US Power Market Update - 15 Nov. 2021
15 Nov 2021
The natural gas storage report for the week ending 11/5 indicated a small injection of 7 Bcf, which fell on the low side of expectations. This injection was short of the 5-year average build, but slightly better than the injection for the same week of last year.
Inflated Winter '21/'22 power market futures continued their dip this week, with CAISO and New England showing the sharpest declines. ISO-NE has seen its winter strip shed $20/mWh over the last two weeks alone. Summer 2022 moved very little, week-over-week. Although outer year positions in 2023 and 2024 saw minimal movement, it was once again consumer- friendly.
Budget-conscious end users seeking coverage for the upcoming winter have finally seen some improvement in near-term pricing, however the markets remain in an inflated state. Long-term hedging strategies remain untimely, with options likely to be more attractive in late Q1 or Q2 2022. The prime risk remains a colder-than-average winter, which would put upward pressure on prices. For organizations with the budgetary means, shorter-term bridge positions are preferable until the markets retreat from their inflated state.
Regional LMP Movement
It was a week of LMP pull-back, as both PJM and New England saw spot prices decline by more than 10%. ERCOT saw the most significant movement, trending 23% lower than the previous week. NYISO remained relatively stagnant, week-over-week.
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