Weekly Energy Market Update: January 22, 2018

Natural Gas 

The February 2018 Nymex natural gas contract continues to trade in a volatile manner.  This morning it’s up 5c to $3.235 and is set to expire next Monday the 29th.  While near term cold weather has moderated for the Midwest and East regions, forecasts for February remain cooler than normal and another late month arctic intrusion is looming for the Midwest.  Storage withdrawals remain a bullish factor illustrating the strong underlying demand in the gas market place.  Last week’s EIA report was a somewhat bearish 183 bcf withdrawal following on the prior week’s record 359 bcf.  This week’s report is estimated to be in the 250 bcf range and should result in the deficit to the five year average increasing.  Storage withdrawals are now forecasted to draw down inventory levels to around 1,250 bcf in mid April, which is around 200 bcf under estimates at the start of the winter.  This increases summer refill demand in a season that is likely to be warmer than last summer with a budding El Nino weather pattern.  Higher LNG production and exports to Mexico complicate the summer picture and will likely put further upside pressure to Nymex prices.  Cash prices were soft over the weekend with Transco Z6 and M3 both averaging less than a 20c premium to the Hub in the $3.30s.  February gated prices remain elevated but currently a slight discount to January bid week, with Algonquin trading around an $8 premium to the Hub.  Marcellus prices and summer gated prices are seeing some weakness with the fixed price strength and confidence around higher production levels.  M3 prices for the Apr18-Oct18 period have weakened to around Hub minus 50c and Dominion South has also weakened to Hub minus 65c for the same period.

Electricity 
Current Month Markets

DA and RT markets both saw significant declines this weekend as 50 degree temperatures blanketed the east coast.  This is shaping up January to be a very interesting month with record setting cold on in the first two weeks offset by record warmth for the remainder of the month. Given current levels and the warm guidance through the remainder of the month, we can expect DA and RT to continue coming off their beginning of the month highs.

Market MTD DA Settle ($/MWh) MTD RT Settle ($/MWh)
NEMA (ISO-NE) $128.45 $130.79
PSEG (PJM) $115.13 $115.62
ZJ (NYISO) $122.17 $129.82



Forward Markets

As forecasts warmed up significantly in the last week there remains a great deal of movement on the February contract. Supporting higher prompt month prices is a call for another round of cold sometime in the middle of the month. Volatility will likely remain very high as traders try to time the cold blast ahead of securing profits. Beyond that, market have remained relatively range bound and will likely remain there until a better idea of end-of-season gas storage frames up the supply picture for the spring and summer months.

Regulatory
More Municipalities Seek Approval For Opt-Out Aggregations In New York

Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Municipal Electric and Gas Alliance (MEGA), which is already an approved administrator for various community choice aggregations (CCAs) in New York, has filed with the PSC for authorization to offer opt-out aggregations in several additional municipalities.

MEGA has sought authorization to expand its opt-out aggregations to the Towns of Spencer, Hancock, and Nelson, and the Villages of Horseheads and Naples

The Town of Spencer and Villages of Horseheads and Naples would be included in MEGA’s NYSEG C Aggregation Group, and the Town of Hancock would be included in MEGA’s NYSEG E Aggregation Group.

The Town of Nelson would be served via the creation of a new MEGA Aggregation group, National Grid C.

MEGA has submitted local approval packages for each of the above municipalities to the PSC

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