Good Morning,
Price Forecasts – Selected Markets
Next Day
Mid-C bore the brunt of a bearish turn in the Ansergy forecasts, day on day, with a drop of $1.46 for on peak. This crash was the result of a confluence of bearish variables:
Rarely will you see all the key drivers turn bearish but that is what we saw in the model today. Demand (down 500 mw), Hydro (up 600), wind (up 300), and gas down $0.04; the only bullish element in today’s forecast was exports which were up 240. All other hubs were also down but most of that drop is explained by the change in gas price.
Balance of Month
Day on day changes are universally down but, like the Next Day, the biggest drop in the model is at Mid-C.
Prompt Month
Same story as the BOM, everything off but the biggest hit is again at Mid-C.
Q2 2016
Here, in Q2, the trend is somewhat broken with NP15 leading the hubs down. Mid-C’s decline is tempered by the fact that the model has pretty much put coal on the margin through the entire strip rendering that hub relatively immune to changes in gas price.
Today’s Fundamentals
The weather has turned warmer everywhere; and wetter at the Mid-C:
Composite Weather Forecast – MidC
The near-term outlook has gotten materially wetter at the Mid-C but with that warm weather the snow levels will be well above 5,000 feet meaning much of this next storm is going straight into the rivers. Also worthy of mention was that head-fake cold front which yesterday’s forecast teased us with … it’s pretty much gone today.
Temperature Forecast – Burbank
Burbank is clocking a scorching 88 for a high today which will come close to setting a new record. That heat wave is kicking on some air conditioners; yesterday’s ISO SP load is near a 21 day high:
The weather forecast has already driven Mid-C to its knees but the RFC decided to kick it one more time by raising its 10 day forecast:
Rub that sleep out of your eyes and you’ll see that the RFC added about a 1000 MWs to its outlook for next week which bodes bearish for the STP that never was published yesterday, but should be today. We checked our holiday calendar to see if the Feds had the day off – all we could come up with was that yesterday was National Boy Scout Day. Hopefully today isn’t National Cub Scout Day.
I can’t close with out throwing you bulls a bone; a bone that the RFC Water Supply Forecast provided:
This 1% derate arrives conveniently one day before the COE releases the Feb Flood Control which should drive a slightly smaller April GCL draft. Probably just noise but it still is a bullish bone and bullish bones are hard to come by of late.
Mike