Good Morning,

We were bears leaving fundies, let’s see if markets are cheap enough to offset that sentiment. Today, we’ll take an exclusive look at SP15 markets, starting with Jan (BOM) and ending up with the near-term Qs.

We’ll comment in the above APT order.

Jan is the BOM now, and it is relatively cheap from both a price and HR perspective, but the fundies look awful. The weather is growing both warmer and wetter which suggests falling loads and rallying hydro. Doubt the latter plays much of a role in setting price but the former most certainly will. Most troubling, all WECC hubs will see loads fall.

But one thing I can’t get out of my head is the embedded Socal Citygate term market premiums; what if these collapse? Length will suffer, that’s what happens. Not saying Citygate will reset but those one bcf draws last week were unsettling. For now, we’ll see all spot gas prices tank off of declining demand, and we should see heat rates drop off of the same. At this point, we are SELLERS despite the low prices.

Feb is just Jan, price-wise. The market has sold down both the PP and HR; now the HR is at or near a contract low. Time to buy? I doubt it because of gas; we believe the sell-off in term gas may resume, but let’s look at the roll.

The roll was a buy a month ago; today it is just fair value for PP and a tad cheap for HR. Given that we’d instead just short both BOM and Prompt, we’ll pass on the roll.

More fairly priced than either BOM or prompt, but negative cash sentiments will have bearish effects on March; we made a small position by shorting both, we’ll pass on March.

Nothing of interest here, Pass.

The April heat rate’s cheap, but the PP isn’t suggesting more substantial gas price premiums in April than any of the winter months. There is not much of a bullish case to be made for this month given that it is too early to get very hot in LA. Our bias would be short, but we have weak conviction. Pass.

Like every WECC winter roll, this was a raging buy a month ago, now it’s a yawner and we’re passing here, too.

Nothing cheap in the Prompt Q, unless you see winter rally. We don’t know what would drive an SP rally in the next couple of weeks; you need a new temperature forecast to make that happen. Note the five-month-long heat rate rally. SP heat rates have cleared at very low levels because of the high Citygate prices, but the market isn’t pricing that in. If anything, I’d sell this heat rate.

The Mother of all WECC term markets, the mighty Q3 SP15 HL. This mama hasn’t moved much in the last two months; it’s just sideways meaning anyone that bought this in the last 60 days has just wasted VaR and credit.  That 1 BCF draw this weekend were eyebrow raisers, will Socal Gas be allowed to pull the same this summer? If it can, or if import capacity is increased, the Citygate premiums could evaporate, and the Q3 would tank $10-$20. We aren’t ready to bet on that, yet, nor are we willing to buy this. Pass.

Talk about an extended rally, the 3 to 2 PP roll is upward sloping since March of last year, nearly a year. The HR is just the opposite because of those fat Citygate premiums. It seems to me that almost everything at SP is just a gas trade and selling this roll seems a somewhat safe way to short gas.

Super cheap heat rate, back to a contract low and the power price isn’t that rich. If I were short in the front and needed a long hedge, I’d consider buying the Q4. We are slightly short SP front, but not short enough to own this dog. Pass.

Wow, looks like the mirror image of the Q3|Q2. You could either sell that roll or buy this one; each does the same thing – shorts gas.

If you think you might be entering into a coma, this would be an excellent trade to put on because you won’t see much movement either way. You could sleep for another six months and probably be marked the same as the day you put it on.

Instead, why not buy the roll? It is cheap PP and fair HR suggesting not much gas roll risk.

Let’s say you are bored, why not look at the prompt cal roll. Price-wise, this is dirt cheap, never been this inexpensive and the HR is reasonable. The roll suggests that the Citygate problems are not resolved by 2020, that is a year away, at least. I’d buy it if VaR weren’t an issue. Who knows, even the maintenance crews at Socal Gas might be able to fix something within a five-year window? Who knows?

Good Morning and Happy New Years,

I hope everyone had a pleasant and safe New Years. I spent mine on Whidbey Island and enjoyed this sunset over the Olympic Mountains.

