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Forwards recap: Term power markets mixed as May gas takes lead

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Forwards recap: Term power markets mixed as May gas takes lead

Power prices for April delivery moved in different directions during the week ended March 31 as values reflected conflicting signals from higher fueling costs due to gains in natural gas futures and moderating demand brought about by spring weather.

At the natural gas futures arena, modest losses kicked off the review week March 27 with the front-month April contract shedding 2.4 cents to $3.052/MMBtu amid a dearth of near and mid-term fundamental support. April gas regained some ground March 28 owing to short covering ahead of the contract's expiration on March 29 and added 4.4 cents to close at $3.096/MMBtu with options expiring the same day.

The midweek March 29 session was marked with April gas rolling off the board in positive territory at $3.175/MMBtu, up 7.9 cents, with gains once again fueled by short covering. Not far behind, the soon-to-be front-month May contract ended the day 5.4 cents higher at $3.231/MMBtu.

May gas, however, had a less-than-stellar debut March 30 as it fell 4.0 cents to $3.191/MMBtu with the downside supported by a 43-Bcf net withdrawal that was below market expectations but still above historical averages. Front-month gas stayed on the defensive March 31 with the May contract still shedding a scant 0.1 cent to exit the review week at $3.190/MMBtu. Despite the downtick, the transition of contracts from April to May gave front-month gas a 13.8-cent gain overall during the review week spanning March 27-31.

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Across wholesale electricity markets, trading action for April power was pointed higher in the East and Midwest but took a few steps back in Texas and the West as spring weather suggesting subdued demand clashed with higher fueling costs implied by gains in gas futures.

The biggest gains of the review period were noted at NEPOOL-Mass where April power rose by 19% week on week and changed hands at $33.80 on March 27 and $40.26 on March 31.

Other East markets also favored the upside. New York Zone G April was up 14% for the week with trades opening at $32.22 on March 27 and closing at $36.79 on March 31 while a more modest 6% increase was noted at PJM West with April power exchanged at $33.29 on March 27 and $35.13 on March 31.

Muted but higher moves were seen in the central U.S. PJM AD April notched at 62-cent gain with transactions pegged at $33.96 on March 27 and $34.58 on March 31. A 93-cent premium was posted at PJM Northern Illinois with April trades assessed at $31.79 on March 27 and $32.72 on March 31. Prompt-month power at MISO Indiana was up 46 cents for the period and was traded at $34.57 on March 27 and $35.03 on March 31.

In Texas, ERCOT North April shed 21 cents with transactions valued at $27.77 on March 27 and $27.56 on March 31.

Flat to lower moves were seen in the West. In California, South Path-15 deals slipped 37 cents and were done at $20.32 on March 27 and $19.95 on March 31. In the Northwest, following the abundance of cheap hydroelectric power, Mid-Columbia April was traded at $8.52 on March 27 and $7.73 on March 31, for a 79-cent weekly loss. In the Southwest, Palo Verde dropped $1.89 during the period with April power priced at $21.83 on March 27 and $19.94 on March 31.

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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.