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Power dailies push higher with demand but held back by gas

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Essential Energy Insights - February 2021

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Message in a (Word)Cloud

Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


Power dailies push higher with demand but held back by gas

Next-day power values in the U.S. moved mixed tohigher Friday, April 1, as gains inspired by stronger demand outlooks wereslightly limited by softer spot natural gas prices.

The front-month May natural gas futures contractreversed prior gainsand closed the final day of the workweek at $1.956/MMBtu, down a scant 0.3cent. Likewise, most spot natural gas markets retreated with only the weatherbacked hubs in the East going the other way.

In other supply, the full return of 's BrownsFerry 3 in Alabama and XcelEnergy Inc.'s Prairie Island 1 in Minnesota and increasedproduction at Energy Northwest'sColumbia Generating Station in Washington and 's Grand Gulf 1 inMississippi drove total U.S. nuclearplant availability higher early April 1 to 87.39%, up from 85.61%on March 31 and well above the 85.13% level reported on the same day a year ago.

In near-term weather, a forecast from AccuWeather.comnotes that a "fresh shot of arctic air will usher spring snow into partsof the Great Lakes and Northeast during the first weekend of April."

Eastdailies exit workweek with fundamental support

Power markets in the East edged higher Friday, withthe uptick driven by forecasts for stronger demand along with support comingfrom incoming cold weather and gains in spot natural gas prices.

Next-day deals at NEPOOL-Mass were pegged in the mid-to high $30s, climbing from a prior-day index of $23.50, while trades at PJMWest were heard in the low $30s, also up from Thursday's index of $28.75.

Day-ahead markets moved in different directionsdespite typically weaker weekend demand. DAM transactions at NEPOOL-Mass, NewYork Zone G and New York Zone J added less than a dollar from Thursday to postaverages of $20.27, $23.18 and $23.45, respectively, while DAM deals at NewYork Zone A dropped by about $20 from the day prior to average $13.73.

Spot gas markets favored the upside, with gas deals atTransco Zone 6 New York soaring by around 40 cents to average about$1.70/MMBtu, while trades at TETCO-M3 were more than 20 cents higher fromThursday and averaged close to $1.50/MMBtu.

Grid operators in the Northeast and the mid-Atlanticexpect higher load at the start of the new workweek, with demand in New Englandexpected to reach 16,230 MW on April 4, up roughly 2,000 MW from Friday, whileload in New York should hit 18,680 MW on April 4, adding about 600 MW fromFriday.

The PJM Mid-Atlantic region expects peak April 4 loadto touch 32,783 MW, climbing by more than 2,400 MW from Friday, while the PJMWestern region forecasts demand to peak at 48,328 MW on April 4, gaining morethan 2,800 MW from Friday.

ERCOTmarket gains limited by cheap gas

Power parcels in Texas were priced at a modest premiumFriday, with the increase mostly driven by expectations of robust April 4demand but limited due to declining spot natural gas prices.

ERCOT projects stronger demand to kick off the newworkweek, with peak load possibly surpassing 41,200 MW on April 4, up more than4,900 MW from Friday. Bolstered by demand, next-day deals at ERCOT North werepegged in the high $20s, up from Thursday's index of $20.00.

Day-ahead markets defied typically lower weekend loadoutlooks with most hubs adding around $3 to post averages of $20.85 at ERCOTHouston, $20.77 at ERCOT North, $20.78 at ERCOT South and $20.82 at ERCOT West.

Restricting power price gains were retreating spot gasprices, with deals at El Paso Permian losing more than 15 cents to averagebelow $1.60/MMBtu while trades at the Henry Hub were more than 5 cents lower onthe session to average below $1.90/MMBtu.

MostWest dailies close workweek with muted moves; Mid-Columbia falters

Power dailies in the West, with the exception of dealsdone at Mid-Columbia, were mixed with little change overall as traders soughtdirection in the midst of outlooks implying rebounding demand due to next-dayschedule revisions and a lack of support caused by floundering spot natural gasmarkets.

Next-day deals in the West were done for the combineddelivery days of April 3-4, with the inclusion of the typically higher loadweekday providing upward pressure on values.

In California, power packages leaned flat to slightlyhigher. Power bids at South Path-15 were quoted in the high teens, up by lessthan a dollar from Thursday, while deals at North Path-15 were flat to the dayprior and were heard in the low $20s.

Power parcels in the Southwest were mixed but sawlittle change overall. On-peak trades at Palo Verde and Mead were pegged in thehigh teens with the former adding less than a dollar from Thursday and thelatter easing from the day prior.

Power markets in the Northwest were biased lower, withtransactions at Mid-Columbia ranging from the single digits to the low teens,down by about $3 from Thursday, while offers at COB were seen in the low tomid-teens, easing from an index of $14.00.

Spot gas markets favored the downside, with gas dealsat PG&E Citygates and SoCal Border losing more than 10 cents from Thursdayto post averages below $1.85/MMBtu and below $1.70/MMBtu, respectively, whiletrades at Malin tumbled by about 15 cents from the day prior and averaged below$1.65/MMBtu.

CAISO anticipates load to crest at 26,083 MW onSaturday, dropping roughly 800 MW from Friday. However, demand should reboundat the start of the new workweek on April 4, as business-related load typicallyrises after the weekend.

Midwestmarkets pressured by conflicting cues at week's end

Power packages in the Midwest saw diverging signalsFriday coming from forecasts suggesting stronger demand and a lack of supportdue to a downtick in spot natural gas markets.

Demand in the Midwest is expected to rise coming outof the weekend, with the PJM AEP region projecting an April 4 high at 15,254MW, up about 700 MW from Friday, while the PJM ComEd region predicts load totop out at 11,586 MW on April 4, increasing by more than 500 MW from Friday.

Spot gas markets floundered and left dailies with nosupport. Gas deals NNG Demarc deflated by more than 10 cents from Thursday andaveraged below $1.80/MMBtu, while trades at Chicago Citygates limited thedownside to around 5 cents and averaged slightly below $1.90/MMBtu.

Market prices and included industry data are currentas of the time of publication and are subject to change. For more detailedmarket data, including power,natural gas andcoal index prices, as well asforwards andfutures, visit our Commodities Pages.