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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: January 30th, 2020  (Wk 5)

 

POWER MARKETS

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WEST As January comes to a close, the above-average tempera-tures, expected to continue through February, and strong snowpack continue to drive forwards down. The downturn in heating demand has considerably relaxed demand for natural gas and consequently softened spot prices over the past week.

ERCOT   With mild winter weather across the state, 7x24 real-time prices look to settle at an average of $16/MWh for January across all zones except the West Load Zone, where congestion has yielded an average of $22/MWh for the month. The ongoing collapse in front-month natural gas prices continues to take its toll on 7x24 forward prices. Since the beginning of November, when NG prices began their descent, forward prices are down by approximately $2.50/MWh.

EAST Prices have come back down from the jump seen last week. Both DA and RT prices in the main trading hubs in PJM, MISO, ISO-NE, and NYISO have averaged from the high teens to the low $20s/MWh for the week with minimal DART spreads.  

NATURAL GAS 

The EIA reported Thurs-day morning that, for the week ending January 24, U.S. inventories decreased by 201 Bcf, splitting the goalposts bookending the predicted range of 180-225 Bcf. Total stockpiles now stand at 2,746 Bcf, up by 23.6% from a year ago and 7.6% above the five-year average for the same week.

Although the storage re-port suggested rising de-mand, NYMEX prices seemed more focused on updated forecasts project-ing warmer weather on the way, which would reduce demand for heating as spring approaches. March contracts traded as low as $1.814/MMBtu, $0.051/MMBtu below yesterday’s close.

 

 

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WEATHER 

Temperatures will be above aver-age in the 1-to-5-day forecast peri-od across the entire country with the exception of the West Coast, where a cooling trend should take hold as next week begins.

During the 6-to-10-day forecast period, temperatures will be above seasonal averages along the East Coast, and clouds and rainfall may show up there toward the end of the period. Meanwhile, a swath of cold will stretch across the South-western desert.

Over the 11-to-15-day forecast period, temperatures should return to normal in most regions, although the Atlantic and Gulf Coasts are expected to be warmer than usual.

 

 

U.S. ECONOMY SYMPTOMATIC OF CORONAVIRUS?

The novel Coronavirus spreading through China is consist-ently making headlines as mortality and confirmed case sta-tistics are updated daily.  And although various world gov-ernments are keenly tracking this data, what’s more ob-scure is the virus’ ripple effects on the world economy.  With many publicly traded companies currently reporting earnings, additional insight can be gleaned as company ex-ecutives mingle with analysts and investors on earnings calls.  From food sales to entertainment to airlines, many sectors of China’s economy have already been affected and the impacts are trickling through to American compa-nies and their investors.  Here are some notable examples: 


Starbucks: Closed more than half of its stores in main-land China. 
McDonald’s: Closed several hundred stores in the af-fected Hubei Chinese province (as reported by Reuters) 
Apple: Closed one retail store in China and is restrict-ing corporate travel to the region.  The company warned hardware production could be affected as Chinese factories remain closed. 
United Airlines: Suspending at least 24 round trip flights between the US and China. 
Disney: Disneyland has been temporarily closed in Shanghai and Hong Kong. 
 

Additionally oil prices have dipped around $5 per barrel in the past week and Reuters reports that jet fuel prices are plummeting in Asia.  Meanwhile the Centers for Disease Control has advised against unnecessary travel to China and the White House is reportedly considering a complete ban on travel to China - any further travel restrictions will put additional downward pressure on oil prices. 
Only a handful of coronavirus cases have been confirmed in the U.S. yet American companies – and their investors – have already been affected by the disease outbreak.  The financial harm appears minimal at this time but it remains to be seen whether the virus will lead to more serious financial contagion.
 

 

 

 

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Disclaimer: This report is for informational purposes only and all actions and judgments taken in response to it are recipient’s sole responsibility. Champion Energy Services does not guaranty its accuracy. This reports is provided ‘as is’. Champion Energy Services makes no expressed or implied representations or warranties of any kind. Except as otherwise indicated in this report, this report shall remain the sole and exclusive property of Champion Energy Services and shall be free from any claim or right, license, title or interest. Champion Energy Services shall not be liable for any direct, indirect, incidental, consequential, special or exemplary damages or lost profit resulting from this report.