Pretty, huh? That was the end of 2018, which was another exciting energy year – they all are, right? Last year we saw Socal Citygate dominate the markets, until that explosion in central BC on Westcoast’s pipeline. Then, all of a sudden, right before the WSPP meeting commenced in Palm Springs, Sumas became the WECC’s driver. A legitimate fear spread across the market that there wouldn’t be enough gas to serve winter loads, the Northwest would see rolling power and gas blackouts.

But that didn’t happen, instead,  Winter never arrived, and Enbridge quickly restored service, most of it anyways, and MidC saw massive price gyrations in its term market. Now, Citygate is back to being the driver, Sumas is rapidly fading. On top of the gas issues, the MidC also enjoyed an extremely dry fall, at one point, around the start of December, the hub’s cumulative precip was about 50% of normal, but all that changed with significant rain and now its closer to 90%.

And 2019 is starting with a whimper, weather-wise.

The entire USA (continental) is warm in both the 6-10 day and the 8-14; these maps take us half way through Jan, the new BOM.

Not only is it warm, but it is also wet; most of the production basins will see above normal precip over the first half of the month. Given the warmth, much of that will come down as rain; only above 5000 feet will snow accumulate. Tough year to own a ski resort.

Surprisingly, the Day-Ahead LMP markets staged a rally yesterday for today. Well, all the markets but Palo, the congestion was priced in across most on-peak hours for PV, but not at the MidC. That hub hardly congests against either NP or SP.

Some of the tightness is explained by rallying power demand, all four traded hubs are up, week-on-week. That doesn’t say much, the pivot date was Christmas, but yesterday was New Year’s, so the comparison was holiday to holiday. Strange that Palo saw the sharpest rally but still congests into SP.

Much of the price strength is explained by cold weather in the south and which drove high gas demand. Socal set a winter peak a few days ago, so did Palo.

Socal Gas’s system sendout matched last winter’s high; if you recall, the prices then gapped up into the teens. That didn’t take place this time, Socal Citygate didn’t move despite the big loads.

Some of this can be explained by the short duration of the cold and the rest by timing – this cold took place over the holidays, most traders were at home counting their bonuses. There was no one around to hype up the cold.

And it is short-lived, low temperatures at both Burbank and Phoenix will rally ten degrees. But let’s stick with gas as I have a few more observations to share.

The above chart plots daily change in total Socal storage. Check out the deep draws, nearly matching last winter’s peaks. This is interesting as it proves Socal can pull 1BCF from storage when it needs to; not only did they pull that BCF, the price didn’t move. Contrast the draws over the weekend versus last summer, only half as much then as now. Why is that? Why didn’t socal pull a B last summer on those sweltering days? Is summer SP worthy of those massive term-market premiums without these Aliso constraints? Will Socal allow a B to get pulled next summer on a sweltering day?

While on storage, take a look at Mist and JP. Mist was pulled hard during the Sumas crisis all the while JP didn’t budge. How ironic, when gas was tightest the facility had builds or modest draws and now has more gas in storage than perhaps ever as of Jan 1. That is bearish for Sumas suggesting there is more room for the term markets to come off.

Socal system sendout was at a seasonal high but power noms cratered at SP all of which underscores how the ISO leans on imports from ZP to serve SP loads. I could have proven that statement by posting Path 26 flows, but the ISO pulled that critical market information for nefarious reasons.

Gas outages at SP cratered with the expiry of 2018, but we’d expect these to rally as the hub prepares for summer. Though in this new world, SP’s gas units are just standby units because of high Citygate prices; now the hub leans on its neighbors to serve its load.

Strong renewals over the holidays; both NP and SP had big wind while the MidC had no wind yesterday.

This dashboard summarizes weekly fundies inside the ISO (there is a daily version of the same). We can easily draw some conclusions by comparing last week against the same week from prior years.

• Loads are about a gig lower
• Imports are a gig or more higher
• Thermal is off about 2-3 gigs
• Solar is up because capacity has doubled
• Power price is higher because gas is 80% richer all of which drove heat rates down.

