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Tuesday Apr 21, 2020   
This year has been like no other in the commodity markets. The failure of the OPEC-Russia quota agreement to the lock down effects of the coronavirus pandemic have put the foot down on crude oil prices and there is no indication that the malaise is going to stop any time soon. Yesterday's price action in the WTI crude market was one for the ages. Never before have we seen such a squeeze in the market where prices were forced to drop all the way down to minus $38. This was clearly an issue of a few contract holders not being able to acquire storage capacity for physical delivery. Without a home for the physical product at or around the Cushing storage field they were forced to sell instead of incur liquidated damages costs. The selling has not ended either. In pre market action this ... » read more
Monday Apr 20, 2020   
We are in the fourth week of the stay-in-place mandate in many parts of the West and with that has come behavioral changes such as less driving and more walking.  Working from home has now become the norm for many while businesses are left wondering when they can get back to some sort of normalcy.  As far as the weather goes, the Pacific Northwest has been experiencing what some would consider Southern California weather as the skies are full of sunshine for the most part.  The overnight lows are still pretty chilly but quickly turn into nice walking weather will little demand on the grid.  Down in Southern California, the conditions have been just the opposite on for a period of days as the Portland clouds and rain seem to be endless as everyone is couped up in their ... » read more
Friday Apr 17, 2020   
https://www.facebook.com/NextEraEnergyR/posts/nextera-energy-resources-was-thrilled-to-show-off-its-rush-springs-wind-energy-c/10159517505560134/ Is everyone cool if I poke a little fun at Mark Z on my way to the point of this blog? Cool! As you may recall, back in 2017 Zuck took his “Year of Travel” challenge where he visited all sorts of normal people and things throughout the year. He was getting in touch with his customers. On that tour he stopped by a NextEra wind farm in southwestern Oklahoma. After that visit he posted the following on Facebook: “Oil prices are volatile, and any oil well eventually taps out, so you have to move from place to place, often working shifts a few weeks away from home at a time. By contrast wind is renewable and doesn’t run out ... » read more
Thursday Apr 16, 2020   
With the lack of sport in our lives, I thought I would bring back one of the quotes used by Jimmy Johnson who at the time was the Dallas Cowboys football coach.  It was a glorious day over 18 years ago when his team just beat the San Francisco 49ers 30-20 to win the NFC Championship on the road in Candlestick Park.  His post-game speech was one for the ages as his excitement flowed over as it was not to long before this day that his team went 1-15 and the loyal fans wanted him fired. He stood up amongst the team, all the coaches/trainers, owner and media and congratulated his players for all their hard work.  If you have ever seen Jimmy play (Arkansas) or coach, you know he is as competitive as anyone so if you watch his speech the tone is that of proudness and confidence ... » read more
Wednesday Apr 15, 2020   
Europe has been hit particularly hard by the effects of the coronavirus. Lock down mandates are expected to remain in effect for most of the summer keeping commerce and tourism depressed until a vaccine can be acquired. Just like North America, gas demand is going to suffer. Some of the hardest hit countries are Italy, France and Spain. Those three countries are also some of the largest importers of LNG volumes on the continent. The region is also coming out of a very warm winter where cavern inventories were not drawn down like previous years. As a result, European natural gas is experiencing very loose balancing conditions at a time when they have record natural gas storage inventory.  Figure 1 | European LNG Receipts and Deliveries by Country - (source EIA) Total European ... » read more
Tuesday Apr 14, 2020   
Am I the only one who thinks its bizarre that the United States government is conspiring with Russia, Saudi Arabia, and other members of the OPEC cartel to lift oil prices? Is this not a clear case of market manipulation? Imagine if Exxon, Shell, and BP got together to control prices? Wouldn’t the Department of Justice be all over their case? Wouldn’t Congress open investigations into the matter? Figure 1 Lead Headline of the Wall Stret Journal Online - 4/12/2020 Leaving aside the philosophical/ethical/legal question about whether the US government should take an active role in manipulating oil prices, I’m interested in the underlying question of whether higher oil prices are good for the United States? The first time that high oil prices hit my radar screen was in the ... » read more
Monday Apr 13, 2020   
Back in the middle of March, I struggled with the fact that Easter Sunday was not until April 12th as it seemed so late.  With everything going on these days, the festivities tied to Easter have fallen to the wayside as the stay-in-place orders keep everyone from getting dressed up, going to church, having brunch with friends/family and kids running around the yard looking for Easter eggs.  I thought it would only be fitting for Monday's Newsletter Blog to tie in its own Easter Egg Hunt and see what we found. Figure 1 | Easter Egg Hunt - 2020 The first egg we found was hidden under the clouds of Southern California.  This past week, the southern portion of the state saw overacast skies and several days with precipitation.  This is pretty adnormal for this ... » read more
Friday Apr 10, 2020   
There is no place in the west where resource adequacy concerns are more complicated and more ripe than the Pacific Northwest (PNW). With Oregon and Washington closing coal plants within their borders and limiting the purchase other coal-fired resources, pending shortages are well advertised. To make matters even more challenging, the largest supply source in the PNW is an intermittent resource known as hydro. While there is a material amount of storage on the hydro system, there isn’t sufficient storage to bail the region out of a prolonged dry spell. EnergyGPS wanted to find out more about the underlying conditions during times of scarcity or oversupply. We turned to BPA’s published data on load and generation, which we have back to 2007 and includes wind, hydro, and thermal ... » read more
Thursday Apr 9, 2020   
Yesterday we detailed how the ERCOT market was facing a huge uptick in it's peak net load profile as temperatures were going to be well above normal and the wind generation saw its forecast show a big dip down during the middle of the afternoon hours.  The combination of the two was enough to push the net load up to the 47.6 GW level compared to the 41.8 level the prior day and 31.8 GW on Monday.  The ERCOT day-ahead auction results reacted to the higher peak load by clearing around $300 for an hour or two during the later afternoon hours. Figure 1 | ERCOT Day-Ahead Net Load and North Zone Hourly Breakdown Come real-time, the hourly auction clears for the North Zone matched that of the day-ahead with a slight shift by an hour (later).  Things could have been far worse when ... » read more
Wednesday Apr 8, 2020   
Summer-like weather is in the cards for today throughout the Lone Star State and with that comes higher power demand and lower wind generation.  In our most recent Newsletter Article, titled Another Round, we detailed how each of these components would interact with each other to create a pinch point in the later afternoon block of hours.  Looking at the ERCOT day-ahead auction results, things are playing out as expected as the heavy load period averaged just under $100 across all key regions while the natural gas price for Houston Shipchannel continues to be well below the $2.00 mark.  The combination of the two, put the implied heat rate for each zone up around the 54 point level. Figure 1 | ERCOT Day-Ahead Auction Breakdown Taking a look at the actual scheduled load and ... » read more
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