On Thursday, the U.S. Energy Information Administration (EIA) reported that working gas in storage as of Friday December 27, 2019 was 3,148 BCF. This was a decrease of 44 BCF from the previous week, a smaller-than-expected withdrawal. Inventories are now 521 BCF higher than last year at this time, 74 BCF above the 5-year average.
Next week looks to be very warm, but that has been expected (forecast) for more than a week. Some expectation of a return to normal weather for the end of January into February has kept forward prices from falling despite the somewhat bearish storage report. For the week, PJM Western Hub 12 Month curve (Feb20-Jan21) was up 0.9% and the NYMEX natural gas 12-month curve was up 1.7%. Both contracts remain near all-time lows.
PJM announced Thursday that it will not run a Base Residual Auction (which is the first, and most impactful step in setting capacity prices) until FERC rules on price floors related to its recent minimum offer price rule (MOPR) order. Recent FERC orders and subsequent PJM filings have changed the way prices will be determined. Thursday’s announcement means there is no set time for the running of the already-delayed auction for the 2022/23 delivery year that would have typically taken place in May 2019. It is also likely that the May 2020 auction for the 2023/24 delivery year will be delayed. These delays add uncertainly to capacity prices for June 2022 and beyond.
This past week's market information is provided as a courtesy to our customers and is not indicative of, nor should be relied upon, as representative of future transactions.