In the fall, the California water gurus were drooling over another El Nino, a big and wet water year. But that hasn’t happened, there were a few storms but more dry days than not. Now the state’s rivers are all below average, cumulative precip.

Three weeks earlier, both NP and SP were above normal and now are around 80% each. The MidC staged a rally, moving from the 50s to 90s but Idaho hasn’t changed, the hub remains in the mid-70s. I like Ansergy’s historical weather image tool, useful for capturing changes across time. Let’s see how the snow year has unfolded:

NRCS Snow Water Equivalent Anomalies

The Northwest was red and brown, now its yellow and green; California was black and blue and now yellow and green and brown.

USA Snow Cover

Dec 31, 2017

Jan 15, 2017

The snowpack built over December but is nowhere close to that big 2017, yet the water year is relatively young still.

Flows through Coulee’s turbines are up, week-on-week.

Some of the new-found water can be explained by increased inflows, most of those are regulated. They are about to get more regulated, next week the Corps of Engineers will release its first Flood Control guidance (is the Corps impacted by the Federal shutdown?). Here is our early bird on that release:

The NWRFC’s current TDA Apr-Aug water supply forecast is 92%; using that and comparing to the last 20 years (See tables) we can surmise the Coulee draft will range between 1244 and 1258. That range also puts drum gate work in play, we haven’t heard any news on that, have you?

One certain bullish item is reservoir levels – these are all off, in aggregate, when compared to last year. The Coulee deficit is narrowing as averages are falling and the project is not drafting. BC remains well below average but has a big snowpack building.

Check out peak HL hydro energy in the ISO; this has soared from the end of summer and hit 4000 MWs a few days earlier.

The NWRFC has revised its forecasts from last week; those were ridiculously low, and now is projecting energy builds over last week’s STP. Our take is that the entire 120-day forecast is too low, we’d expect big builds across all months.

Take note of the change on Monday in the AC’s TTC – this is an extended derate to 3100 for nearly two months. Another bearish nail in the MidC coffin.

BC exported to MidC yesterday; this followed a week of strong buying. Perhaps that dearth of wind is the explanation? Maybe BC is just MidC’s wind battery? Something was tight at MidC, the DC actually flowed north for an hour, and the AC didn’t come close to TTC for the entire day. Palo cut its exports to the ISO, probably angry over the hefty congestion charges for its dirty energy.

Conclusions

Bearish. One word to say it all; there is nothing in the fundies that I saw to make one want to get long. Well, let me caveat that last thought by saying nothing but the market. I guess if prices are low enough, why not buy? More on that in the next post.

 

Greetings,

We developed a new tool for a client who wanted to display live data on their Trade Floor big screen. The client wanted to show a different report every 15 seconds and wanted the data refreshed each time. We liked the idea and built the “Ansergy Playlist” ap; the client loved it and we think you might as well.

Playlist Features

• Custom Report Configurations –  add as many reports as you like, these can be any reports on the Ansergy website:
  • Market Prices
  • Weather data and images
  • Real-time loads for all of WECC
  • Forecasts (loads hydro, prices)
  • TradeRank reports
  •  Fundies
    • Transmission flows and TTC
    • Hydro stream flows and energy
    • Gas nominations

• Set Delay– pause for 5 seconds or 60 seconds, or any setting you desire.

• Multiple Playlists – Make one for the real-time team, another for your term guys.

Screen Shot

Drop us a note if you’d like to have us make one or more for your team.

Happy New Years

• Team Ansergy
• [email protected]
• 206-877-0991

Good Morning,

Given the restoration of Sumas, mostly, and a big water rally, let’s see how the MidC near-term markets have fared.

We filtered APT on MidC and the prompt months and rolls; we’ll comment in the order above.

This isn’t BOM, its BOW, and barely that, after all, it’s the 26th, but still worthy of a look. The market seems reasonably priced for both HR and PP, but it will grow colder and loads will rally:

Not as cold as the early Dec event, then Seattle posted high 20s, now the Emerald City won’t bust 35 degrees. Still, its colder and we’d buy this.

