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Forwards recap: August power ticks higher as weather, gas support

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Forwards recap: August power ticks higher as weather, gas support

Elevated cooling demand expected to come with hotterweather forecasts and higher fueling costs implied by an uptick in the naturalgas futures complex drove most power trading hubs across the country to priceAugust power at a modest premium during the week ended July 22.

After ending the previous week with gains, thefront-month August natural gas futures contract opened the review period July18 uninspired by weather forecasts and slid 3.4 cents to close at $2.722/MMBtu.A hefty inventory bogged down August gas further July 19 as the contract wasonly able to add a scant 0.6 cent to end the day at $2.728/MMBtu.

The midweek July 20 session was marked withfront-month gas falling by 7.0 cents to settle just slightly above the keysupport of $2.650/MMBtu at $2.658/MMBtu as bears took advantage of bull'sreluctance to push the contract higher ahead of U.S. Energy InformationAdministration's release of the weekly storage report the following day.

Cautious trading paid off July 21 as the EIA reporteda 34-Bcf netinjection into natural gas inventories during the week ended July15 that was below consensusestimates and historical averages with bulls building on themomentum to pull August gas up by 3.4 cents to settle at $2.692/MMBtu. Gainscontinued July 22 with front-month gas rising 8.5 cents on the session to exitthe workweek at $2.777/MMBtu. Overall, August gas added 5.5 cents during the reviewperiod from July 18 to July 22.

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At wholesale electricity markets, term prices forAugust delivery were biased higher as supportive weather outlooks impliedstronger demand by and gains in natural gas futures drove increased fuelingcosts.

Posting the biggest increase for the review week wereterm deals at Mid-Columbia, which opened at $29.50 on July 18 and closed at$32.49 on July 22 for a week-on-week premium of $2.99.

Elsewhere in the West, term prices also saw a boostfrom supportive fundamentals. South Path-15 August traded at $38.83 on July 18and $39.83 on July 22, up by a dollar for the week, while term deals at PaloVerde were quoted at $37.72 on July 18 and $39.50 on July 22, adding $1.78during the period.

In the East, August power deals were mixed to lower asprices at some locations drew little incentive from robust demand and greaterfueling costs. NEPOOL-Mass August began the week at $38.92 on July 18 andexited at $37.90 on July 22, down by $1.02 for the week, while New York Zone GAugust shed a scant 72 cents in trades pegged at $39.16 on July 18 and $38.44on July 22. Defying the trend were prompt-month packages at PJM West, whichwere assessed at $39.78 on July 18 and $40.16 on July 22, adding 38 cents overthe week.

In the central U.S., August deals favored the positiveside of the ledger due to weather-driven demand support and rising fuelingcosts. Term trades at PJM AD were done at $36.90 on July 18 and $38.28 on July22, up by $1.38 for the review period, while a weekly increase of 88 cents wasseen for August deals at PJM Northern Illinois, which were posted at $35.92 onJuly 18 and $36.80 on July 22. August transactions at MISO Indiana were done at$36.46 on July 18 and $38.32 on July 22, up by $1.86 during the review period.

Down South, term prices in Texas floundered,unimpressed by strong demand and increased fueling costs. ERCOT North Auguststarted the week at $74.56 on July 18 and ended at $60.86 on July 22, fallingby $13.70 over the period.

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.