Power and natural gas prices in the eastern and western U.S. could continue to derive upside momentum from weather-related demand in 2019.
Monthly average spot pricing from Jan. 1, 2018, through Dec. 31, 2018, and forward assessments for 2019 delivery collected on Dec. 27, 2018, the last day of trade for which all twelve monthly terms for the delivery year have available values, show winter price spikes for eastern energy markets and western gas hubs and summer price hikes for western power hubs.
After prior-year monthly average spot peaks reached in January 2018 of $15.872/MMBtu and $16.551/MMBtu at Algon Gates and Transco Zone 6 NY, respective monthly gas prices are seen finding highs at more or less $9.000/MMBtu in February along the 2019 forward curve. Prices soften as winter subsides to be largely contained between the low $2s per MMBtu and the low $4s per MMBtu.
Similar trends prevail at the eastern power markets, with NEPOOL-Mass and N.Y.C.-J day-ahead on-peak monthly average prices cresting above $100.00/MWh in January 2018 then pulling back as the year unfolded. Along the 2019 forward curve, NEPOOL-Mass and N.Y.C.-J on-peak prices find highs in February in the low $90s per MWh and high $70s per MWh, respectively.
Pipeline constraints and robust heating demand amid frigid weather tend to bolster energy markets in the East during winter, but moderate weather thereafter is seen allowing for shale gas to flow more freely into the region.
Winter peaks are also observed at the benchmark Henry Hub, where monthly average spot gas pricing topped out at $4.105/MMBtu in December 2018 and is expected to remain elevated in the $3.60s per MMBtu for January 2019. However, absent impressive highs that occur in the eastern hubs, benchmark pricing is more closely mirrored by western gas markets.
Natural gas markets in the West reach peaks in the winter that are much lower than their eastern counterparts. Monthly average spot gas prices reached annual highs at $4.050/MMBtu in November 2018 at Houston Ship Channel and $5.192/MMBtu in December 2018 at PG&E Gate, then are seen hitting forward-curve peaks in January 2019 in the low $3.80s per MMBtu and the low $4.60s per MMBtu, respectively.
Demand for cooling amid hot weather helps boost power prices in the West, where monthly average on-peak power prices crested at $77.15/MWh in August 2018 at Mid-Columbia and $89.43/MWh in July 2018 at Palo Verde, then are seen peaking along the forward curve in August 2019 in the low $60s per MWh and the mid-$80s per MWh, respectively.
Also bolstered by summer demand, prices at ERCOT North in Texas topped out in the summer at $112.15/MWh in July 2018 and are seen reaching into the high $170s per MWh in August 2019.
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.