A dose of fall warmth, paired with significant natural gas volatility brought sizable week-over-week LMP spikes in each of the ISOs. PJM and ERCOT saw the sharpest increases.
Thursday's natural gas storage report for the week ending 10/1 indicated the largest injection of the season, coming in at 118 Bcf, which exceeded expectations. This injection came in significantly above both the 5-year average as well as the comparable for the same week of last year.
The rising power market continued its climb this week, gaining in both short- and long-term positions across the country -- with the exception of CAISO, which saw a pullback. Winter '21/'22 continues to be exceptionally volatile, with New England and PJM both hovering more than 50% higher than where their respective strips sat 60 days ago. Most ISOs are also trending 15-20% higher for Calendar Year 2022 vs. early August levels.
Budget-conscious end-users with uncovered positions in the near term will need to be mindful of their own organizational appetite for risk when deciding whether to hedge short-term or long. A short-term hedge is an ideal solution in the midst of an elevated market, however it will be a more expensive insurance policy. While longer-term positions will offer pricing relief for your current budgets, the premium in the near-term portion of your hedge may leave additional dollars on the table in the latter portion of the term.
For more information about the market pricing activities and the impact on your specific situation (i.e., current supply contract and hedged/open positions), please contact us.
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