Market Commentary

Market Commentary

Weekly Recap- Week Ending 10/21/2016

Stay up to date on the latest information and changes that may impact natural gas and electricity pricing with the Market Commentary. Download a PDF version of this week’s Market Commentary here.

Daily Natural Gas Settlements

Unseasonably warm temperatures finally made an impression on the NYMEX last week. The prompt month November contract spent the end of the week in a tailspin and finished the week below the psychologically significant $3 threshold.

Last Week on the NYMEX

The 12 month strip was not quite as bearish. It dropped just 2.4% on the week compared to almost 9% for the prompt month. 12 month strip power prices consistently dropped between 1% and 1.5% in most markets.

Natural Gas in U.S. Storage

With natural gas entrenched in the shoulder season and storage looking like it will fill up as scheduled, the rest of this commentary will look back at the past summer and some key takeaways:

  • It was the hottest summer of the last 4 summers in PJM
    DC and Philly saw 40 days of daily highs in the mid-to-upper 90’s
  • Cooling degree days were 16% higher than the 10-year average for summer months
  • However, peak demand in PJM came in at 151.3 GW, just below PJM’s normal weather expectation of 152.1 GW
  • For comparison, 2013 was a relatively normal year from a temperature perspective but saw a peak demand of 157.5 GW
  • The disconnect between high consumption and low peak demand can be attributed to a) energy efficiency in lighting, TV’s, and air conditioners b) behind-the-meter solar growth and c) focused and effective conservation of energy by end users
  • As a result of the low peak demand, power prices in the day-ahead market remained consistently weak throughout the summer, especially in PJM

NOAA 6-10 Day Outlook

Weekly Commodity Changes in Power Markets (c/kwh)

The comments made above regarding the NYMEX futures market are the sole opinion of the author, not necessarily the opinions of Interstate Gas Supply, its officers or its employees. Information provided in this “Market Update” is for illustration purposes only, and neither the author nor Interstate Gas Supply shall be liable for any information contained herein.

IGS Energy provides weekly analysis and market updates on industrial and commercial natural gas news. We cover natural gas prices, futures, and national storage information, giving you the most accurate market data.

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