Electricity Markets
Aftershocks in the market were present as a result of last week’s cold that impacted the entire U.S. The worst was obviously present in Texas, and ERCOT still has not recovered, but prices for energy in other ISO’s also skyrocketed. This event will certainly change the way people look at the Texas market and the risks associated with it. As the market continues forward, analysts will be watching further impacts on legislative issues, along with what the investigations will bring for the natural gas and energy markets, in general. Over the report week the rest of the ISO’s dropped, but prices are still elevated from where they had been prior to February.
Sustained elevated prices have been present for much of February, particularly in ISO-NE. Finally seeing some relief to some more normal/stable prices. The recent cold spells highlight how prices react as temperatures drop.
Natural Gas Markets
The March 2021 contract expired on 2/24 at $2.854. Week over week, the Algonquin basis was up $.03 while the NYMEX 12-month strip dropped $0.20 from $3.16 to $2.96. Following the freeze-offs in the Southwest last week, natural gas production has recovered back to the 91 Bcf per day level that had been the average over the past months, and LNG exports are ramping back up as well.
Futures as of 2/24/2021 versus previous week:
|
Apr-21 |
$2.795 |
-$0.237 |
|
May-21 |
$2.822 |
-$0.218 |
|
Jun-21 |
$2.871 |
-$0.202 |
|
Jul-21 |
$2.921 |
-$0.187 |
|
Aug-21 |
$2.937 |
-$0.179 |
|
Sep-21 |
$2.926 |
-$0.177 |
Natural Gas Inventory
As of Friday, February 19, 2021 working gas in storage was 1,943 Bcf. According to EIA estimates this represents a net decrease of 338 Bcf from the previous week. This was the second highest withdrawal in American history and quite notable in comparison to last years 145 Bcf withdrawal and the 120 Bcf 5-year average. The large withdrawal forced storage levels to quickly fall below both last year and the 5-year average levels, and will likely start to cause upward pressure on prices.
The Baker Hughes exploration gas count increased 1 rig from the previous week for a total of 92 rigs. This is 18 fewer rigs than the 110 in operation at this time one year ago.
Weather Update
The beginning of March is expected to have more moderate temperatures. The average to warmer-than-average temperatures across the bulk of the U.S. are expected to lower heating demand, and forecasts show this trend of moderate weather holding into the second week of March.
National Weather Service Updates (NOAA)
Hurricane Watch: No Hurricanes
Click here to view the National Hurricane Center site.
Equatorial Pacific Outlook:
Click here to view La Nina and El Nino status.
Energy News
The Texas electricity crisis and the energy transition
Severe winter weather in Texas caused the worst energy shortages in the United States since the 2003 blackout in the Northeast and Midwest.
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Disclaimer: This information is provided for the use of our customers and potential customers. Power Management Company assumes no responsibility or liability for the accuracy or completeness of pricing or information in this document. Historical data was obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. Views are subject to change withou