More reasonable prices in Jan, soon to be BOM. The heat rate is still cheap given a low water year and constraints at Sumas; the PP isn’t though which suggests Sumas is still commanding a significant Jan premium.  Note the soaring temperatures in Seattle following New Year’s day; its hard to like Jan too much. The biggest fear in carrying length is gas – if you trade it as heat rate  – go long. If you are trading just power, I will short it because I think Sumas has another $1.00 to fall.

The roll is back to reality, if anything it is rich, PP-wise, and cheap HR-wise. No real thought here, the trade was buying the roll at $-24 and selling it at $6.00 for a handy $300k gain per piece. Assuming you did the standard ten piece package, a cool $3 mill bouncing around in your book.

Feb’s still pricey and not just because of gas; the heat rate is in the one-year range. I get this if you believe the NWRFC’s forecasts, but I don’t. I think there will be another gig or two of hydro added over the next five weeks and Feb will be a trainwreck. SELL

The roll’s day in the sun has turned from dusk to night; now the only thing interesting is shorting the heat rate roll as it is at a contract high.

March, the Poor Man’s Winter. March has been a widowmaker in the past; a few years back (2017) saw record flows – over 500 kcfs at Portland OR. So it can be wet or dry, it can also get very cold or not. More than likely, Coulee isn’t going to see much drafting this winter, at least not until April. After all, the reservoir is already seven feet below normal. March could be a sleeper, assuming the northwest doesn’t acquire a pile of low-level snow over the next couple of month,  Still, its priced towards the high side on PP and fairly priced HR-wise; we just can’t make a case to do anything with it and we’ll… PASS

Cheap roll; Feb still packing some premiums, probably from the Sumas hangover. If that gas hub doesn’t rally off of this modest cold weather, or if Westcoast restores full capacity, this roll is poised to pop $5-10. Buy, or watch cash and study weather. If Friday’s Next Day market yawns through this cold, and the forecast grows warmer, definitely buy this roll.

Here’s another widow-maker, April that is. This is the draft month, the period where Coulee must be pulled to its flood control target. We doubt the reservoir will get below 1240′ this year; it may not even draft to 1250′. That is bullish for April, but that doesn’t mean there won’t be a mountain of natural river water flowing into the Pacific. It all comes down to temperature, and we know nothing about that today; we only see the volume, and that is about 90% of normal. That leaves us with fading anomalies, and this is rich both HR and PP – SHORT

The roll is uninteresting; it’s priced about as reasonable as it will get. PASS

There seems to be a slight change in the weather. If you believe the world is getting warmer (it is, unless you live on another planet) than runoff should start earlier, which is what we’ve seen lately. That means May is the new June and will typically bear the brunt of snowmelt-driven natural river flows. Another factor, low draft, which means not as much room to refill, and May starts looking uglier than its price would suggest. Top off all of that with May priced high PP and fair HR and this is a strong candidate for SELLING.

We shorted May and April so will pass on the roll, though it is more cheap than not, plot-wise.

June is rich in PP and fair in HR but it’s a dry year and growing dryer, plus June is the new July, and you get all the PV and SP long call options by owning this. BUY

The roll’s rich, but we already bought it on legs and will buy it outright.

July is the new July, and it’s rich in every sense of the word, but why wouldn’t it be? Socal couldn’t fix their untied shoes, and their pipes won’t be any better this summer than last. What happens to the MidC when Citygate clears $30? This is the poor man’s way to play SP15, plus its a dry year. BUY

Roll this roll into a joint and smoke it. It’s rich and tasty, we’re long both June and July, why clutter up the book with a roll?

 

Good Morning and Happy Holidays,

Hard to believe many of you are working today, but I am and there are some new developments to consider. Let’s start with the weather – where would we bloggers be without weather to feed our blog fodder?

Earlier in the holiday break we saw both the 6-10 day and 8-14 post cold anomalies; now just the 6-10 day has them. It’s cold in Four Corners and mildly cool everywhere else in the WECC. The sky’s not falling with this forecast but demand will rally across the WECC and Socal Citygate will get another test.

