Natural gas prices fall in eastern markets. PJM suspends capacity auction activities pending FERC ruling, electricity prices stagnate, and warm temperatures persist into the second week of October.
The October 2019 NYMEX Henry Hub forward contract fell to $2.502/MMBtu, a -$0.14 (-5.1%) decrease from the previous Wednesday. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts decreased -$0.08 (-3.2%) to $2.505/MMBtu.
Natural gas prices took a steep decline in Northeast markets. Boston’s Algonquin Citygate prices decreased -$0.34 (-15.9%) to $1.80/MMBtu last Wednesday. Transco Zone 6 NYC prices decreased, falling -$0.39 (-19.4%) from $2.01/MMBtu to $1.62/MMBtu.
Pennsylvania’s Dominion South decreased -$0.47 (-23.7%) to $1.51/MMBtu. Tennessee Zone 4 Marcellus spot prices decreased -$0.41 (-21.9%) to $1.46/MMBtu.
California price movements have been mixed since last week. SoCal Citygate prices rose $0.54 (17.0%) to $3.72/MMBtu last Wednesday amidst warm temperatures driving natural gas demand for electricity generation. Prices at Northern California PG&E Citygate decreased, falling -$0.09 (-2.9%) to $3.02/MMBtu.
For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.33 (0.9%) to $37.36. The 24 Month ATC strip increased $0.20 (0.5%) to $37.90 and the Cal 2020 ATC strip decreased -$0.26 (-0.7%) to $37.79.
For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $1.12 (2.7%) to $42.24. The 24 Month ATC strip increased $0.58 (1.4%) to $42.06 and the Cal 2020 ATC strip decreased -$0.18 (-0.4%) to $41.75.
For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.01 (0.0%) to $34.39. The 24 Month ATC strip remained the same at $33.77 and the Cal 2020 ATC strip decreased -$0.21 (-0.6%) to $33.66.
For the Houston zone in ERCOT, the 12 Month ATC strip increased $0.32 (0.8%) to $42.67. The 24 Month ATC strip increased $0.27 (0.7%) to $39.88 and the Cal 2020 ATC strip decreased -$0.05 (-0.1%) to $41.97.
The current Price to Compare for Illinois’ Commonwealth Edison (COMED) Demand Non-Electric Space Heating small commercial rate class (C28) is $0.07389/kWh, in effect for the period October 1, 2019 through October 31, 2019. This rate is a 9.2% increase from the previous rate of $0.06769/kWh for the September 1, 2019 through September 30, 2019 price period.
Headroom is now available in the COMED territory for the 12 month term, with $0.00097/kWh of likely headroom for the 12 month contract.
Over the last week, the COMED ATC 12-month strip decreased slightly, falling -0.5% to finish at $27.02/MWh yesterday. This time last year, the strip was trading at $29.41/MWh, which is 8.9% higher than this year.
Since the beginning of the year, the ATC strip has reached a high of $31.05/MWh on January 17, 2019 and a low of $25.39/MWh on July 1, 2019.
For the week ending September 20, the EIA reported net injections from storage of 102 Bcf, which is higher than last year’s net injections of 51 Bcf for this week and higher than the 5-year (2014–18) average net injections of 74 Bcf.
Working natural gas in storage totaled 3,205 Bcf, which is 444 Bcf (16.1%) more than last year’s working gas totals of 2,761 Bcf at the same time and 47 Bcf (-1.4%) lower than the 5-year (2014-2018) average of 3,252 Bcf. Total working gas is within the five-year historical range.
Supply and Demand
Average total supply of natural gas increased 1% week/week. Dry natural gas production increased 1% while net imports with Canada decreased 6% compared with the previous week.
Total US consumption of natural gas decreased by 3% since last week. Consumption for power generation decreased 6% week/week, industrial sector consumption remained the same, residential-commercial consumption increased 7%, and exports to Mexico increased 6%.
US LNG exports increased week/week, with twelve vessels departing US ports for a combined 44 Bcf.
PJM released an update to market participants that it is suspending all Reliability Pricing Model (RPM) Base Residual Auction activities for the 2022-2023 and 2023-2024 Delivery Years until FERC makes a decision on its capacity market rules. Uncertainty continues to surround PJM’s 2022-2023 capacity auction, which has been postponed twice after FERC declared its rules regarding treatment of state-subsidized resources unreasonable. A decision will likely not come until December as the last chairman needed for quorum, Richard Glick, must continue to recuse himself from decisions through the end of November.
A new report from the U.S. Government Accountability Office (GAO) warns that the country’s electricity grids are becoming more susceptible to cyberattacks as distributed energy resources grow. The report named Industrial Control Systems (ICS), which control the flow of electricity, as weak links that may be targeted. The GAO recommended that the Department of Energy (DOE) develop a national cybersecurity strategy and that the Federal Energy Regulatory Commission (FERC) reassess its cybersecurity standards.
Above average temperatures will continue to dominate the eastern portion of the U.S. into the second week of October. The South will bear the brunt of these warm temperatures, with the Southeast seeing the greatest chances for warm anomalies. The Midwest and Southwest will also see warmer than normal weather, while the Northwest is predicted to experience below average temps.
Typically, mild temperatures in October present bearish risks for electricity demand and pricing. However, abnormally high temperatures this month could increase cooling demand and electric loads in the PJM and ERCOT regions, which could introduce some price volatility during a normally quiet pricing period.
Much of the country east of the Rockies should expect above average precipitation, with the greatest probabilities expected in the upper Mississippi River valley and in Florida. The Pacific Northwest will also see elevated levels of precipitation. About average precipitation is predicted for Texas and California, while the Rocky Mountain region will see drier conditions in the 8-14 day window.