Weekly Energy Market Updates by Region

Issue week: February 24th, 2022  (Wk 8)

 

POWER MARKETS

 

WEST  As frigid weather has increased both commercial and residential demand for natural gas in the Pacific Northwest, pushing up natural gas spot prices, Mid-C has had to send price signals above those of CAISO to keep gas from flowing south. Consequently, Day Ahead prices have cleared around $53/MWh and $57/MWh in SP15 and Mid-C, respectively, since Tuesday. In the forward market, prices are slightly higher than last week.

ERCOT  After an overnight swell due both to extended cold and to intermittency in some resources currently online, real-time prices actually hit quadruple digits this morning! Consequently, the MTD average of Hub pricing in Houston has climbed to more than $52/MWh, whereas it was around only $28/MWh through day 22. Term prices have increased by $1-$2/MWh out the curve because of developments in the natural gas market, where prices are on the rise not only because of the aforementioned cold but also because of volatility in crude oil prices. The newly approved ORDC has reduced the price cap from $9,000/MWh to $5,000/MWh, but its steeper slope does allow higher prices in times of scarcity.

EAST Prices continue to level out in ISO-NE and NYISO and are now in double digits. In MassHub, Day Ahead is averaging $69/MWh, $12/MWh above Real Time. These Day Ahead and Real Time averages are 30% and 50% lower than last week, respectively. Similarly, the Day Ahead and Real Time averages have dropped to $60/MWh and $58/MWh in both Hudson Valley and NYC. Both Day Ahead and Real Time in the main PJM and MISO hubs are holding steady in the $40s/MWh.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending February 18, U.S. inventories decreased by 129 Bcf, only 4 Bcf more than the anticipated removal of 125 Bcf. Total stockpiles now stand at 1,782 Bcf, down by 10.5% from a year ago and 10.7% below the five-year average for the same week.

The NYMEX prompt month of March expired today with much less fireworks than did February a month ago. As the market awakened to news of Russia’s invasion of Ukraine, it did reach $4.920/MMBtu in early morning trading but spent the rest of the day calming down and ultimately closed at $4.568/MMBtu, $0.055/MMBtu lower than yesterday’s final. The current instability in Europe is certain to affect energy markets everywhere, but, so far, the sanctions announced today by the U.S. Treasury Department in response appear to have left gas markets largely unharmed. Indeed, the White House issued a statement saying, “We were deliberate to direct the pain of our sanctions towards the Russian economy, not ours. None of our measures are designed to disrupt the flow of energy to global markets.” A State Department official echoed that point to Reuters, assuring, “The sanctions that are being imposed today, as well that could be imposed in the near future, are not targeting and will not target oil and gas flows.”