With the high-pressure cold comes dry…

Seems the MidC wet trend is broken, let’s see what that cumulative impact has done to the snow and precip anomalies:

The MidC went from the high 50s (SWE % of Normal) to 92%, but now its poised to start dropping right in front of the first Flood Control release (Jan 10? – the date’s not published yet). Still, we’d guess the Apr-Aug TDA posts around an 88 given the draught:

What  that suggests is minimal drafting in the Northwest which is bullish for Feb-March; the reservoirs already have holes:

Mica is at a 10-year low; Coulee is seven feet behind last year but filling. Things are still tight, water-wise, but not in gasland; in that world things have turned a bit bearish.

Sumas is now trading $2.00 under Citygate and we doubt the hub sees double digits any time soon, or at least not until Westcoast blows up its pipe again. Citygate (Socal) is interesting, the forecasts are showing Burbank toying with a 30 handle for lows:

38 degrees over the weekend, that is colder than the last cold event and we should see Sendout soar, we already are!

Check out the gapping going down in Socal Gas’s system;  total sendout is up 900 MMCF in a week and only a few days last winter had higher demand, and it is growing colder. Back to the Sumas debacle; we don’t see how it can rally hard without constraints on imports and we’re not seeing big ones any longer.

Sure, the pipe isn’t flowing at the same levels as last year, we’re still short about 400 MMCF at Station 4 which leaves Sumas 200 short. That is kind of bullish, right, until you realize that Enbridge has the capacity to fill the pipe and will fill it should demand demand the gas. In other words, there is a 200 MMCF long put at Sumas should things grow bullish.

Another bearish bullet in the long’s back are the storage levels at Jackson Prairie:

You’d expect JP to have pulled hard during the Westcoast curtailments but you’d be wrong. Total storage is higher today than the same day last year. Mist pulled, but not JP. Two reasons for this:

1. It was never that cold
2. The Northwest utes never ran their Sumas-based gas turbines

Regarding #1 – not that cold – check out these December cumulative degree day anomalies:

Every station in our WECC group is below normal, degree day-wise. Every station. So, the Northwest dodged a massive bullet by sheer luck and provident prudence.

These power demand plots make you think everyone left the west, but the deltas are a biz day versus Christmas so somewhat meaningless, though interesting that the MidC’s demand was almost equal to last Tuesday.

Power demand for gas is down in California and sideways everywhere else; reflective of the warm weather and holiday loads. These should rally as the 6-10 cold descends upon the coastal load centers.

Recall point #2 above – Sumas-based turbines curtailed. Well, that’s one for the history books, now all of them are running at full capacity, even though the power really isn’t needed. I guess its payback time, now the turbines will run while the reservoirs fill.

One surprise gift in Santa’s bag was a whole lot of wind energy; check out NP, it’s combined renewables nearly doubled on hour 14, SP was blustery and bearish, too; so was the MidC.

Coulee discharge approached a ten-year low for this  time of the year; not that inflows are that low, it’s because the water is refilling the reservoirs.

Well, let’s restate that- some of the inflows are not that low; the flows on the Columbia at the US border tanked over the last couple of days.

The feds published the STP on Monday which caught us by surprise; we weren’t sure if they were on shut-down furloughs, I guess not. Monday’s numbers were also a bit surprising, I think their 120 day forecast is too low. Recall, the MidC’s SWE anomaly is 92% and the precip is the same. So how does the NWRFC get to a record low 120 day forecast? I’d say their numbers are short 1-2 gigs of energy and will be revised upwards.

Meanwhile, they are revising downward, at least in their 10-day forecasts. I don’t get this, either; the weather is growing colder. BPA is going to resume drafting to serve loads, so will BC Hydro. Maybe someone spiked the eggnog on Monday?

The AC has a small uprate and in a few weeks a material derate; no changes on the DC.

Energy flowed north, into Canada on the Northern Intertie. Flows into the ISO dropped across all major interties. Both of these changes reflect the overall bearishness of the recent cash markets.

Conclusions

I’m bullish ISO, especially SP, given the cold weather and continued Citygate issues. It is really hard to get bullish the MidC, though the dry weather will pull the anomalies back down, but they’ll also cut the amount of water drafted for flood control. More on market sentiment in a post to follow.

