Electricity Markets
Forward pricing rose across all markets this past week in correlation with a dramatic increase in the underlying cost of natural gas. Uncharacteristically, ERCOT, which had dropped near $.015/kwh month-over-month due to the lack of a volatile July, took a sharp turn back up unrelated to summer heat.
Prolonged summer heat has kept the day-ahead markets elevated as we move past the, statistically, warmest part of the year.
Natural Gas Markets
The NYMEX saw a dramatic increase week-over-week for the remainder of 2020, and the 12-month forward average is now at its highest since early 2019. Though Dec. ’20 is now trading above Dec. ’21, the forwards have moved into a historically-normal range.
Futures as of 8/5/2020 versus previous week:| Sep-20 | $2.191 | +$0.261 |
| Oct-20 | $2.331 | +$0.252 |
| Nov-20 | $2.675 | +$0.137 |
| Dec-20 | $2.994 | +$0.098 |
| Jan-21 | $3.103 | +$0.093 |
| Feb-21 | $3.056 | +$0.081 |
Natural Gas Inventory
According to EIA estimates a net increase of 33 Bcf from the previous week was reported. As of Friday, July 31, 2020 working gas in storage was 3,274 Bcf. This injection was on par with the 5-year average and continues to hold current storage levels in line with the 5-year maximum.
The Baker Hughes exploration gas count held steady over the report week for a total of 69. This is 100 fewer rigs than the 169 in operation at this time one year ago.
Weather Update
Warmer than normal temperatures are expected throughout much of the United States with the highest probability falling over the Southwest.