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Forwards recap: Term markets retreat as gas prices flounder

Moderating weather and a decline in fueling costs due to losses in natural gas futures pushed most forward power markets lower during the week ended Jan. 20.

Action during the Martin Luther King Jr. holiday-truncated workweek kicked off Jan. 17 with the front-month February natural gas futures contract revisiting the downside, slipping by a scant 0.7 cent to settle at $3.412/MMBtu. Losses extended further Jan. 18 with February gas crumbling to weather pressures and closing the day at $3.302/MMBtu, down 11.0 cents.

Front-month gas regained some ground Jan. 19 due to support from a better-than-expected 243-Bcf net withdrawal during the week ended Jan. 13, allowing it to add 6.6 cents to settle at $3.368/MMBtu. The upside would be short-lived Jan. 20 as weakening fundamentals sent February gas tumbling by 16.4 cents to exit the review week below $3.25/MMBtu support at $3.204/MMBtu. Overall, front-month gas lost 20.8 cents during the review week spanning Jan. 17-20.

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The subsequent drop in fueling costs owing to the retreat in gas futures along with expectations of slack demand brought about by weather forecasts also pushed major wholesale electricity markets lower during the review period.

Encompassing the week's predominantly bearish sentiment were February deals at NEPOOL-Mass, where power was priced at $70.65 on Jan. 17 and $60.41 on Jan. 20, down 14% over the period.

Other markets in the East fared no better. PJM West February began the review week at $44.84 on Jan. 17 and exited at $41.80 on Jan. 20, down $3.05, while February power prices at New York Zone G tumbled 10% in trades done at $63.75 on Jan. 17 and $57.51 on Jan. 20.

Modest losses were also noted across hubs in the Midwest. February deals at PJM AD were down 6% for the week and were pegged at $41.12 on Jan. 17 and $38.84 on Jan. 20, while MISO Indiana February also slipped 6% during the period in trades noted at $42.00 on Jan. 17 and $39.29 on Jan. 20. Losses of $2.18 were posted at PJM Northern Illinois, where February power changed hands at $38.52 on Jan. 17 and $36.34 on Jan. 20.

Prompt-month power in Texas also favored the downside with ERCOT North pricing term packages at $29.64 on Jan. 17 and $27.16 on Jan. 20, about 8% lower for the week.

Prices in the West, however, were varied but almost flat overall. South Path-15 February added 25 cents in transactions assessed at $32.75 on Jan. 17 and $33.00 on Jan. 20, while Mid-Columbia saw February power exchanged 42 cents higher in deals posted at $26.50 on Jan. 17 and $26.92 on Jan. 20. Prompt-month power at Palo Verde was exchanged at $26.35 on Jan. 17 and $25.64 on Jan. 20, slipping 71 cents for the period.

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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.