Hot Weather in the East, Calendar Divergence, and ISONE Alert
Energy Market Update Week 27, brought to you by Acumen.For More Updates Like This, Subscribe Here!
Because of the July 4th holiday, the EIA storage report for natural gas was pushed back to this morning. The build was higher than expectations, but has not moved the market today. The August contract has pulled back after the heat in Texas had it in rally mode last week. While the heat moved to the east, allowing for hot weather alerts in PJM, it wasn't enough to keep a rally going as the August contract has pulled back to $2.60.
Draw for LNG has reached roughly 13 bcf per day which has been offset by production trending above 100 bcf/d. We aren't in the game of trying to call markets, but we follow plenty of folks who do. Usually we aren't interested in the targets, but more so the level of confidence. It seems right now the market has a nice balance to it where supply meets demand, but judging the sentiment from market prognosticators, there does seem to be consensus that will change. Ironically, some have the change on the supply side and some on the demand. As they say, that's what makes a market.
Over the past couple months, we've pointed out how IN Hub, PJM West and ERCOT north on peak calendar strips have all been trading in a range with $50 as good support. Over the last couple weeks, we've started to get some divergence with ERCOT breaking out and PJM lagging. Given the weather over the last month, that could be expected, but still worth noting.
Wednesday night ISONE issued an emergency alert during a "capacity deficiency" as they had a transmission event that curtailed their ability to import. This occurred around 6pm and relevant steps to address ended when peak load fell with nightfall. ISONE said they would have more details coming which are worth following. ISONE has been pretty open and blunt about generation fuel and transmission bottle necks in the past. It's likely we will get a good honest assessment of what happened and possibly learn some things that might be relevant to other markets.
NOAA WEATHER FORECAST
DAY-AHEAD LMP PRICING & SELECT FUTURES
DAILY RTO LOAD PROFILES
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