Market Commentary

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Westcoast Update

Greetings,Westcoast released an update on the pipe. It appears capacity restoration is being accelerated. Here is the text of their releaseAs near as I can tell, the pipe's capacity is on a fast-track towards complete restoration. This weekend the plan appears to bring Hungtingdon up to 1.4 bcf.Here are where flows are at as of 12:00 PM Sunday (PST) -That's the 7-year view, let's zoom in on this last year:Since Thursday (Nov 29), flows at Hungtingdon are up 240 MMCF and, per WEI, another 90 MMCF will be added today or tomorrow. More important, if the intent is to get the pipe's capacity fully restored, you should expect another 400 MMCF to return the capacity to 1.8 BCF, last year's winter levels. At that point, there are no "Sumas Gas Issues," and most of the winter anomalies will be gone.I'm not saying the pipe will be fully restored, read their posts, but it seems the chances of full capacity before March 2019 are higher today than on October 10, 2018.On top of that bearish news, check out the latest weather ...Recall, the forecast looked like this last week:Hhmm, the plot thickens, the pot boiling over, sea change poised to wash away the long's gains? Speaking of washing ... check out the 8-14 day precip outlook:Sadly, stole my blog thunder for tomorrow, but felt this news was important enough to warrant a Sunday blast.Cheers,Mike

Change Mid-C

This weekly report, Change, summarizes how the week that just ended compares to both last week, and the same week a year ago.  Through 1000 change records, we have filtered down to those that we found most relevant. [render_email_report name="Change - MidC" date="2018-12-01"]

Chatroom Update

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WECC Update – Part Two of Two

Good Morning,It's MidC's turn on the hot seat; appropos given the arrival of cold weather, problems in the gas world, and reservoirs that are over-drafted. Let's see what Mr. Market thinks of all of this.We use APT to sort the trades and rank them; I"m reporting in period-sorted order. Click on Rank or WoW to reorder.Dec rallied, duh, but interesting that the heat rate tanked. I'd a thought that if total demand increases the heat rate would rally; I guess the explanation would be that the price is relatively low given the gas move. We'd buy the Dec as a lotto ticket thinking if it is frigid next week there will be a remote chance of unserved load (either gas or power, doesn't matter which). Should that happen, cash in the triple (or quad???) digits is not unreasonable.  Long.This heat rate is more reasonable but still cheap. If you like Dec you have to like Jan, the R-value between the two is almost 1.00.  Long.The roll grows ever-cheaper as the market becomes ever more paranoid, but we think the spread is rational, though we're long both so would ignore the roll. That said, if we were to be bearish next week, we'd buy this for the $-30.Hah, Feb hardly moved. Like Jan, if you like Dec you need to own this too, unless VaR is an issue. I guess it comes down to which do you want, Dec, Jan, or Feb. We'll take all three; our VaR is infinite.Feb to Jan is $-25 and tanked $10 in a week. The bearish case for this roll (it drops more) goes along these lines. It is freezing next week and BPA drafts everything creating a hole for the rest of Winter - then another cold wave descends upon the MidC. Further, JP and Mist get sucked dry, and WEI doesn't open the spigot. That said, we're long all three so forget the roll.Interesting, March has come off in the last week. If you are trading the MidC from a water-perspective, it might not be a bad move given the big storms. But there is more than that driver at play. Still, you can't be long everywhere and shorting here might cover a small piece of pain should next week be a misfire.Buying the roll ($-18) is the bearish strategy. Let's say the markets scream on Monday and your length is in the money. One approach would be to flip out of the length and sell every one of these rolls. Then you hope the 8-15 day precip is reality and the warm trend builds. It won't take but a few weeks for BPA to restore its reservoirs and extended wet would put another 3000 aMW of zero cost hydro into MidC's supply stack.We love the Apr-Mar, May-Apr, Jun-May, Jul-June rolls, but it is too early to bet on timing of runoff, we don't even know what the runoff volumes are. OK, but the April is at a contract high and the WEI issues should be just memories and Sumas will settle back to the 1s and 2s. What if these wet patterns extend into Jan? That bearish scenario suggests April may be over-priced and is a decent short candidate to hedge some of your length in the front.The Apr-Mar is just a gas play; WEI has said they'll keep the pipe at 80% through March; the roll is $-14 because of that. Should that derate change, this roll will be closer to flat.We won't bother with the Qs today, the market is all about the very front of the curve.   

