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Forwards recap: November power takes reins as front month biased higher

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Forwards recap: November power takes reins as front month biased higher

Power prices for November were biased higher during the week ended Oct. 6 despite a combination of slack demand implied by mid-range weather forecasts and lower fueling costs implied by losses in natural gas futures.

At the natural gas futures arena, trading action kicked off Oct. 2 with the front-month November contract dropping 9.1 cents to $2.916/MMBtu following pressures from a lack of fundamental weather support. Losses extended the next day Oct. 3 with front-month gas easing by 2.1 cents to close at $2.895/MMBtu.

November gas found some relief during the midweek Oct. 4 session as short covering allowed market bulls to lift the contract by 4.5 cents to $2.940/MMBtu. However, the report of a 42-Bcf net injection during the week ended Sept. 29, which was lower than consensus estimates and historical averages, failed to inspire higher moves and November gas still closed the Oct. 5 session in the red at $2.923/MMBtu, down 1.7 cents.

Front-month gas remained tethered to the downside Oct. 6 despite Tropical Storm Nate continuing to head toward the Gulf of Mexico and threatening U.S. oil and natural gas production interests. The gas market ultimately closed with a 6-cent loss to $2.863/MMBtu. Overall, front-month gas tumbled by 5.3 cents during the review week spanning Oct. 2-6.

At wholesale electricity markets, power packages for November took over as the prompt-month product and spent the debut week in positive territory, withstanding the combination of declining fueling costs and forecasts for lower demand.

Encompassing the week's defiant sentiment and noting the biggest gains was the New England Mass hub, where prompt-month products changed hands at $33.01 on Oct. 2 and $35.00 on Oct. 6, up 6% over the period.

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Other markets in the East leaned flat to higher over the week. PJM West November changed hands at $31.13 on Oct. 2 and $32.32 on Oct. 6, up 4% during the period, while prompt-month power at New York Zone G added 86 cents for the week with deals opening at $30.97 on Oct. 2 and closing at $31.83 on Oct. 6.

In Texas, term deals at ERCOT North were pegged at $23.33 on Oct. 2 and $24.63 on Oct. 6, rising by 6% week on week.

Prompt-month packages on the western side of the country were biased higher as well. Mid-Columbia November was priced at $23.13 on Oct. 2 and $24.52 on Oct. 6, adding 6% for the week. November power at Palo Verde rose by 5% over the review period and was traded at $25.29 on Oct. 2 and $26.62 on Oct. 6. In California, South Path-15 November was transacted 44 cents higher and was quoted at $34.00 on Oct. 2 and $34.44 on Oct. 6.

Term trades in the central U.S. managed to stay in shallow positive territory despite a lack of fundamental support. MISO Indiana saw prompt-month power exchanged at $32.97 on Oct. 2 and $34.00 on Oct. 6, up 3% over the week. A gain of 37 cents was noted at PJM AEP-Dayton, where November power was valued at $31.66 on Oct. 2 and $32.03 on Oct. 6. PJM Northern Illinois November added a scant 23 cents for the period with power changing hands at $29.24 on Oct. 2 and $29.47 on Oct. 6.

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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.