US Power Market Update - 6 Jan. 2022

Market Commentary

The natural gas storage report for the week ending 12/24 indicated a withdrawal of 136 Bcf. This draw was closely in line with expectations, which maintained a storage inventory total above the 5-year average.

We saw a significant pull-back in Winter strip power market futures, with both NYISO and New England declining over 15%, week-to-week. Even California, which has been relatively stable, gave back 12%. The summer '22 strip dropped in nearly every territory as well, although not as significantly. Outer year positions through 2025 were down as well, with the exception of ERCOT which saw steep jumps in both 2024 and 2025 calendar year strips.

The weather patterns over the next month or so will be very pivotal in terms of whether or not futures positions continue to drop off, or regain some of their lost momentum. Forecasts are painting a mostly mild outlook into February, which would suggest that there is room for additional favorability in the coming months for end-users who have held off on locking into long-term hedges.

Regional LMP Movement

LMPs continued their volatility this week, with big week-over-week drop-offs. NYISO and PJM both dipped over 30%, while New England dropped 44%. ERCOT declined by 11%, while California saw a slight increase to last week's range.

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