Greetings,

Here is our schedule for the coming holidays.

Christmas

• Monday, December 24 – holiday
• Tuesday, December 25 – holiday
• Wednesday, December 26 – Working – WECC Update
• Thursday, December 27 – Working – STP update, Change Reports
• Friday, December 28 – Working – WECC Update

NewYear’s

• Monday, December 31 – holiday
• Tuesday, January 1 – holiday
• Wednesday, January 2 – Working – WECC Update
• Thursday, January 3 – Working – STP update, Change Reports
• Friday, January 4 – Working – WECC Update

We will be monitoring emails and skype; if something comes up, or you need our assistance, drop us a note. Mike will be posting to Public Chat throughout the holidays.

Happy Holidays

• Team Ansergy
• [email protected]
• 206-877-0991
• skype: longmidc

 

Good Morning,

We left off our first post a shade on the bullish side, driven by colder weather. Like all sentiments, the buy/sell decision needs to be relative to market price. Today, we’ll look at the front of the curve, BOM and Prompt. The trades to be discussed today are in the following APT order.

Each subsequent chart can be accessed by clicking the chart icon to the far right. You can also pull them down directly from the TradeRank reports.

First up, the spread between NP and MidC for BOM. This was cheap during the pipeline / Sumas crisis, now its flipped to NP premium by nearly $10. Given Sumas is still trading premium to PG&E citygate the spread feels rich. Offsetting that sentiment are the increased flows into Sumas at the US border; nevertheless, a cold event in the Northwest could be more bullish than a cold event at NP. This is BOM, just ten days left; we’d take out a flyer and SELL the spread.

This spreads Palo against MidC, a dubious virtual given no direct transmission between the two, but for those creative gamblers its worthy of a look. This was dirt cheap while Sumas was on life support, now it is just cheap but, for the same reasons as NP, we’d sell it (Sell Palo, buy MidC).

NP’s Dec heat rate was silly cheap a few weeks back, it has rallied off of that, but we’d suggest there is more room to move up. With cold weather approaching, we are BUYERS.

The Palo heat rate has fully recovered, the price is still above the one year average, and we aren’t so bullish we’d go long everywhere.  PASS.

Cheapish heat rate, modest PP that just posted a reversal of a two-week long slide … on the cold weather, and going into a long weekend… BUY

When trading off of cash, which is what we’d be doing by buying BOM off of cold, you may as well do the same thing in the Prompt, especially when it is the 20th of the month. So, all of those Dec sentiments … press Repeat.

If we sold the BOM NP-MC, we probably wouldn’t do the same with Jan. Our fear here is water in the Northwest. BPA will begin drafting again to serve the incremental cold-driven load, that will leave Jan longer than otherwise. Plus, if the cold is a headfake, we’d not want a book too directional over the multi-holiday span, plus liquidity will be an issue.  BUY

The spread’s heat rate is more pricey than not, but the power price is still on the cheap side. Plus, PV sees massive LMP congestion into SP … SELL

We already said we’d mimic our Prompt with the BOM sentiment, but let’s look at the rolls. The MidC PROMP|BOM is now at a contract high – HUH? Where this was trading $-30 a month ago, now Jan is premium. Makes no sense in front of a cold forecast… We’d short this for size.

The NP never got stupid-priced like MidC because PG&E Citygate isn’t Sumas; still, the roll is at a contract high, and Sacto and its minions will be cold over the holidays… SELL

Why not, sell this roll too off of problems in the ISO over the holidays.

Good Morning,

The news de jour is the west has been growing colder for a week straight; now it’s growing dryer, too.

Mostly the interior, but the anomaly spills into the load-center coastal regions. Power and gas loads will be remarkably higher throughout BOM and possibly spill into Jan.

Dyer, too, after three weeks of above average precip, now the NW and Cal have a negative anomaly. Makes sense, high-pressure cold blocks the storms; rare you get both wet and cold. Both forecasts are bullish, though it’s the demand we’re more interested in.

