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Lackluster fundamentals continue to pressure US power markets


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Lackluster fundamentals continue to pressure US power markets

Power markets across the U.S. were mixed to lower Thursday, Jan. 19, amid sluggish Friday demand forecasts and declining spot natural gas prices.

Reports of a better-than-expected 243-Bcf net withdrawal from natural gas storage during the week ended Jan. 13 helped halt two consecutive sessions of losses and allowed the front-month February gas futures contract to add 6.6 cents to close the day at $3.368/MMBtu. However, spot gas markets continued to reflect declining demand and moderating weather with most hubs swinging lower on the session.

La Niña is expected to shift to a neutral pattern by February and should continue this trend through the first half of the year, according to a recent diagnostic discussion from the National Oceanic and Atmospheric Administration.

East dailies biased lower as fundamental support wanes

Power dailies traded in the East moved mixed to predominantly lower Thursday amid outlooks for decreasing demand and falling spot gas prices.

At next-day markets, power prices at New York Zone G slipped by about a dollar and ranged in the mid-$30s, while deals at PJM West shed less than $1 from Wednesday and spanned the low $30s. Defying the trend were dailies at NEPOOL-Mass, which were steady to Wednesday in the mid-$30s.

Day-ahead markets reflected subdued demand outlooks and ticked lower. DAMs at New York Zone A and New York Zone J shed $1 to $2 from Wednesday and averaged $31.61 and $36.37, respectively, while DAMs at NEPOOL-Mass and New York Zone G lost less than $1 from the midweek session and averaged at $33.12 and $35.72, respectively.

Grid operators in the Northeast expect demand to fall on the final day of the workweek. Load in New England may hit highs of 16,830 MW on Thursday and 16,520 MW on Friday, while demand in New York may near peaks of 20,126 MW on Thursday and 19,619 MW on Friday.

However, load in the mid-Atlantic may be varied. The PJM Mid-Atlantic region should see load peaks of 35,439 MW on Thursday and 35,608 MW on Friday, while the PJM Western region should see highs near 53,118 MW on Thursday and 50,589 MW on Friday.

Northwest markets notch gains; Calif., Southwest dailies flounder

Power values in the West, excluding those in the Northwest, held a downward bias Thursday as traders took into account lower spot gas prices and retreating demand associated with next-day schedule revisions, as trades covered the Friday and Saturday delivery days.

Posting the only gains of the session were hubs in the Northwest with Mid-Columbia and COB deals adding $1 to $2 from Wednesday and spanning the high $20s.

In California, power deals at North Path-15 eased from midweek and ranged in the mid-$30s, while trades at South Path-15 slipped by around $2 and were heard in the low $30s. Southwest dailies fared no better with Palo Verde transactions down almost $1 in the mid-$20s, while dailies at Mead were done roughly $2 lower in the mid-$20s as well.

The California ISO projects load to peak at 30,869 MW on Thursday and 29,808 MW on Friday with further drops expected over the weekend.

Texas DAMs varied despite sluggish fundamentals

Regional day-ahead markets in Texas diverged Thursday as some locations ignored slack Friday demand forecasts and tumbling spot gas prices.

Demand in Texas is expected to run up to 38,187 MW on Thursday and 37,786 MW on Friday.

Day-ahead markets, however, moved in different directions with ERCOT North and ERCOT West up less than a dollar to averages of $20.88 and $19.56, respectively, while ERCOT Houston shed around a dollar and averaged $30.90. DAMs at ERCOT South eased by less than $1 and averaged $25.25.

Midwest dailies tugged lower by declining demand, cheap gas

Trading activity in the Midwest on Thursday was pressured lower by subdued Friday demand forecasts and a dip in spot gas prices.

At the day-ahead markets, the PJM AEP Dayton hub saw prices average $32.25 while the PJM Northern Illinois hub saw an average DAM of $39.93, each down almost $2 on the day.

Load in the PJM AEP region should top out at 17,012 MW on Thursday and 16,009 MW on Friday, while demand in the PJM ComEd region may crest at 12,609 MW on Thursday and 12,475 MW on Friday.

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.