Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

In this list
Coal | Natural Gas

Generation share for gas in the US Northeast likely to fall this winter as prices rise

LNG | Natural Gas | Natural Gas (North American)

Historic price volatility envelops US, Texas natural gas markets

Electric Power

Platts Forward Curves – Gas and Power

Electric Power | Renewables | LNG | Infrastructure Utilities

Caribbean Energy Conference, 21st

Coal | Emissions | Electric Power

Central Appalachia 2020 coal deliveries to US power plants drop 37.5% on year: EIA

Electric Power | Renewables | LNG | Natural Gas

Fuel for Thought: For green hydrogen to catch up with blue, it's a long ride in India

Generation share for gas in the US Northeast likely to fall this winter as prices rise


Northeast cash markets rally off lows as temperatures fall

Market-area forwards prices hit $4 to $5/MMBtu range

New York — As more winter-like temperatures arrive across the US Northeast, rising cash prices there could begin to pressure market share for gas as power generators switch away from the fuel in favor of coal.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

In just the past several trading days, spot gas prices have been up sharply in both the Northeast market area and at upstream supply hubs in Appalachia.

At Transco Zone 6 New York, the cash market surged more than 40 cents Nov. 11 to $1.90/MMBtu. At the nearby Texas Eastern M3 hub, prices climbed about 30 cents to $1.76/MMBtu. Just several days prior, both locations recorded record-low settlement prices at less than 30 cents/MMBtu.

A similar rally in Appalachia also lifted prices from recent record lows around 30 cents/MMBtu. At Dominion South, the cash market climbed about 25 cents on Nov. 11 to $1.63/MMBtu. At Columbia Gas Appalachia the market added nearly 40 cents to trade at $2.12/MMBtu, preliminary settlement data from S&P Global Platts data showed.

Over the next week, Northeast cash markets are likely to continue strengthening as colder weather finally arrives in the region. According to an updated forecast from S&P Global Platts Analytics, Northeast temperatures will average nearly 2 degrees Fahrenheit below normal over the next seven days, boosting residential-commercial gas demand by nearly 50% compared to its month-to-date average.

As the extended shoulder season comes to an end, forward markets are expecting Northeast gas prices to climb further and trade well-above last winter's averages. With some market-area hubs priced at $4 to $5/MMBtu for January and February, gas could quickly fall out of favor in the PJM Interconnection – an ISO that includes key markets such as New Jersey, Pennsylvania, Maryland and Virginia.

Generation share

Recently, coal-fired generation in PJM has seen incremental gains at the expense of gas. According to Platts Analytics, these gains can be attributed to gas-fired generation outages and more coal-fired generation offering into the market as a price taker.

Month-to-date, generation share for coal has climbed to an average 22% this month, compared with 16% and 17%, respectively, in October and September.

Over the same period, gas share in the PJM generation stack has fallen to an average 31% – down nearly 9 percentage points compared to October and 10 percentage point compared to September.

As gas prices continue rising – particularly at downstream hubs such as Transco Zone 6 New York and Texas Eastern M3 – market share for gas could continue falling as power generators shift increasingly to coal.

In November, the $/MWh fuel cost ratio for coal vs. gas has fallen to an average 1.25 in PJM – down from an average 2.75 in September. As that ratio dips below 1, coal generation becomes cheaper than gas, likely making it the preferred fuel among power producers, S&P Global Platts data shows.

Forward prices

Heading deeper into winter, forward markets are expecting a sizeable jump in Northeast gas prices.

At Transco Zone 6 New York, calendar-month prices for January and February – typically the coldest months – are now trading around $5.50/MMBtu. Last winter cash prices there averaged little more than $2/MMBtu over that same two-month period.

At Texas Eastern M3, prices for January and February are currently trading around $4.65/MMBtu – also sharply higher compared to last winter's cash average of just $1.93/MMBtu, S&P Global Platts data shows.