Oil Prices go negative for the first time but Natural Gas and Power prices rally.

Natural gas prices rallied strongly last week continuing a bounce off previous week’s lows, while power prices were also up slightly. Prompt month oil futures went negative for the first time ever. Off shore wind projects are experiencing delays. 330MW of ERCOT solar scheduled to start commercial operation within a year. The Great Lakes and Northeast are forecast to experience below normal temperatures at the start of May.


Natural Gas

  • The May 2020 NYMEX Henry Hub traded up to $1.939/MMBtu, a $0.34 (+21.3%) increase from the previous Wednesday. The price of the 12-month strip averaging May 2020 through April 2021 futures contract climbed $0.25 (+5.9%) to $2.549/MMBtu.

  • For the week ending April 17, 2020, the EIA reported net injection into storage of 43 Bcf, which is less than last year’s net injection of 92 Bcf for this week and lower than the 5-year (2015–19) average net injection of 49 Bcf.

  • Working natural gas in storage totaled 2,140 Bcf, which is 827 Bcf (63.0%) higher than last year’s working gas totals of 1,313 Bcf at the same time and 364 Bcf (20.5%) higher than the 5-year (2015-2019) average of 1,776 Bcf. Total working gas is within the five-year historical range.

Power

  • The song remains the same in our power market view as markets continue to trade in tight range, this will continue into the summer, with obvious fundamental bearish conditions putting pressure on all forward terms. Prices did move up early last week in sympathy with the natural gas price move but as expected gave back almost all gains to finish the week flat to slightly higher in a few terms.

  • The pricing in New England MassHub for 12 Month peak was up slightly to finish at $36.72 with 24 Month peak up $0.30 week over week to end at $37.95. Other northeast locations had similar small moves last week. NYISO Zone (J) 12 Month peak flat at $35.12 and summer 2020 peak pricing up slightly to finish at $29.17. In PJM, your load serving zones were up slightly and West Hub 12 Month peak strip up to $31.70 and 24 Month peak strip up slightly as well at $33.25.

  • Only market with larger price movements was in ERCOT as fundamentals and low ISO clearing prices start to weigh on summer pricing. Houston zone 12 Month peak strip down to $43.79 and the 24 Month peak strip was down slightly to finish at $44.11. Trading volume is down and hedge execution taking a little longer than normal in this environment but still business as usual for most counterparties and great value opportunities to lock down margin out the curve in most load serving locations. Contact TrueLight to stay on top of value in current forward curve pricing with expert hedge strategy recommendations and learn more about our portfolio management execution expertise.


Utility Highlight

  • Headroom in the WMECO – R1 territory is now available in the shorter periods for contracts with 3 and 6 month terms. Headroom of $0.01660/kWh and $0.01001/kWh is likely for these periods, respectively.

  • Belltown Power Texas, a renewable development company has announced a 330MW solar deal in Texas. The three solar project are located in the North zone of ERCOT are expected to start commercial operations before March 2021.There is 168MW site in Fannin County that will be contracted by Rayburn County Electric Cooperative .A second 81MW site in Van Zandt County will also be contracted to Rayburn County Electric Cooperative. A third, 81MW site in Cooke County is contracted to Vistra Energy. Let TrueLight help you stay on top of all utility and market rates and subscribe to our PTC tracking and headroom reporting or use our price verification service to ensure you stay on top of all utility and market rate changes.


Clean Energy

  • Vineyard wind has announced a one and half year delay in their project off the coast of Massachusetts. The delay is due to a delayed release of its final Environment Impact Statement by the Department of Interior's Bureau of Ocean Energy Management (BOEM). Skipjack offshore energy announced a one-year delay in their 120 MW wind farm off the coast of Maryland. They delay is a result of a hold up with federal permitting. Is it me or are we starting to see a pattern developing to delay the offshore wind industry. Contact TrueLight Energy for renewable asset management services.

Market Intelligence

  • On April 20th the May future contract on the key U.S. oil benchmark, West Texas Intermediate, settled at negative $37.63. That means roles were reversed as sellers had to pay buyers to accept delivery of oil. This was the first time the U.S oil benchmark fell below zero. The worldwide collapse of demand for oil caused by COVID-19 created the situation that lead to this record occurrence. The lack of demand, as well as the failure of oil producer coordination to curb oil production when it was obvious it was needed, created an oil glut and lack of physical storage to hold oil. Market pricing for May was a good wake up call for the industry. For strategic energy market support and analysis of the most up-to-date energy market news or use our price verification service to ensure the most recent market shifts are reflected in your forward price assumptions.

Weather

  • Above average temperatures are forecast for the western continental U.S., along with the southern states in the 8-14 day window starting May 1st. Cool anomalies are expected to continue in the Great Lakes, Northeast and Mid-Atlantic states. The 4-corners states and west Texas are the highest chances for warmth.

© 2019 by TRUELight Energy LLC

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