For the record, these hourlies are not “cold,” they are just colder, but the trend is to walk down the temperatures and should that  continue, then it may just get cold. Don’t expect panic; the system is healthier today than three weeks earlier. The warm wet allowed both gas and hydro storage to recharge, plus the Northwest is no longer threatened by the Westcoast pipeline explosion impacts. WEI will increase flows as needed; if it gets bitter cold, the pipe will flow 100%.

Spot gas is off but still relatively strong; recall, last year on the same day Sumas had $2.00 handle; almost every hub is $1.00 or higher than last year. With cold, these spot prices may move yet higher, at least the ones in California.

Citygate term markets found a bottom, at least a temporary one, but we’d suggest that small bump yesterday was more Nymex-driven that Socal.

Sumas mostly just continued its slide back to reality; the market has the Feb contract beneath Henry, a sign pointing to a complete return of Westcoast’s capacity. That said, cold weather will support the prices, then they’ll slide more until basis reverts to its mean.

Hey, here’s a rally! LMP spreads against SP blew out over the last few days at all three points. Mostly, this is a reflection of the gas spreads; there is nothing bullish going on inside of SP.

Socal’s Sendout has cratered on those exceptionally warm temperatures; interesting, because PG&E’s loads are up and soon to spike back to the levels we saw earlier this month.

The above plot is a new dashboard, a chart of the last 30 days of LDC demand by power hub. Ansergy has mapped all of the LDCs inside a power hub and aggregated their gas nominations. This data is a close as you’ll get to actual gas demand, at least outside of the two Cal LDCs.  PG&E’s demand has rallied, MidC’s tanked and is now sideways, same with Socal.

Power demand at the four traded hubs is either sideways (SP, NP, PV) or in a free fall – MidC. Cold weather should change that.

The MidC’s wind has been consistently strong further weakening its cash markets. California’s solar has been volatile due to the big storms systems that have blown across the state.

Check out the changes to the SWE (Snow Water Equivalent) anomalies at the MidC. A week ago, the hub-composite was 70%, now it’s in the high 80s. Those storms pushed up the NWRFC’s water supply forecasts a bit. As of yesterday, about 25% of the Northwest’s snow pillows were above normal; a week ago maybe 5% were.

We also took note of the drops in California; NP15’s composite snow anomalies were above normal two weeks earlier, now they’re in the 80s. El Nino-like water … not yet, anyways.

We’ll be closely watching these numbers over the holiday; the first flood control guidance is released around Jan 10 using the TDA Apr-Aug forecast. Given a drying trend, that forecast may be in the low 90s which would suggest a modest draft into the 1240s at Coulee.

Energy from that large project has been cut, much of the water coming into Coulee is refilling the reservoir. We’d expect discharge to pick up as BPA drafts to serve load next week. The NWRFC doesn’t see that, though.

Just two days after releasing its weekly STP, the agency has cut its December flows across all days in its 10-Day. We’d expect just the opposite, a strong rally as the water is used to meet incremental cold-driven power demand.

A parting comment on this week’s STP – it’s too low. These forecasts are suggestive of a near-record draught, but that isn’t what we saw in the current snow anomalies. The Northwest is below average, but not by much, and we expect the Feb-April forecasts to see some significant upward restatements.

BC exported energy in a big way at MidC yesterday which was surprising given relative weak fundamentals at the hub. Was there an outage?

Conclusions

Cold, but not Siberian-like, yet the trend has been a colder outlook for seven straight days. Imagine how cold it would be if that trend continued another seven days? A more bullish near-term outlook, coupled with relatively low market prices, has us believing length is the position de jour. More on that in the next post.

 

 

 

Greetings,

Ansergy will be sharing some insights into WECC markets on the ENElyst chat platform. The session will begin today at 12:00 PM PST.

You’ll need a login, click here to get complimentary access:

Sign in at https://chat.enelyst.com/

We’ll be discussing the status of WECC fundies and taking a look at a few trade ideas.

