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| Wednesday Oct 6, 2021 | |
| European and Asian gas prices have been on an absolute, record-breaking tear this summer with a significant acceleration in the past couple of weeks. Throughout the summer and over recent weeks, we have been putting out frequent flashes to subscribers of EGPS' LNG market reports on the variety of factors conspiring to keep pushing European and Asian gas prices higher. Just when it seems prices can't go higher, some new piece of news breaks on a near-weekly basis to keep the momentum alive. Last winter kicked off the action. Temperatures across Europe and Asia where the coldest they've been in decades. Changes in both market's power stacks along with carbon/climate goals contributed to higher gas consumption rates than have ever before been seen. In Europe ... » read more | |
| Tuesday Oct 5, 2021 | |
| With all the news swirling around Southern California regarding increasing the pressure on the L4000 portion of the SoCal Gas system and setting up a date in early November 2021 with the CPUC to determine the level of natural gas that can be injected into Aliso Canyon prior to the heart of winter had the market turning the clock back to what once was prior to the El Paso pipeline rupture in the middle of August 2021. The graph below is a representation of the November-March 2022 future basis strip for delivery into the SoCal Border and Citygate markets. As you can clearly see, the straight drop down took the entire premium that was built into the hubs back out as the sediment in the market is that everyone act in accordance with system reliability. The shift down is the ... » read more | |
| Monday Oct 4, 2021 | |
| Volatility is the word tied to the energy space these days as the European market is fast approaching its winter season with a pretty good deficit when it comes to the amount of natural gas in the ground and an energy sector that has been reeling over the past few months. The North America market fundamentals are closely tied to such volatility as LNG exports are a mainstay in the overall supply/demand picture. Throw in the simple fact that the US production levels have not been responding to the uptick in the overall price movement and we are seeing our own volatility in the Nymex forward curve. Figure 1 | Nymex Prompt Month Daily Settle The graph above illustrates the prompt month Nymex settle on a daily basis over the past two years with the blue line representing the ... » read more | |
| Friday Oct 1, 2021 | |
| Back in June, we wrote about the impact that Winter Storm Uri was having on fixed quantity wind hedges: iced-over projects were on the hook to deliver their contracted quantity despite the weather, and with no way to generate the only option was to buy from the market at the $9,000/MWh prices. This resulted in existing projects scrambling to unwind or restructure their hedges and exposed the risks inherent in the fixed quantity hedge structure. We proposed an alternative hedge structure and quantified the associated risks and values. In short, we proposed a settlement on a monthly quantity (rather than 12x24) where the floating price would be equal to the average of the bottom 80%-90% of prices during the month. A wind project does not own a fixed quantity of generation due to the highly ... » read more | |
| Thursday Sep 30, 2021 | |
| Here at EnergyGPS, we spend a lot of time slicing and dicing the data related to energy prices within the CAISO market as there are a lot of moving parts that driver the daily results. Once of the reasons as of late is due to the influx of renewable battery capacity that has showed up throughout 2021. This is not the first time the renewable sector has been tied to the CAISO pricing impact as the solar penetration is tethered to what is now known as the ‘Duck Curve’. The avenue we use to distribute such insight is via the EnergyGPS West Power Market Fundamentals Offering as well as the growing eCommerce Newsletter Packages (Gold, Platinum and Platinum Renewables). Within each, subscribers have been regularly receiving reports and articles dissecting the ... » read more | |
| Wednesday Sep 29, 2021 | |
| Autumn is a beautiful time of year in Mexico. The season kicked off a couple weeks back with Independence Day. After that, every corner of the country kicks off celebrations to commemorate agricultural harvests. Then, towards the back end of October and start of November, festivities and remembrances for loved ones ramp up around Dia de los Santos and Dia de los Muertos. Amid this all, weather transitions from the heat of summer into a temperate phase while the tropical storm season winds down. Figure 1 | "Ofrendas" are altars setup around the end of October to commemorate and celebrate the lives of loved ones deceased. They're erected and visible in homes, stores, and public spaces. For energy markets, the seasonal change of climate means less power ... » read more | |
| Tuesday Sep 28, 2021 | |
| Yesterday's move up in the winter natural gas futures has taken the strip to new highs at $5.73. Concerns about meeting demand needs for this winter continue to drive the price higher and we have no expectation that the buying will stop any time soon. One of the biggest problems is the ongoing hangover from last winter. When the deep freeze hit Texas back in February it exposed just how fragile the delivery system for natural gas is under adverse weather conditions. For years the demand side of the equation took it for granted that the Lone Star State had the physical capabilities to meet all needs. But with the robust demand growth and recent slide in production volumes in the wake of the COVID pandemic the entire region is struggling to secure gas deliveries for the winter heating ... » read more | |
| Monday Sep 27, 2021 | |
| The Alberta power market saw its price action shift up again last week throughout the midday and into the evening ramp on moderate net load. The chart below illustrates just how much the hourly settle shifted as the peak for the 23rd came in just under $480.00, which helped push the daily average up to $173.00. Figure 1 | Alberta Price and Transmission Summary – Hourly The one thing that is noticeable once again is the lack of transmission response given the higher price action as the BC flows did not move off the floor while MT flows were not much better. Sask flows did respond but it was not enough to make a material difference. This is due to the simple fact that there is a planned maintenance between the 18th and 25th, whcih is right in the wheelhouse of the ... » read more | |
| Friday Sep 24, 2021 | |
| On multiple occasions throughout the summer the Pacific Northwest has found itself constrained in its ability to find flex generation during moments of heavy demand, of which there have been plenty with significant heat waves all over the West in the PNW, down in California and the Desert Southwest, and up in Alberta. One of the key drivers of these constraints has been the low generation numbers throughout the hydro system, where flows down the Columbia and Snake Rivers from January through September have been only 82% of normal and where the rains have been nearly nonexistent for much of summer. The recent EGPS hydro discussion “Wind and Rain” discussed how the problems in the supply stack have been particularly pronounced over the last several weeks, starting in ... » read more | |
| Thursday Sep 23, 2021 | |
| It has been a few weeks since Hurricane Ida moved through the Gulf of Mexico and onto shore devastating the New Orleans region with high winds instead of the massive water surge Hurricane Katrina left in its paths way 16 years ago to the day. The impact was for the current storm to bring down power lines while the historical one saw the levees damage and massive flooding that has since been addressed by reinforcing the walls of a city that is below sea-level. Below is a list of some of the minor differences of the two storms that hit the ‘Big Easy’ and areas around it. Direction | Ida it hit straight on (known as the right front part of the hurricane) while Katrina was more at an angle hence dumping 28 foot storm surges in Mississippi not New Orleans Size | Ida ... » read more | |