on Thursday.

At the term markets, power for January 2018 generally favored the upside at the start of the abbreviated workweek Dec. 26, as supportive weather expectations undermined weakness at the natural gas futures arena that implied cheaper fueling costs.

In the East, the prompt-month power offering added roughly $4 in deals carried out in the low $80s in New England and tacked on 60 cents in trades done in the low $40s at PJM West. February 2018 power was transacted in the high $70s in New England and also in the low $40s at PJM West.

In the Midwest, price action for January 2018 power was lifted by almost 60 cents at the PJM Interconnection markets to the high $30s at the AD hub and to the low $30s at the Northern Illinois hub, but was near unchanged in the low to mid-$30s at MISO Indiana. Power values for February 2018 spanned the low to mid-$30s overall.

In the South, roughly $1 gains at the ERCOT markets took pricing for month-ahead power to the low to high $20s. Regional price activity for February 2018 power delivery similarly ran through the low to high $20s.

In the West, California saw transactions for January 2018 power ascend by around $1 to the high $30s at North Path-15 and climb by 50 cents to the low $40s at South Path-15, while similar deals were boosted by about 20 cents at Mid-Columbia and bolstered by roughly 70 cents at Palo Verde to the high $20s at both hubs. Power trades for February 2018 were assessed in the low to mid-$30s in California and in the low to mid-$20s elsewhere in the region.

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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.