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Power dailies favor losses ahead of weekend; PJM West firm

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Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Power dailies favor losses ahead of weekend; PJM West firm

Next-day power values across the U.S., excludingtrades done at PJM West, were tethered to the downside Thursday, April 28, asdailies reflected forecasts of potentially sluggish Friday demand and limitedsupport from mixed to higher spot natural gas prices.

After notchinglosses prior to its debut session as the new lead, the front-monthJune natural gas futures contract slipped 7.5 cents to settle at $2.078/MMBtu. Puttingpressure on June gas was storage data from the U.S. Energy InformationAdministration, which reported a better-than-expected73-Bcf net injectioninto natural gas inventories in the Lower 48 during the week ended April 22.

Despite the downtick in futures, most spot natural gasmarkets, with the exception of deals done in the Northeast and PG&ECitygates, embraced gains. In addition, spot gas trades were done for the combineddelivery days of April 29-30.

Looking at other supply, total U.S. increasedearly April 28 to 84.17%, rising from 83.50% on April 27 and still holdingabove 82.96% level recorded on the same day in 2015.

Eastdailies post varied moves with sagging demand, declining gas prices

Next-day power packages in the eastern U.S. were mixedThursday as dailies were bogged down by forecasts calling for softer Fridaydemand and retreat in spot natural gas prices.

At NEPOOL-Mass, next-day deals were pegged in the high$20s and low $30s, falling down from a prior day index of $33.75, while powerat PJM West was quoted in the high $20s increasing by slightly less than adollar from Wednesday.

Day-ahead markets in the Northeast saw mixed butpredominantly lower moves. DAMs deals at NEPOOL-Mass fell by more than $5 toaverage $25.92 while declines of about a dollar were seen at New York Zone Gand New York Zone J both of which slipped to averages of $26.82 and $29.30,respectively. Running counter to the trend were DAM trades at New York Zone A,which gained about $5 from the midweek to rise to an average of $29.00.

Offering power parcels no respite was a decline inspot gas markets. Gas transactions at TETCO-M3 and Transco Zone 6 New Yorktumbled by more than 10 cents on the session with each hub falling to averagesbelow $1.30/MMBtu and less than $1.35/MMBtu, respectively.

Grid operators in the Northeast and the Mid-Atlanticanticipate slack demand at the end of the workweek. Peak Friday load in NewEngland could hit 13,650 MW, down 520 MW from Thursday, while demand in NewYork should top out at 17,517 MW on Friday, shedding close to 400 MW from theday prior.

The PJM Mid-Atlantic region expects load to peak at29,820 MW on Friday, stumbling by roughly 700 MW from Thursday, while the PJMWestern region forecasts a Friday high at 45,829 MW, falling by more than 1,000MW from the day before.

ERCOTdailies flounder with demand but propped up by gas

Next-day power products in Texas lost some valueThursday, with the demand-driven downside partially mitigated by biased higherregional spot natural gas prices.

ERCOT projects peak Friday load to reach 47,681 MW,decreasing by more than 1,900 MW from Thursday. Uninspired by demand, next-daypower at ERCOT North was exchanged in the low $20s, for a daily loss of morethan $3.

Day-ahead markets in Texas were mixed but leanedultimately lower. DAM deals at ERCOT Houston fell by about $4 to average$22.20, while losses of more than a dollar swept through DAM trades at ERCOTNorth and ERCOT South with both posting averages of $20.51 and $20.94,respectively. Defying the downtrend, on the other hand, were DAM transactionsat ERCOT West which gained more than $3 to average $18.03.

Providing dailies with much needed support was anuptick in spot gas markets. Gas transactions at the Henry Hub were about a centhigher from Wednesday to average close to $1.90/MMBtu, while deals at El PasoPermian were steady to the day prior and retained an average above $1.70/MMBtu.

Westdailies biased lower in revised trade

Trading activity in the West favored the downsideThursday owing to outlooks suggesting slack demand due to next-day schedulerevisions but with losses pared back by mixed to higher spot natural gas prices.

Next-day deals in the West were done for the combineddelivery days of April 29-30, with the inclusion of the typically lower demandweekend day providing downward pressure on values.

In the Northwest, power dailies at Mid-Columbia fellby around $2 with deals done in a range spanning the single digits to the lowteens, while in California, power at South Path-15 slipped by less than adollar with trades pegged in the mid-teens. Power trades in the Southwestcontinued the trend, with Palo Verde easing on the session in the mid- to highteens while transactions at Mead dropped more than $2 in the mid-teens.

Spot gas markets moved mostly higher, with deals atMalin and SoCal Border increasing by more than a cent to post averages around$1.75/MMBtu and about $1.80/MMBtu, respectively, while trades at PG&ECitygates tumbled roughly 5 cents from the midweek to an average below$2.00/MMBtu.

The CAISO predicts peak Friday load to touch 27,632MW, dropping by roughly 400 MW from Thursday with demand possibly falling evenharder over the weekend.

Midwestmarkets pressured by demand but supported by gas

Power markets in the Midwest saw conflicting signalsThursday, as dailies were depressed by forecasts of lower Friday demand but withsupport garnered from flat to higher spot natural gas prices.

PJM regions in the central U.S. anticipate load totaper off ahead of the weekend. Friday demand in the PJM AEP region may crestat 14,479 MW, slipping close to 600 MW from Thursday, while load in the PJMComEd region may run up to 11,060 MW on Friday, dropping nearly 200 MW from theprior day.

Spot gas markets were biased higher and offereddailies some support. Gas deals at NNG Demarc added more than 2 cents to riseto an average close to $1.90/MMBtu, while trades at Chicago Citygates sawlittle change from Wednesday and retained an average above $1.90/MMBtu.

Market prices and included industry data are currentas of the time of publication and are subject to change. For more detailedmarket data, including power, naturalgas and coal indexprices, as well as forwards and futures,visit our Commodities Pages.