Cheers,

• Team Ansergy
• 206-877-0991
• [email protected]

 

Good Morning,

Today we’ll examine the MidC bullets from BOM to Sep and include the rolls. The rolls are illustrative of relative pricing, and we think its easier to draw conclusions on the outrights by studying them.

We will report in the following order:

Dec is cheap from both PP and HR (Power Price and Heat Rate) perspectives, plus there are these fundy facts to consider:

• Trending colder weather forecasts
• Sumas inflows still short
• BPA’s net reservoirs remain 1 MAF below average

These are reasonably solid facts, couple those with low prices and heat rates and we are ……….. LONG

What is true for BOM is usually valid for Prompt; the two have an R-value that approaches 1.00 about 95% of the time; when they diverge it can be violent. Here we see similar low prices and heat rates, but let’s turn to the roll before making the final call:

Remember when we put out the strong BUY for this roll, that was like $25 ago; now it is at or near a contract high – how times change.  Note the rate of change is changing in power price, the chart was straight up for a week or two; now it appears to be flattening. Given perhaps tighter cash off of rallying demand, we’d be inclined to sell this roll. In other words, we’d own the Dec over the Jan.

Feb never rallied up as much nor came off as hard. With snowpack building so is the February draft, but the heat rate is still cheap suggesting the gas isn’t.  One valid Mid-C fear is the early return of Sumas to 100%, and we think this isn’t an outlier, it is increasingly becoming our base case. I’d not want to get too long the MidC because of that. Therefore we’d SELL

Another roll that rolled back to reality; this one is almost back to the contract average on price but is close to contract high on heat rate. The latter is because the Feb gas never got as high as Jan. We’d not own this roll, if you bought it back then, take the profits. Otherwise, we’d PASS

Like Feb, still rich in price and reasonable in HR. This still contains a small piece of Sumas premium, and perhaps that piece is still too big. SHORT

MAR to FEB is low price and reasonable HR. Perhaps the market remembers 2017 and those biblical March floods – 550 KCFS past Portland. Odds are, you won’t see anything close to that this year. BUY

April, one of the most volatile MidC bullets, a veritable widow-maker. It’s rich and not because of Sumas; the premium here reflects a dry water year; the market assumes little draft. Wrong, even NWRFC has pegged TDA at 94%, and that number is growing. Ignoring Sumas, we look for anomalous pricing relative to the water year, and this seems rich … SHORT

I think it was the April-March that brought down Amaranth in 2007 (and added a $B to Arnold’s book); this is power, but this roll is just as volatile. Now it is more reasonably priced than not … PASS

May is often the Mid-C’s red-headed stepdaughter and usually is scorned relative to April or June. That isn’t the case this year, the May is near a contract high, and its heat rate isn’t cheap. Given a growing water year, we’d……….SHORT

The roll isn’t cheap or rich, it’s just ……….. PASS

June is interesting as it almost always contains peak hydro. It also gets the free-rider effect of hot ISO or Palo. On rare occasions, the melt is delayed and June gets smoked for a few weeks. Probably a more significant risk is that Calif never gets hot in June; given this is near a contract high for PP and the HR isn’t cheap , we’d ……..SELL

June to May and the market is pricing it like it always does – big June premium. Way too early to call either Volume or Timing, so we just fade anomalies … SELL

Wow, this is straight up both HR and PP; but with a growing water year it can’t keep going up forever, or can it? Big cold in Seattle would pull this up off a cash-sympathy play, but we do not see that just yet. I’d be more inclined to short this then buy it.

The June to July roll is at contract highs for both HR and PP. Fade anomalies, SELL.

Aug is like July; bullish both HR and PP. Everyone fears a repeat of last summer when the ISO had a Citygate meltdown. I’d fear that too and this is too deep into summer to waste VaR on … PASS

Check out the heat rate resistance; its hit that high about five times and come off, but the power price just keeps going up. I’d be comfortable selling this roll, though doubt you’d find the liquidity to put it on or get out of it. But in the virtual world of ours, we ignore those factors and will be …………..SELLING

SEP – the poor man’s summer. Cheap HR, rich PP……………. PASS

WOW, cheap everything. BUY