Good Morning,
Let’s start with the price forecast, then we will explore some of the more important fundamental developments.
Next Day
Our models are forecasting lower prices across all hubs for both on and off peak. Blame it on lower demand, lower gas, partially offset by lower hydro. The BOM and Prompt outlook is not much better, as in not any more bullish:
Balance of Month:
Prompt Month:
Today’s fundamentals are a mixed bag of bullish/bearish elements. Starting with weather we see a very warm and slightly dryer Mid-C :
Mid-C Composite Weather Forecast:
It’s dry as a bone now but another storm will hit by week’s end. though it will return just normal precip. More interesting is the cooling trend beginning on Day 9 (Feb 17) which, if realized, will jack loads by 2000-3000 MW. Maybe call it Winter 2016’s last hurrah because we are running out of calendar in a hurry:
Forecasted On Peak Loads – MidC
We Mid-C travelers are literally approaching a cliff of falling demnad as winter wanes; contrast Mid-C with SP15:
Definitely a tale of two demand curves and speaking of SP, how about that February heat wave our friends in the Golden State are enjoying:
85 degrees in February, early February at that. Sorry, this isn’t going to be much of a load event as the evenings are in the low 50s. San Jose, as we know from watching the Super Bowl last night, is also experiencing something similar:
That forecast, San Jose, is bearish as its not hot enough to kick in the ACs and not cold enough to start up the heaters. More important is what it will do to the snow pack in the Sierra’s, which is expected to reach the high 50s for several days (Lake Tahoe). Lower elevation snow will melt and we should expect the first freshet of the season. Though much of that water will be caught in the reservoirs some will go through the turbines. Call it bearish.
Monday means STP update, oh boy, always fun to see what the Ouija board has in store for us. The 10 day may hold some clues:
The big surge in last week’s STP never came but the latest 10 day is adding more water at the back end. Hard to really say what today’s forecast will do though I’d be leaning towards a restatement of May – downwards, maybe like 1000 MW lower based upon lower water supply forecasts – both GCL and TDA are off 1%:
That is an important change since Wednesday, or Thursday, the Corps of Engineers will update the Flood Control Draft. Don’t count on any major changes given that Jan’s draft was based upon 93 GCL and 94 TDA, though I don’t really see how the RFC comes up with a reduction. Snow pack doesn’t support a lower forecast:
Every major basin is up week on week yet the RFC is down … go figure. Tomorrow I will take a look at some of the forwards and attempt to identify some opportunities. Enjoy the rest of your day.
Mike