WECC Update – Part One of Two

Good Morning,The cold got colder and the markets rallied. The million dollars (bonus???) question is how cold it will get and will the gas markets have the supply to serve those loads? As for how severe, it is cold, but not record cold:Rarely will you see the entire continental USA blue, you did yesterday in NOAA's 6-10 day. The 11-14 backs off from cold and reverts to warm anomalies on the load-center west coast.San Jose saw its forecast grow colder, day on day, and so did Phoenix, while Portland's got a shade warmer in the digital version. But it is all relative, and these temperatures, versus all of November, are at least ten degrees colder. Gas demand will spike, so will power, and the tenuous WECC energy infrastructure will be tested. We'd always be biased towards the stability and reliability of the system versus the "sky's falling," and the "end is near" and "Trump will get re-elected."That glass "half-full" idea is predicated on BPA drafting hard on its reservoirs, cutting transmission exports, and pulling max withdrawals from JP and Mist. We think a short-duration cold snap is no problem for the MidC, Socal might be a different story since they cannot drawdown their storage at "max." We'll see, the days of Reckoning are Dec  5-7. By the way, I'll be in Phoenix those days but responding to emails and chats.Last weekend we saw flows out of Station 4 on WEI spike up; now we're seeing some of that gain given back. Plus, that pesky maintenance on Westcoast lingers ...It is hard to believe Enbridge would actually cut 40% of its capacity on arguably the three coldest days of 2018-19, isn't it???The above isn't on the website; it's a special report we've compiled which tracks the impact of the WEI derates for both WEI and NWP. The top section is the WEI points; bottom is NWP.The markets are very choppy and aren't moving in dimes and quarters, more like dollars. Check out the AECO prices and that AECO-Kingsgate spread? Is that other-worldly, or what?Socal Citygate is less choppy, that hub just goes up. Some of that bullishness is driven by this expected cold weather and its impact on storage; the rest from the Nymex gone Crazy.California gas demand is already rallying, before the cold even lands. Socal is up 700 MMCF, week-on-week, and PG&E bounced 400 MMCF - over a BCF a day more demand in Kally and the cold hasn't arrived! Socal has seen big draws (400) over the last two days, so has PG&E. Though the latter has not the withdrawal constraints that the former operates under, it has much less total gas to work with, like 30 BCF less than a few years earlier. A cold winter may be problematic for PG&E. On top of being liable for every fire ever started in the state of California, now it might run out of gas and get sued for that, too.SP's loads ticked up, Palo too, though just barely. MidC saw its load come off while NP is just sideways. All of that will change once this cold weather strikes.Timing is everything, and now one of the Diablo units is having troubles; we think its preparing for refuel, though we show 13 days left in the tank. How poorly timed would that be if they take the unit down in front of this cold weather? The PV#2 unit is still off; this is one of the longer refuels any Palo unit has seen.Palo noms are up off of higher loads; the rest of the hubs are sideways.MidC's are sideways because there isn't the fuel to run the I-5 units; I doubt they run in the cold snap, either. Avista is firing up its 11.5k peaker in anticipation of cold.That's weird, the solar at ZP and NP - like nearly zero. I guess that is what happens when the air is saturated with rain.The above is yesterday's radar - the state got slammed, but so did Oregon, Washington, Idaho, and Montana. Meanwhile, the RFC has materially ratcheted down its Water Supply Forecasts.Huh? You'd think the plots got dryer, but they are very wet:Let's zoom in on that NCEF:The Northwest westside is poised to get 5-10" in the 8-15 day; the producing east side will enjoy 2-3"; these are massive anomalies and should they land as painted above, will put the Northwest "ABOVE" normal. Yet our Portland pals don't see it that way. Even before this event lands, things are not that dry:We examined all the snow pillows, mapped to our production basins, and compared the current SWE versus normal. 83% of Clearwater's stations are above normal, in fact, most of the major rivers are doing "OK" as of 11/28. The real dry stations are the mostly irrelevant westside stories (irrelevant unless you own production there). Now, toss in about 2-3" on everything east of the Cascades and all those are now above normal; throwing in 5" on the west side and those are above average.Above, that is the entire WECC (US), but things can change quickly (anomaly-wise) this early in the water year. Look at these snow cover maps:

