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Forwards recap: August power posts modest gains as weather and gas support

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Forwards recap: August power posts modest gains as weather and gas support

Termpackages for August delivery moved mixed to predominantly higher during theweek ended July 8 as gains at most hubs were encouraged by prospects ofincreased cooling demand driven by summer weather and rising fueling costsimplied by an uptick in the natural gas futures arena.

Afterposting sizable gains ahead of the July Fourth holiday weekend, the NYMEXfront-month August natural gas futures contract opened review period July 5 witha 22.3 cent loss to drop to $2.764/MMBtu as technical buying turned intotechnical selling amid overbought conditions and supply-side pressures. Augustgas recovered some ground July 6 with the contract moving to $2.786/MMBtu,increasing by 2.2 cents.

Reportsof a less-than-expected39-Bcf net injectionduring the week ended July 1 did little to push front-month gas higher July 7as the contract shed 0.9 cent to slip to $2.777/MMBtu. However, shrinkingstorage overhangs prompted a fresh round of buying July 8 with August gasposting a 2.4-cent gain to exit the workweek at $2.801/MMBtu. Overall,front-month gas still added 3.7 cents during the review period.

Takinga look at forward power, term markets across the country leaned mixed toultimately higher during the holiday truncated review week as parcels continueto derive demand support backed by ongoing summer weather and rising fuelingcosts due to gains in natural gas futures.

Leadingthe way were August trades at NEPOOL-Mass which posted a weekly gain of $4.60in deals done at $39.78 on July 5 and $44.38 on July 8.

Elsewherein the East, price activity leaned flat to higher. New York Zone G Augustentered the workweek at $40.80 on July 5 and exited at $43.55 on July 8, adding$2.75 during the period. In the Mid-Atlantic, term trading at PJM West wasunchanged with power packages opening and closing July 5 and July 8 at $43.00.

Overin the Midwest, August power notched modest gains alongside support fromstronger demand and increased fueling costs. PJM AD hub August was priced at$37.09 on July 5 and $38.75 on July 8, for a week-on-week premium of $1.66 whilea scant 1-cent gain was seen at PJM Northern Illinois which exchangedprompt-month packages at $37.72 on July 5 and $37.73 on July 8. MISO Indianatraded August power at $37.24 on July 5 and $38.73 on July 8, adding $1.49during the period.

Downsouth, term trading at ERCOT North eased despite outlooks calling for elevateddemand and higher fueling costs with August packages assessed at $82.02 on July5 and $81.14 on July 8, shedding 88 cents for the week.

Inthe West, power for August delivery was slightly mixed as some hubs were unimpressedby strong demand forecasts and an uptick in fueling costs. In the Southwest,Palo Verde August deals were done at $34.97 on July 5 and $36.06 on July 8, upby $1.09 for the week while in California, South Path-15 August deals changedhands at $38.64 on July 5 and $38.68 on July 8, adding 4 cents. In theNorthwest, Mid-Columbia transactions eased by 87 cents and were posted at$29.50 on July 5 and $28.63 on July 8.

Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power, naturalgas and coal indexprices, as well as forwards and futures,visit our Commodities Pages.