Good Morning,
The weather outlook for the northwest remains warm and modestly wet:
Mid-C Composite Weather Forecast
The storm next week remains in the forecast and most of that Mid-C precip makes it into the eastern production basins setting up an ever-increasing water supply outlook. That is the bearish news, now for the bullilsh news – the DC line is back and flowing electrons:
After a nearly four month hiatus the line has returned rendering Mid-C less long and SP longer. The Canadians remain sellers though they backed off some yesterday, perhaps the price wasn’t right:
Actual Flows on the Northern Intertie
I expect our friends to the north to continue to sell into the Mid-C given that they are enjoying a robust water year:
Snow Levels by Basin (BC and Mid-C)
Robust, and growing ever more robust, as are all basins though none are near the anomalies of four weeks ago. The RFC’s near-term stream flow forecasts are also growing:
NWRFC 10 Day Forecast versus STP
Those are big back-end bumps and you should expect another bearish STP outlook on Monday. Bearish in Feb would be my guess, maybe we see another 500-1000 MW boost to prompt, maybe more as the RFC is now projecting a 2,000 MW bump for next week.
Our outlook remains bearish everywhere and we would be net short and any length would come from rolls and spreads though lower prices renders us less bearish. At some price point it no longer makes sense to carry a short and I think that may be the case in the May-June light load, trading as it is in the mid single digits. I am confident cash will trade in the low single digits for 14-21 days but am not sure when said event will occur. I am also confident it won’t happen for the market’s 60-90 days; no that won’t happen in a 95% water year. So when will it happen? Don’t know but do know April is going to get shocked by a 30′ foot GCL draft spread over about 20 days.
Enjoy your weekend,
Mike