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Key Market Insights

Power prices in the East rallied this past week as above normal temperatures are forecasted for much of the week of the 4th of July. Loads should be somewhat moderated given the holiday is in the middle of the week but mid-90s should still bring some price volatility. The July contract at PJM West is up roughly $0.80 this morning trading $42.25 which represents a roughly $3.50 rally from June 19th. Term markets continue to be a snooze as the Cal20-22 strip was unchanged on the week as the market rightly focuses on near term demand events.

Electricity Price Trends

Price Trends At Key Trading Points ($/MWH)

price trends

Cash prices in the West were slightly lower on the week due to lower realized loads with SP15 clearing $32.83 (down from $34.60) while Mid-C averaged $20.76 down modestly from the prior week at $21.56. Hydro generation continues its weekly decline as the peak of generation for this resource looks to have been early June. GCL is sitting at 12854.4 ft., just 6.6 feet from full pool. Term markets came under pressure last week as fuels drifted lower and cash prints are coming in lower than expectations.

12 month strip price

strip price

Cash prices continue to underwhelm with June18 liquidating xxx on-peak thus far for June (The Jun18 contract traded as high as $140 in late May). The lack of cash volatility has taken a significant portion of the risk premium out of the Jul18-Aug18 contract which settled $112.60 on Friday representing a $92.40 decline from the highest trade of $205 on May 25th. Significant weather volatility can still prices higher but thus far ERCOT has been able to manage rather decent loads albeit with a rather healthy generation stack.

Other News

SERC demand was strong across the region pushing the dispatch stack into the peaking assets for many of the on-peak house. Natural gas generally ignored the increase call from power demand thus continuing to focus on end of season stocks in October. We did see some other items that were constructive cash prices in SERC this week as unplanned outages on both generation and transmission keep a constant bid to the market. The strength was a short term weather driven event as nothing structurally has changed to feed into forward markets. A few weather models opening up to the possibility of increased precipitation moving into GA/AL from the gulf roughly 20 days from now. Forward liquidity was poor again this week with most terms having the typical $1.00-$2.00 bid/ask spread with little motivation on either side.

Natural Gas Price Trends

Northeast spot natural gas prices ($/MMBTU)

Natural gas spot

NYMEX HH 5-year futures

Natural gas spot

 

All information is pulled from Macquarie and Crius internal databases as of June 2018. All materials published on this document are based on real-time and/or historical data, and are for informational purposes only. Crius Energy makes no representations or warranties, express or implied, as to the quality, accuracy, completeness, or reliability of the information provided here. Crius Energy accepts no responsibility for any loss, damage, costs or expense (whether direct or indirect) incurred as a result of any error, omission or misrepresentation of any information on this page. This content includes predictions, estimates, or other information that might be considered forward-looking. Any forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements.