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Forwards recap: Northeast term power prices sacked by slumping gas futures

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Forwards recap: Northeast term power prices sacked by slumping gas futures

The price of forward power plunged in the Northeast in the week ended Dec. 15 following losses at the NYMEX natural gas futures market, although losses for power forwards elsewhere in the U.S. were kept in check.

The January 2018 natural gas futures contract began the week with a 5.6-cent gain on Dec. 11 but reversed lower on Dec. 12, declining a full 15.0 cents before recovering 3.7 cents on Dec. 13. The report of a below-average 69-Bcf net injection to storage in the week ended Dec. 8 helped push December gas futures lower as the contract fell 3.1 cents on Dec. 14 and another 7.2 cents on Dec. 15.

Overall, the front-month natural gas contract ended the previous week 16.0 cents lower week on week at $2.612/MMBtu, its lowest close in almost ten months.

Northeast U.S. term electricity markets plunged with the gas futures complex. January 2018 deals at the Mass hub in New England began the week just below $80 and was priced below $65 by Dec. 15, down 20% week on week. In New York, front-month January 2018 power traded down from near $67.50 on Dec. 11 to near $50 by Dec. 15, off 25% on the week.

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PJM West in the mid-Atlantic saw January 2018 deals slip 9% from near $43 on Dec. 11 to below $40 by Dec. 15.

Midwest markets were flat to lower. January 2018 deals at MISO Indiana held in the mid $30s all week, down 2% on the week, while PJM markets in the Midwest made a more decisive move lower. The Northern Illinois hub saw January 2018 power value slip from near $34 on Dec. 11 to near $31 by Dec. 15, declining 8% for the week, while January 2018 deals at the AEP-Dayton hub in Ohio declined 8% to trade from above $37 on Dec. 11 to near $34 by Dec. 15.

In Texas, January 2018 deals at ERCOT North remained in the mid-$20s all week, easing a little more than $1 on the week.

Most markets in the western U.S. posted losses, however Mid-Columbia in Washington State bucked the trend, adding almost $3, or 10%, on the week from near $27.50 on Dec. 11 to near $30.50 by Dec. 15. South Path-15 in California dropped about $2, or 5%, during the course of the week but remained one of the highest-priced hubs with trades done near $40 all week. Palo Verde front-month deals shed 4% with deals in the high $20s all 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.