November 1, 2018

November 21, 2018

November 28, 2018

Or, compare NRCS's SWE maps:

November 21, 2018

November 28, 2018

Oh my, Kalistan went from <25% of normal to >175% in a week. LOL. But the changes were not just there, check out the Snake changes. And this is before another significant storm lands. Some of that recent precip is finding its way through the penstocks and driving the turbines. All of these stations are above Coulee, all have rallied of late.Northwest hydro has backed down from a few weeks earlier; we have to think it rallies next week to serve load. And check out those thermal cuts, year-on-year(Sumas issues).The water behind the reservoirs is essential for MidC. That water is the escape valve when things get tight, but those storage levels are down at both MidC and BC; each has pulled a MAF since October and may very well pull another MAF next week. At some point, the bullets are spent all of which puts pressure on Mar-April given that the flood control draft happened in Dec.Sometimes we jokingly refer to the NWRFC as the Random Forecast Center - just look at the above plot to see why. Last week, going out, they forecasted huge flows, now they've cut those way back - all in the face of very cold (draft-induced flows) and a potentially massive storm.Not a lot of surprises in transmission flows. None of the lines are even close to TTC; we'd expect even less to flow out of the NW next week; don't think MidC will have much energy to spare; doubt Powerex will, either.

Conclusions

Still a bull; without weather warming, I'd wait to see how cash (gas and power) behaves next week. Too risky to be naked short anything going into the weekend in front of the first cold snap of the season. All of this water, however, could quickly change that temperament. For now, we'd be cautiously long going into next week, but more on that in the next post to follow shortly.

Mid-Week Update

Good morning, NOAA Forecast ImagesThe blue blob of winter weather is centered in Wyoming but it's stretching across the entirety of the West, especially from the Great Basin north.  The following week is less extreme but cooler temps look to linger everywhere outside of Southern California.Precipitation ForecastThe Northwest will be cold but dry this week, while California and the Southwest may see a slightly higher than normal amount of precip.  Next week will bring a considerable amount of rain to Northern California and a return of wet weather to the Northwest.  Nearly everything east of the Rockies is projecting a normal amount of precip.LMP SpreadsSP-PV showed a difference of $31 at their peak and $12 when comparing their low prices yesterday.  SP-NP had no difference at their peak price yesterday while SP-Capt Jack had $3.FuturesCrude was essentially flat today following a $0.02 decline, bucking the one-day $1.20 rally from Monday.  Gas managed a $0.06 climb but was up as much as $0.12 at its peak yesterday.  Futures remain highly elevated.West Term Gas PricesDecember Sumas rallied strong yesterday with a $3.61 increase day-on-day, this on the back of a week-long drop in price.  Socal City had its own rally of $0.85 as well.  January Sumas jumped as well though more modest at $1.50.  Citygate stayed flat in January.Gas StorageJackson Prairie storage ran positive again yesterday after adding another 42 MCF to storage.  That marks the 5th-straight day of injections, though it was off 97 MMCF from Monday.Spot GasSumas spot rose to $11.77, up just over a dollar from Monday but up more than $2.00 week-on-week.  Malin fell $0.30 day-on-day and is now more than $0.50 off its high on the 21st.AECO crashed back below a dollar and settled at $0.42, its lowest price of the month.Mid-C DemandSeattle shows no sign of peeking its head into the 50's any time in the near future as today tops out at 49, but that sets the high watermark.  Lows fall well below freezing half way through next week and highs will struggle to reach 40.Loads were most flat yesterday as peak demand stayed flat through the weekend.NP 15 DemandNP peak demand was up just over 100 MW day-on-day but was down 100 MW from its low in comparison.  Loads were also mostly down week-on-week.San Jose is projecting a high of 65 today, five degrees above its 10-year average, but highs well drop off sharply, falling well into the 50's by the weekend.  Daily lows could dip as far as 39 by the 3rd of December.SP-15 DemandSP peak demand fell more than 700 MW day-on-day yesterday though off-peak demand rose 500 MW.  Loads were off roughly 600 MW week-on-week as well.Burbank is looking at a high of 69 today, just a degree north of average, but it too will see a considerable drop over the next week as temps fall as low as 40 by the 3rd.  If that low temp holds true, it would equate to 10-degrees below normal.PV DemandNot to be left out, Phoenix will get its share of cool weather next week as well.  Temps drop from a comfortable mid-70s high today and tomorrow to the mid-50's by next Monday.  Overnight temps could dip to 39 by the 4th.Las Vegas is even colder as we are currently projecting freezing temps for the 3rd and 4th and 30 and 31 degrees, respectively.  Temps may fail to reach 50 on each of those days as well.Nuke StatusPV2 remains in refuel mode at 0% while all other plants stay at 100%.Gas Plant NomsSP gas noms fell to 766,000 MCF, down 100,000 day-on-day and roughly the same difference week-on-week.  Mid-C noms ticked up another 20,000 MCF but haven't varied by more than 80,000 MCF since the 5th of November.RenewablesSP-15 solar was peaking at just 4,200 MW on the 22nd but has since been able to generate more than 5,300 as of the 26th.  Wind had a heavy presence from the 22nd through the 24th as no hour averaged less than 1,400 MW.Mid-C wind peaked at 1,900 and 2,300 on the 22nd and 23rd respectively but fell off sharply soon after.  Wind managed a small comeback on the 26th with most hours averaging just over 400 MW.ISO Gas OutagesGas outages are up more than 2,000 MW week-on-week after another 600 MW of outages were tacked on to yesterday's totals.ISO Outage Unit DataTwo of the largest contributors to the increased outage counts are highlighted here -- CENTRAL LA ROSITA II COMBINED CYCLE and LR2, both at 322 MW.

