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Forwards recap: Term values swept higher with gas futures

Power prices along the forward curve were swept higher in the week ended Dec. 23 as the front-month natural gas futures contract posted some impressive gains in the second half of the week.

Term power markets in the week ended Dec. 23 began the week pressured by the gas market but with forward markets reclaiming losses and then some in the second half of the week as gas futures rallied with the help of a supportive storage report.

January 2017 natural gas started the week on a bearish note with a loss of 2.3 cents on Dec. 19 and a decline of 12.9 cents on Dec. 20 but reversed higher with conviction midweek with a gain of 27.9 cents on Dec. 21.

The gas market returned to the downside Dec. 22 as the January 2017 contract eased 0.4 cent, even after the U.S. Energy Information Administration reported a bigger-than-expected 209-Bcf natural gas storage withdrawal for the week ended Dec. 16. However, the impressive gains resumed in the week's final session Dec. 23 with a gain of 12.4 cents to some of its highest levels in more than two years.

The January 2017 contract added a collective 24.7 cents in the five days ended Dec. 23 with all of those gains occurring Dec. 21 and Dec. 23.

In power trading, front-month deals for January 2017 flow mostly tracked the movement of the natural gas market, rallying in the second half of the week.

January 2017 power deals at the NEPOOL Mass hub began the week near $66.50, shot up to above $73 by midweek and continued to above $85 by the end of the week, up a whopping 28% on the week.

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Likewise, PJM West in the mid-Atlantic saw hefty gains, starting the week below $47 and ending above $52.50, up 12% for the week.

Neighboring Midwest markets also saw January 2017 power prices press higher during the week as the PJM Northern Illinois hub began the week below $40 and finished above $45 by Dec. 23, up 13% for the week, and front-month deals at PJM AEP-Dayton rallied 19% on the week, beginning just below $40 and ending Dec. 23 above $47. The MISO Indiana hub held firm with the gas gains, trading in the low $40s to start the week and in the upper $40s later in the week.

In Texas, January 2017 power prices at ERCOT North added a relatively meager amount over the course of the week with most deals done in the low $30s.

In the West, Mid-Columbia in the Northwest ended the week close to $3.50 higher than where it began, trading just below $30 early in the week before ending the week near $33, up 12% during the week. South Path-15 ended more than $2 higher on the week near $39, up 6%, while Palo Verde in the Southwest also added $2 throughout the week with action pegged near $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.