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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: February 25th, 2021  (Wk 8)

 

POWER MARKETS

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WEST After natural gas prices normalized, Day Ahead prices calmed down, aver-aging $31.92/MWh and $25.22/MWh in SP15 and Mid-C, respectively, since last Saturday. In the term market, Q3 forward prices have moved up because of below-normal snowpack in California and uncertainty about the availability of the 1,300 MW baseload supply from Diablo Canyon Unit 1 during the summer.

ERCOT  Driven mainly by falling natural gas prices, term prices retreated in the front of the curve. Term heat rates were mixed with some consolidation in the front of the curve followed by a rally in the outer years. Meanwhile, given last week’s settles near the $9,000/MWh price cap, real-time prices could do nothing but hold there or go lower. At more than $100/MWh, the ORDC adder remains incredibly high for February. Fortunately, forward weather projections have taken a milder turn, so last week’s brutal market developments should not repeat them-selves.

EAST Both Day Ahead and Real Time prices have increasingly softened every day this week across the regional ISOs. For instance, whereas Day Ahead settled above $100/MWh in the main hubs of each ISO last Thursday, it printed in the low $20s/MWh to mid-$30s/MWh yesterday. In NYISO, DART spreads have picked up at Hudson Valley and NYC, where Day Ahead is above Real Time by an average of $15/MWh. A similar trend is happening at Indian Hub in MISO, where the DART spread is averaging $27/MWh this week.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending February 19, U.S. inventories decreased by 338 Bcf, more or less in the middle of the rather generous withdrawal range of 287 to 371 Bcf projected by the ana-lysts. Total stockpiles now stand at 1,943 Bcf, down by 13.3% from a year ago and 7.7% below the five-year average for the same week.

The March NYMEX futures contract expired yesterday, settling at $2.854/MMBtu, $0.215/MMBtu lower than last Friday’s final price, which was still elevated because of the polar vortex that afflicted most of the country last week. April, the new prompt month, has itself slid every day this week, including today, when the last trade as of 12:00 p.m. PT was $2.756/MMBtu, $0.039/MMBtu under yes-terday’s close and $0.235/MMBtu below last Friday’s. Although today’s reported drawdown was the second largest in the past decade, it had been largely anticipated and was apparently already priced in. The drops of more than $0.20/MMBtu for both March and April were the result of moderating weather across the country. The 12-month forward NY-MEX strip was more expensive today than at this time last month by ap-proximately $0.09/MMBtu.

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