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AM Power Report: Dailies could be split between easing demand, supportive gas

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Essential Energy Insights - September 17, 2020

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AM Power Report: Dailies could be split between easing demand, supportive gas

Power prices at the daily markets could vary Thursday, Dec. 15, as predominantly declining demand forecasts for the close of the workweek collide with support from the gas side.

Gaining 6.6 cents in the prior session, front-month January 2017 natural gas futures were slightly lower overnight ahead of the Thursday open. At last glance, the contract was down 1.5 cents to $3.525/MMBtu on light profit-taking ahead of the midmorning release of weekly natural gas storage data.

Cold weather, which increased demand, and a drop in production due in part to freeze-offs, are expected to have combined to drive an impressive storage withdrawal in the U.S. Energy Information Administration's Dec. 15 report. The data is expected to outline a pull of between 117 Bcf and 144 Bcf, with a consensus formed at a 132-Bcf withdrawal. The fourth pull of the season will accelerate the rate of storage erosion following a 42-Bcf pull from stocks in the week to Dec. 2 and will be well above historical averages.

In terms of demand, outlooks suggest weaker load in much of the country at the close of the workweek, as business-related demand typically tapers off approaching the weekend break.

In the Northeast, demand in New England is set to defy the broad downtrend as it is forecast to see highs at 19,500 MW on Thursday and 20,200 MW on Friday, while load in New York is called to reach 22,564 MW on Thursday and 22,109 MW at the close of the workweek. Farther south, PJM Western region demand is seen touching a high near 70,000 MW on Thursday and 65,136 MW on Friday, while PJM Mid-Atlantic load is expected to crest at 44,783 MW on Thursday and 43,071 MW on Friday.

In the Midwest, load in the PJM AEP region is forecast to hit highs at 22,066 MW on Thursday and 21,741 MW at the end of the business week, while demand in PJM ComEd is projected to peak at 16,375 MW on Thursday and 14,551 MW on Friday.

In the South, load in ERCOT should near 42,021 MW on Thursday and 40,620 MW on Friday. In the West, demand in CAISO is poised to top out at 30,170 MW on Thursday and 29,620 MW on Friday, which should work to exert pressure on power dailies in the region Thursday as traders book revised partly weekend products for Friday to Saturday delivery.

In forward trade, power values for January 2017 predominantly favored the upside Dec. 14, in tandem with front-month natural gas futures that notched gains on the session to ultimately drive an uptick in fueling costs.

In the East, deals for January 2017 power delivery tacked on about 10 cents to average near $73 at NEPOOL-Mass but deflated by almost $2 against the dominant uptrend to an index at roughly $50 at PJM West. Power trades for February 2017 were assessed in the mid-$70s in New England and in the low $50s at PJM West.

In the Midwest, month-ahead power prices faltered by about 60 cents against the wider advance to an index atop $45 at PJM AD but rose by more than $1 at both PJM Northern Illinois and MISO Indiana to average above $44 and near $47, respectively. Looking ahead, price action for February 2017 power similarly ran through the low to high $40s.

In the South, gains of about 20 cents at the ERCOT markets steered front-month power pricing to indexes ranging from atop $31 to a little over $33, while regional price activity for February 2017 power was likewise spread in the low $30s.

In the West, California saw power transactions for January 2017 lifted by nearly 90 cents to an index close to $41 at North Path-15 and boosted by roughly 50 cents to an average at about $39 at South Path-15, as Mid-Columbia and Palo Verde saw prompt-month power deals advance by more than 20 cents to indexes near $31. Power trades for February 2017 were done in the high $30s in California and in the high $20s to low $30s elsewhere in the region.

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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 and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.