Good Afternoon,
It’s Monday and that can only mean another installment of STP to further your enjoyment and you will enjoy this week’s chapter if you are short BOM and long June. Who got that on?
May is up a modest 550 aMW; June down a more modest 370 – is that starting to sound like a broken record “June is down”, it is like 8 weeks running now; July is up 170, may as well call it unchanged; and August randomly increased 800. Overall none of this should surprise anyone (except for August which appears to have changed simply for the sake of a change) given that the northwest is warmer than last week and it hasn’t rained much and the 10 day outlook is for below normal precipitation.
Call the front just weekend shaping (through May 8) and then the rest of the month’s energy was boosted over last week and can be explained by above normal temperatures which will accelerate the melt. The forecast begins shedding energy starting on June 1 and continues cutting through the end of the month, however May peaks next week and then drops 4000 MW over the remainder of the month. So, if cash can hold through next week the BOM might start gaining in stature as a long play.
This chart, which compares monthly energy across the four years, might say it best. May is 10000 aMW over last year and in line with the three previous wetter years. So if you wonder how May might trade this year just take last year’s heat rates at Midc and add 10 nukes to your stack … that should get you close. June has 5000 more MW than last year which should temper some of our enthusiasm, but it doesn’t; and July looks like about the same energy as last year – forget August, we don’t think the RFC has very good read that far out.
Mike