Hydro

 PNW ReservoirsMica is sitting at 25' below average though that's three feet closer to average compared to where it was at the end of October.  Arrow is down to 1,424' and falling and diverting from the trend we see in the average line in the process.Week-on-Week Snow AnomalyThis week brought on considerably more snow in the Rockies in addition to a heavy dumping in the Sierra Nevada.  The Cascades remain well below average, however.  We'll see if next week's cold and wet weather is enough to bring the anomalies closer to 75% at least.Snow Depth SummaryWanapum and Rocky Beach each added more than half an inch over the past three days.  24 of the 30 tabled stations saw more than an inch of snow depth over the past week, however, while the remaining six were made up primarily of Montana stations.Snow Depth ChartPriest Rapids saw the most week-on-week build with 1.75" tacked on.  It came at the right time as the station has had a very late start to the snow year, as the chart above illustrates.

Transmission

 BPA TTC No week on week changes for either the COI or NOB lines, though each is set to see their TTC drop sharply by 10AM PST today.   Have a wonderful day, William

Ansergy – Public Chat Content

Good Morning,Ansergy updates its intraday analysis on the public chat forum embedded on its site. This is just a reminder to log and check it once a day. I post 2-3 times each day, others also add content as warranted. That Public Chat content will not be disseminated anywhere else.

Chat Instructions

Once you log onto the Ansergy website you will see the following screen: In the lower right corner is a chat icon which lists the # of new posts since you last logged - in this example, there were two new posts. Click the icon.  The expanded chat icon shows a "Public Room" and lists the Ansergy analysts currently online. You can private message us with a question or comment or you can open the Public Chatroom where we are posting our intra-day updates.  I recommend opening the public chatroom in its own tab, click that icon to do just that.  Voila, you are there. Keep this open intra-day as we post throughout the day. Our latest posts reference critical maintenance work on Westcoast, check it out - Westcoast Maintenance ScheduleCheers,Mike 

STP Update

Good Morning, The following reports reflect the energy impact of the most recent NWRFC STP.

Monthly

Energy Scorecard:

  • November - Down 738 aMW
  • December - Up 363 aMW
  • January - Up 53 aMW
  • February - Down 72 aMW
  • March - Up 428 aMW
This week's 738 aMW decrease in November essentially wiped out the gain we saw last week, leaving the current projection lower than any of the previous four forecasts.  December reversed trend with a 363 aMW jump, while January added a very modest 53 aMW.  February dropped 72 aMW coming off last week's sharp drop.  March now has enough data to join the table above, and it shows up with a 428 aMW gain.

