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Forwards recap: March power prices swing lower with weak fundamentals

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Forwards recap: March power prices swing lower with weak fundamentals

Term power markets across the U.S. leaned mixed to predominantly lower during the week ended Feb. 16 as a scant increase in fueling costs was counterbalanced by forecasts for moderating weather that signaled declining demand.

Trading activity in natural gas futures kicked off Feb. 12 with a modest loss as forecasts for warmer weather alongside increased production worked to pull down the front-month March contract by 3.2 cents to $2.552/MMBtu. However, oversold conditions by Feb. 13 allowed front-month gas to gain 4.2 cents to $2.594/MMBtu.

The front-month contract returned to the downside Feb. 14 ahead of the following session's release of storage data from the U.S. Energy Information Administration with the contract shedding 0.7 cent to settle at $2.587/MMBtu. And despite a much larger-than-expected 194-Bcf net withdrawal during the week ended Feb. 9, front-month gas remained in shallow negative territory Feb. 15 at $2.580/MMBtu, down 0.7 cent, as market participants focused on warmer weather likely trimming demand and keeping more gas in inventories.

Traders continued to latch on to warmer weather outlooks Feb. 16 with the March contract exiting the review week at $2.558/MMBtu, down 2.2 cents. Overall, despite the lower settle, front-month gas still added 0.6 cent from Feb. 12-16.

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At wholesale electricity markets, power packages, except those in the West, favored losses as the scant increase in fueling costs owing to the higher settle in gas futures was countered by projections of moderating weather implying diminishing demand.

Mostly moving in line with front-month gas were March deals at PJM West, which were pegged at $33.80 on Feb. 12 and $32.60 on Feb. 16, down 4% for the week.

Other markets in the East sagged as well. A 17% decrease was noted at the New England Mass Hub, where March power changed hands at $45.87 on Feb. 12 and $38.10 on Feb. 16. New York Zone G posted at 9% weekly decline with March packages traded at $37.53 on Feb. 12 and $34.14 on Feb. 16.

Flat to predominantly lower moves enveloped markets in the central U.S. MISO Indiana March changed hands at $31.90 on Feb. 12 and $30.87 on Feb. 16, shedding 3% for the period. March packages notched a 2% weekly loss at PJM AEP-Dayton and PJM Northern Illinois with deals quoted at $32.20 on Feb. 12 and $31.39 on Feb. 16 at the former and $27.84 on Feb. 12 and $27.29 on Feb. 16 at the latter.

In Texas, March power at ERCOT North tumbled by 1% with deals opening at $26.97 on Feb. 12 and closing at $26.73 on Feb. 16.

On the western side of the country, power packages for March moved higher, Prompt-month packages at South Path-15 rose by 15% week on week and were priced at $25.68 on Feb. 12 and $29.49 on Feb. 16. Palo Verde March was assessed at $21.48 on Feb. 12 and $23.24 on Feb. 16, or 8% higher for the period. Term deals at Mid-Columbia were valued at $15.50 on Feb. 12 and $17.00 on Feb. 16, up by 10% for the week.

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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.