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Wednesday Oct 7, 2020   
Henry Hub cash posted a monster rally coming out of the weekend as the market is pushing in its chips on the next tropical storm generating more production cuts but taking a track that will not impede the restoration of chunky LNG export volumes.  While a similar-sized gain is highly unlikely this week, the price should remain well supported. In Monday’s trading, Henry Hub spot cash bounced to $1.92 from an open of $1.34.  This is one of the largest single-day gains for the node in 400 days of trading and comes less than a week after Hub cash set a 10-year record low, the 3rd time that has happened this summer. Figure 1 | Henry Hub cash prices via NGI The rally is boosted by market bets another tropical storm is going to wipe out production in the Gulf of Mexico as ... » read more
Tuesday Oct 6, 2020   
If you have become familiar with our publications you will notice that we have a few go - to phrases to describe our philosophy on natural gas pricing. One of our favorites is "Storage Trumps All". It is generally true that when it comes to natural gas trade dynamics that storage caverns hold the market power in most circumstances....until they do not. This is one of those weeks. Prior to Monday morning the abundance of volume in the daily balancing had driven cash prices to a steep discount versus the rest of the NYMEX (HH) futures strip. For the Gulf, Henry Hub cash prices dipped down to $1.33 this weekend which was a $1.10 discount to the November futures. This is the price expression of the shortage of storage injection capacity in the region.  Figure 1 | NYMEX Continuous ... » read more
Monday Oct 5, 2020   
The summer months have now moved into fall as the month of October is here.  This means the leaves are turning colors and the overnight low temperatures are dropping to a point that will increase the heating demand as we move deeper into the month.  On the power side of the equation, the fall season also represents outage season as many plant operators take their units offline to give them a tune-up.  The process is similar to maintaining your vehicle with an oil change every 3,000 miles and when you get up to different levels the tires, belts and other key components need to be looked at to makes sure the car is running efficiently.   Figure 1 | Time for an Oil Change Looking at the nuclear fleet first, the fall and spring periods have the most units offline as ... » read more
Friday Oct 2, 2020   
Anyone who trades commodities spends a lot of time and effort trying to divine what the price will be in the future. They try to understand the cost of each resource type (supply curve) and when each type of resource will become the marginal, price-setting unit as different demand levels shift the market-clearing supply resource. I mean no disrespect to the demand side of the equation, or flexible demand, or demand side management – but someone’s cost of production ultimately determines the price level – this is the supply curve. Electricity and natural gas traders obsess over this. https://economics.stackexchange.com/questions/26355/real-world-examples-of-supply-curve-shapes Energy GPS advises a large swath of corporates, developers, utilities, investors, and asset ... » read more
Thursday Oct 1, 2020   
Every morning I take our black lab dog, Sonny, for a walk and I find myself still taking over the actual roads instead of the sidewalks as the morning commute traffic continues to be minimal.  This is all a fallout of the coronavirus situation at hand and does not look to improve in the foreseeable future as the case counts continue to be high and companies allow individuals to work from home.  As long as schools are virtual in the metro area, parents are busy getting the desk areas ready for another day of online classes and some home schooling projects.  If you happen to get into your car for a morning ride or some appointment, you might happen to see a few cars in the neighborhood.  If you trek out on a major highway, the on-ramp lights are still turning red and ... » read more
Wednesday Sep 30, 2020   
Little did Vince Lombardi know that his words 'what the h$%^'s going on out here?' were ring true decades later, but they are fitting to what we witnessed last night as well as what 2020 has delivered when it comes to a virus that is still quite active as well as Mother Nature delivering some heat in the West and colder temperatures in the East.  Let's start with the first Presidential Debate aired on television last night.  It was as if you were watching some reality television show on cable as the president himself continues to interrupt both the moderator and his opponnent Joe Biden.  In fact, this Newsletter Blog is later than usual as I found myself reading and/or listening to the comments made by political advisors associated to each television station.  Across ... » read more
Tuesday Sep 29, 2020   
This week the continent is going to make an abrupt switch from cooling to heating demand. A split flow pattern is going to keep above normal temperatures int the West while a cold front descends upon the Midcon and Midwest. Average temperatures throughout the Midcon and Midwest will fall from 70 down to 53 degrees. The last time we had any accumulation of heating load the world was in the beginnings of the current COVID pandemic. Economic activity had ground to a standstill as quarantine mandates were implemented. But now, some six month later the world is on the upswing. Schools are back in session. In some areas, employees are going back to the workplace and businesses are operating again so we will be watching how the overall demand correlates to the temperature bins and similar ... » read more
Monday Sep 28, 2020   
EnergyGPS recently examined the revenue streams available to CAISO batteries in our Battery Ecosystem article posted two weeks ago as part of our Newsletter Gold Package.  This past week, we have extended the insight of batteries in a special report called 'CAISO - Anatomy and habits of the battery fleet',  which details how we can infer the existing fleet’s participation in these revenue streams from their generation patterns.  Such a report is apart of our Newsletter Platinum Package and will be the first of many battery reports published by EnergyGPS as the market unfolds in the coming months/years. As we all know, there is a slew of large new batteries coming down the pipe in California, the first of which hit the grid last month. The 250MW/250MWh ... » read more
Friday Sep 25, 2020   
There has been a lot of attention (and rightfully so) on California and the Desert Southwest this summer.  EGPS has written extensively about the events of August 16th-18th when the Desert Southwest prices ripped amidst a heat wave blanketing the West, and CAISO was left scrambling for megawatts after two days of evening ramp blackouts within PGAE’s territory. The Pacific Northwest was left behind, as several factors led to the region effectively decoupling from the rest of the West.  A key factor at play in keeping the Midc bilateral prices inside the normal supply stack was the hydro system, where a healthy and late developing hydro year meant the megawatts were in good supply. Precipitation was healthy throughout the 2020 Water Year.  In addition, cooler ... » read more
Thursday Sep 24, 2020   
The volatility is real when it comes to the natural gas prompt month movement.  It all started post Labor Day and accelerated at the start of the week when it dropped from just over $2.00 to $1.83.  The cash basis markets followed suite as we saw prices down around the production cutoff point while other regions were shifitng down to levels that expanded the implied heat rates for natural gas-fired generation to take over market share in both MISO and PJM.   Figure 1 | Nymex Prompt Month Volatility The South Central was hit with Tropical Storm Beta along the Texas Gulf Coast where flooding was inevitable and with ERCOT net load down due to the lack of power demand and low wind, the natural gas was looking for a home.  Up in the Northeast, the grid was loose ... » read more
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