Daily

November drops off immediately and holds that deficit well into December.  Dec 9th sees the course reversed as the current forecast gaps as high as 1,200 aMW above last week.  There are small gains from the 1st-3rd of January, though the remainder of the months is essentially par.  February held a 70 aMW drop through the entirety of the month.  March does the same until the final week where the increase can be attributed to new data.

Year on Year

With today's cuts, November is now forecasting below all but three years since 2001.  December inched ahead of 2002 and 2003 but remains behind the remaining years.  January looks to be the sole month that is pacing at least average. William

Change SP15

This weekly report, Change, summarizes how the week that just ended compares to both last week, and the same week a year ago.  Through 1000 change records, we have filtered down to those that we found most relevant. [render_email_report name="Change - SP15" date="2018-11-28"]

WECC Update – Part Two of Two

Good Morning,Today we'll look at the SP15 HL markets, both outrights and rolls. Last week we studied the MidC, maybe on Thursday we'll look at all markets?The following APT table will be the order in which we report.Click the above link to resort or select a different basket of opportunities.BOM's BOW but we'll post anyways. By the time the cold hits, Nov will be in the history books; for now, it's in the history books because the price is in the 70s.  With $7 gas that is where it belongs, pass.Dec is soon to be new BOM, for now, it's just Prompt and an expensive proposition to consider. Heatrate-wise, it just bounced off a contract low, price-wise it just set a contract high. Blame it on gas, Socal's an enraged and neutered bull in the china shop; her horns are swinging wildly impaling anyone who gets close (i.e., short). In light of this cold weather, we'd buy it and hope gas blows out to $30. After all, it didn't take much to blowup Citygate last year:It seems any temperature forecast approaching a thirty handle gets the ute (and the market) cold and bothered; current forecast is 42. What if that drops another five degrees? For starters, system demand will gap up at least half a B. Long.Kind of a meaningless roll given the short tenure of Nov, but crazy heat rate plot, huh?Jan looks like Dec, except the forecast is higher than the market. By the way, we'll be releasing a new set of historical forecasts next month that incorporate numerous model changes - more on that in another post. If you like Dec, why not like Jan? Let's look at the roll to see how much to like or hate.Wow, all over the proverbial map. Those lows were a great buy, and it still hints of buy, but instead, we'd just buy both of them off of the cold.Feb looks rich, but what isn't at SP? Roll time ...Hah, the roll is actually reasonably priced which suggests doing nothing with Feb, just be long Dec-Jan.March is like the end of winter and a long way out. It also is a massively high price (and cheap heat rate).  Any front rally will bring this up but not as much and any crash this will come off, but not as much. We'd pass, but let's look at the roll to Feb.Super cheap, market assumes little winter premium in March, perhaps rightfully so, though last year's peak demand occurred on Feb 27:Q2 has been on a bull run since early August; it hasn't even paused once; kind of like the DOW during Trump's first year; now look at that DOW. We'd pass but look to the roll for more guidance.Relative to the One, the Two is cheap, but this is a pure cold-weather play. You buy the roll to fade cold weather, which was a good play until this weekend, now there is a real threat of cold. Perhaps wait to see how cold it gets this week, and how cheap this roll gets priced, then buy it???The Q3 heat rate took a dump over the last week meaning power rallied while gas went sideways. I'd want to see this relative to the two and four.It is rich to the two, and ...Rich to the four. But why wouldn't it be after last summer's catastrophe? Unless Socal fixes something, anything, next summer will just be deja vu all over again.Q4 just goes up, just like every other strip at SP. One difference here is the heat rate is also going up suggesting Q4 may be getting over-priced; it is moving up faster than the price of gas, and fundamentally nothing is getting more bullish (fuel aside). If you wanted a short at SP, this is where I'd put it on.Same charts.The roll is reasonably priced, so why bother? I'd play the front off of weather, and now it is looking cold and we'd roll the SP dice and go long Dec and Jan and forget the rest of the curve.